New York City
Northern New Jersey
Search Better With
Shop for a Broker
Open House Planner
Saved Listings & Folders
Stats and Figures
Manhattan Condo Market Index
Maybe the owner of the apartment had issues with the board and they rejected you just to hurt his sale or maybe someone on the board wants this apartment for much less than what you were willing to pay. By rejecting you they will force the owner to sell to them at lower price just to assure that the buyer passes the board.
K.W., your new and improved opinion is now downright silly, and tantamount to saying that anyone who ever says, "Sue the bastards" is giving legal advice. If that is your opinion of what I said, so be it. A question was posed, I answered it.
steve - I love how you continue to retrench your position to make it work. We were talking about business judgment law at first. You claimed that it had been whittled down and would permit a purchaser to sue. When I said that was not correct and cited case law, you qualified your position to mean that they can sue for bad faith and discrimination -- just not under the proprietary lease and you continued to cite business judgment law cases. You've now abandoned the business judgment law and are going with general state and federal discrimination laws -- but that's not what this original topic was about. Yes - if someone is discriminated against under state or federal discrimination laws of course they can sue. We needed you to clarify that??? I do not think that was the original tenor of this post or the argument that you initially made.
No I have not abandoned anything, joepa. The post I was referring to was this bit of nonsense:
NYCMatt: "Board VP here. Unless the board wants you to know why you were rejected, there is absolutely no way to find this out. We co-op boards are even more tight-lipped about this stuff than the Masons are about their secret meetings. And a letter from your lawyer won't accomplish anything. We are not bound by any laws to explain ourselves to applicants."
That is a reference to the "business judgment rule" as applied by the courts. The business judgment rule is NOT all-encompassing. It has been whittled down by the courts (denying a sale because of price, for instance) and by other laws (discrimination laws, for example).
You then said: "A board's powers are derived from the proprietary lease, by-laws, etc. If a board oversteps its authority (by improperly rejecting a purchaser), it is breaching the proprietary lease and by-laws -- not statutory or common law."
Completely wrong. There are cases in which a shareholder can sue under the proprietary lease; there are cases in which a non-shareholder can sue under the law; and there are cases in which a shareholder can sue in behalf of the corporation if a board fails to act (derivative lawsuit).
Plainly, statutory law can be broken by the board, and it can be sued by non-shareholders for that reason. There is no common law in New York, so I don't know what you're talking about.
Fess up: your statement was wrong, as was NYCMatt's. That's the problem with most board members - they think they're omnipotent, when they're not.
bela:if the board has issues with the seller (i.e, they don't like him/her; or they are a pain in the arse) wouldn't they be glad to see them move? As to someone on the board creating a cabal to do a low-grab sale smacks of conspiracy paranoia.
And, joepa, to review the rest of what you wrote:
"The causes of action would be breach of contract, breach of fiduciary duty, perhaps breach of Business Corporation Law 501 -- all claims that could only be brought by shareholders. Perhaps the vendee has a claim for tortious intereference with contract - but that's a long-shot and I don't see them getting specific performance on that and proving damages would be difficult from the purchaser's prospective."
It's simply not true. Under the case I was discussing the buyer could sue for discrimination (and I say as much). The buyer could not sue because the sale was rejected for a low price, but the real reason would have to come out in discovery.
I lived in a Co op with a cantankerous old Jewish lawyer in the building. We interviewed a financially viable buyer, very lovely African American couple. The Lawyer was head of coop board and was one of three on interviewing committee along with me. The other neighbor and I thought they were great and immediately expressed our approval. Lawyer said he wanted to go over the financials more closely. Six weeks went by and finally the buyers broker called me strongly hinting that he believed from his discussion with Lawyer that discrimination might be at hand. I went to Lawyer and faced him down saying the financials were fine and his delays were putting the coop at risk of a lawsuit. He made a questionable comment, that included the use of the Yiddish word, --how to spell it-- schvatza?. I said, great, now if we are sued, I will be deposed and won't hesitate to tell the truth about what you said and how I interpret it. So, the lovely couple got the apartment but Lawyer made my life miserable from then on. A pipe broke under the floor of my groundfloor apt which was clearly covered under proprietary lease yet Lawyer contested it. I was forced to hire a lawyer who got into a physical shoving match with Lawyer. Lawyer made life for my husband unbearable. Lawyer got a treadmill for his large 400 lb frame and placed it directly over our bed and got on it at 5AM every morning so we awoke every morning to what sounded like an elephant charge. Finally we decided to sell and leave but Lawyer wouldn't approve of very qualified buyer because they had a dog -- dogs had been approved years earlier when another neighbor was forced to sell in downturn in 90's, and only potential buyer had a dog so I led the charge to change the rules. When I brought this to their attention, they held an emergency meeting that I was not allowed to attend and changed the dog rule. I had to hire another lawyer and threaten to sue based on long pattern of treatment and especially dog issue. And the very worse part was that the lovely African American couple consistently voted with Lawyer because Lawyer was a bully and they didn't want to rock the boat since they had to live there.
