In many ways, purchasing a coop requires more legal work than a single family home or condominium. You must first find out whether or not your unit is exempt from cooperative board approval. If not, you must go through the board approval process. Will you be living in the unit? Are you planning to rent it out? If you are, you need to ensure that rentals are permitted before you sign the contract.
As a purchaser, you need to review the offering plan and proprietary lease. If rentals are permitted, you need to review the sublet application and sublet policy. Some coops charge a monthly portion of your rent as a sublet fee imposed on you. Other coops charge a sublet fee equal to a percentage increase above your regular monthly maintenance.
You must also review the financial reserves of the cooperative corporation, necessary capital improvements, whether or not the apartments are HDFC apartments, and if the unit is an A.I.R. unit that was originally meant for artists. Other considerations are the short and long-term debt payable. The maturity date of the building mortgage must also be reviewed. The total monthly maintenance revenue, compared to the total monthly expenses, and any mandatory assessments, must also be considered.
Finally, your attorney should review the board minutes. The purpose of the board minute review is to be sure that you know the recent history of issues in the building. While these minutes are often redacted by the Board’s counsel, they may disclose pending litigation, increases in maintenance or assessments, and changes to sublet, pet, or parking policies.
There are differences between the levels of expertise and service you may receive from real estate attorneys. That is why in New York City, an attorney in Queens might charge $700 for a coop purchase, while an attorney in Manhattan might charge $4,500. Simply put, you do get what you pay for. No attorney that charges bargain basement prices is going to spend the 5 to 10 hours it will take to do a comprehensive due diligence analysis. A great criminal lawyer is not a great real estate attorney. Whether $150,000 or $1,000,000, you should not gamble your home.
For our concierge clients, our Platinum Property Transfer System enables busy professionals and entrepreneurs to do what you do best. This enables you to often earn many times what our legal fee is by focusing on your career. Our concierge practice allows you to avoid attending the closing by entrusting the entire process to us, if you so desire. We use our expertise to permit you to buy or sell properties with minimal involvement and enjoy a completely stress free transaction.
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Buying A Cooperative Apartment With The Help Of A Real Estate Attorney
Buying a cooperative apartment takes a good amount of work. Coop transactions have their own set of rules, laws, and regulations. Therefore, if you are in the market to purchase a cooperative apartment, it is essential to enlist the expertise of a real estate attorney. A real estate attorney who resolutely represents buyers in New York, Queens, Westchester, and surrounding areas can make certain that the process moves forward without a hitch. At John M. Crane, we are committed to providing our clients with exceptional real estate services and professional legal counsel.
For most, the purchase of a cooperative apartment is a significant financial transaction. Buying a cooperative apartment is also intricate. As such, this type of transaction should not be done without the guidance of an expert real estate attorney. It is worth noting that a buyer who purchases a cooperative apartment does not really own it. Rather, buyers become shareholders of the corporation that owns the apartment building they bought a unit from. However, many buyers see it as a way of breaking into homeownership. Before buying a cooperative apartment, it is important to talk to a real estate attorney to determine whether buying a cooperative apartment is the right option.
The Board Of Directors And Denials
In New York, it is not a secret that coop boards of directors tend to deny a good number of buyers applying to purchase units in their cooperative apartment buildings. When a board rejects an applicant, they typically do not give any reason as to why they rejected the buyer. Unfortunately, they do not have to provide any explanation. For this reason, it is a good idea to have a real estate attorney in your corner. A skilled real estate attorney can help buyers avoid the pitfalls of rejection.
Prior to applying, it is recommended to have a real estate attorney review the application for any discrepancies or conflicts. Since the board of directors are known to be picky, it is always best to be prepared, especially if an offer to purchase may not be deemed as agreeable to the board. For instance, if the buyer and seller have agreed on a purchase price that is below market value, the buyer’s application could get denied due to the low deal. A real estate attorney can step in and advise on how to best structure the deal so that the chances of getting rejected decrease. Even if the buyer offers to purchase the cooperative apartment at a higher sales price, their application could still get rejected. If the board of directors finds the buyer too risky to approve when it comes to financial reasons, they may not approve them. Many times, a rejection can be avoided by taking the proactive advice of an attorney. Therefore, consulting with a real estate attorney is highly recommended before submitting an application to the board of directors.
For more information on buying a cooperative apartment, contact our knowledgeable real estate attorneys. Our offices are located in New York, Westchester, and Queens.
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