The Coop construct stinks. One A#@#hole can change the living environment for everyone. Goodgracious, you should be happy they turned you down. It is a sign that something is rotten there.
"hat is a reference to the "business judgment rule" as applied by the courts. The business judgment rule is NOT all-encompassing. It has been whittled down by the courts (denying a sale because of price, for instance) and by other laws (discrimination laws, for example)."
If wrongdoing can't be proven, then wrongdoing hasn't happened. Period.
"yeah if you still want in, or are just curious, write a letter. you have nothing to lose at this point by confronting them. and if that doesn't work, file a complaint! ageism is a crime and you should call'em on the carpet."
You can complain all you want, but unless you can PROVE discrimination, you're just wasting everyone's time, including yours.
Steve, I haven't any idea what "new" position I offer. I said initially you interpret law poorly. Your concept of standinig is simplistic and too general and too technical. You treat the issue of standing as if it is an end in itself. The mere fact that one CAN sue does not have a lot to do with whether one SHOULD undertake a suit. And standing may exist for certain claims but not others. My posts are consistent--you are the one who scrambles when you wander into areas you do not have expertise in.
Regardless, offering interpretations of case law and what legal recourse one has as a result of your view of the state of the law is offering legal opinion. You shouldn't do that. Here, you've addressed yourself to a particular poster seeking advice, and you answered by citing case law, statutes, etc in support of a recommended course of action. That's pretty much offering legal advice. You should stop doing that.
"If wrongdoing can't be proven, then wrongdoing hasn't happened. Period."
True. That's what the courts are for.
apt23 - I couldn't agree more on the co-op structure in NY. Which is why, after owning two, I would never buy one again.
NYCMatt is precisely the reason why.
"That's what the courts are for."
No, that's not what courts are for. At least not in THIS country. We don't manufacture evidence in our courtrooms.
"There is no common law in New York, so I don't know what you're talking about" - what do you think all those cases that you have been citing are?
I'm done with this argument.
Stevejhx: "There is no common law in New York, so I don't know what you're talking about."
That's just stupid talk. No common law at all, huh?
The First and Second Appellate Departments, the appeals courts for all NYC boroughs, have a rule that
purchasers of coops dont have the right to sue coops for rejecting theor [urchase contracts, that only
the addected shareholders so,
See, e.g, Leonard v. Kannner, and mid-1990's 1st department case, and miller v. swingle, a mid 1980's
second department case which allowed a purchaser to sue the coop directly hwere the Coop had entered into some kind of contract directly with the ourchaser/
Let me clarify: I did not mean "case law" when I said what I did; merely usage and custom. English Common Law was stopped at 1777.
"§14. Such parts of the common law, and of the acts of the legislature of the colony of New York, as together did form the law of the said colony, on the nineteenth day of April, one thousand seven hundred seventy-five, and the resolutions of the congress of the said colony, and of the convention of the State of New York, in force on the twentieth day of April, one thousand seven hundred seventy-seven, which have not since expired, or been repealed or altered; and such acts of the legislature of this state as are now in force, shall be and continue the law of this state, subject to such alterations as the legislature shall make concerning the same."
New York State constitution.
Why, Steven! That is SO helpful! Thank you SO much for finding that important info for us all! So you mean NY can make its OWN laws since the 1770s and stopped adopting English law 240 years ago? Are you seriously sharing that as if it is remotely useful info?
What started this is that you made the idiotic statement that NY has no common law. Faced with the lunacy of your legal opinion, you now say what you actually meant to educate us about was that post the 1770s, NY formed a body of law independent from English law? Go take some Advil because surely you strained yourself coming up with that bit of absurdity. Why are you so incapable of just saying you wrote something dumb and take it back? Normal people can say that, you know.
K.W., that's not what it says.
"Why are you so incapable of just saying you wrote something dumb and take it back?"
Which part would you have me retract? That it's possible for a seller to sue for discrimination?
I'm not taking it back because it's true.
No, steve. You should take back unequivocally that there is no common law in NYS. The passage you quote doesn't say that. In fact, at the time it was written, the concept of precedent and stare decisis, and the judiciary's role in forming law hadn't even been addressed by US courts. NY has common law. It has decisional case law apart from statutes, regulations, etc. That is what you were wrong about disagreeing with. Citing some passage about the year 1770 doesn't make you right on this.
And suddenly you are limiting your comments to just the POSSIBILITY of suing and no longer standing by your initial post advocating that a suit actually be initiated? You just keep peddling backwards on this thread.
Gcondo declares this thread officially HIJACKED!
Yes you are right, K.W., insofar as I was not clear about what I said about "common law" as including case law. I was specifically referring to the binding nature of uses and customs (common-law copyrights, for instance: Wheaton v. Peters, 1834), which is not recognized in New York after 1777. Case law, as apart from uses and customs, is binding within the appellate divisions of the Supreme Court, and within the state for Appeals Court decisions.
That clarification having been made, I don't retract or correct anything else I said. I'm not backpedaling, either.
Don't know much about co-op boards or their complicated and seemingly completely arbitrary and whimsical approaches, other than to reiterate what TheOtherBoB said. Obviously, you have much less ability to control the possibility of being stuck with difficult neighbors in a condo, but that's the risk that 99.9% of the rest of American homeowners have to deal with--you know, the pretty cul-de-sac with the one house where the teenage son has his jalopy up on concrete blocks in the driveway for eternity, etc. Homeowner and condo associations can do only so much, admittedly, after the fact.
But here's a question for the knowledgeable folks on this board: What happens in a situation where the co-op owner dies and leaves the unit to an heir who wants to move in rather than sell it. Does the board have the right to "approve" the heir and reject him/her from moving in if they deem the heir to be too young/old, whatever?
princeton, it depends on the bylaws of the specific co-op. There is no de-jure right of inheritance unless the surviving party is on the lease, in which case the lease would have to be changed to reflect the new ownership status.
Most coop shares are not freely transferable and as such cannot be willed to another who then has an absolute right to occupy the premises. Generally, most coops allow people already living in the apartment to continue doing so until the estate is settled. Joint tenants and tenants in common may usually assume the shares and live in the coop. Others typically may only assume ownership of the shares and tenancy upon approval of the board. If the board refuses, the estate remains liable for monthlies and all other fees.
Each building's proprietary lease and by-laws and house rules must be consulted though. Little is immutable and each coop can shape the rules as it sees fit except where an alteration would run up against some contravening law.
Thanks stevejhx. "There is no de-jure right of inheritance . . . "!!! And co-op boards have the right to reject a seller's prospective purchaser and prevent the transfer of property in their absolute discretion!!! If Karl Marx were alive, he'd probably be broken-hearted about the failure of communism in the USSR and Eastern Europe, but the perversion of property rights by NYC co-op boards in the epicenter of global capitalism should put a little twinkle back in his eye . . .
K.W., there is neither joint tenancy nor tenancy in common with co-ops - those are real property ownership concepts that are unrelated to lessees, which is what a co-op "owner" is. If two people are on a lease and one dies, the other has the right to stay as the lease is joint and several.
"And co-op boards have the right to reject a seller's prospective purchaser and prevent the transfer of property in their absolute discretion!!!"
No they don't. They cannot reject a purchaser for any reason that is illegal.
"They cannot reject a purchaser for any reason that is illegal."
But they need not disclose WHY they rejected an applicant.
"But they need not disclose WHY they rejected an applicant."
If they're sued they do.
THANK YOU !
Your post pretty much incapsulates the underbelly of the Coop institution.
I Think everyone reading this should research the bill that was introduced by council member Hiram Monserrate, intro 119. It was a bill that would have required Coops to disclose their reasons for rejection. It was defeated by a very aggressive campaign by real estate developers in this town with the assistance of Christine Quinn who originally endorsed the bill then later flipped her position. Reason... unknown.
After the City council election on the 15th write to your new Council members and insist on a bill that would require full transparency of Coops. Not just for the ill informed purchasers but for the shareholders as well. Unfortunately many of the new candidates are also implants for special interest so it may be many years before this corrupt institution is forced to change.
"If wrongdoing can't be proven, then wrongdoing hasn't happened. Period."
That is the biggest pile of trash I've ever heard. You're probably a lawyer and if you're not you should be. That comment speaks volumes about you.
"...We don't manufacture evidence in our courtrooms."
No, you simply distort it or hide it all together.
"...But they need not disclose WHY they rejected an applicant."
Case in point
Run Away!!! At your age you should know better. Go buy a condo or simply rent.
Let the idiot rich and trust fund babies be the victims to this ponzi scheme.
There's a reason why it's nearly impossible to find coops anywhere else on the planet other than New York.
"Christine Quinn who originally endorsed the bill then later flipped her position. Reason... unknown."
There's one reason that explains all Porcine Quinn moves: she's a pig [in my opinion!]. Really.
andwin, the reason that co-ops exist in NY is that before 1964 it was illegal to own property not affixed to the ground (a holdover from pre-1777 English property law). There are co-ops in many places, including Florida and Pennsylvania, but they are not as common - there wasn't that much building in NY from 1964 until the 1980's, when you started to see condominiums as new construction. Conversions went co-ops because the underlying mortgage made it cheaper for developers.
"If they're sued they do."
Then the board members either take the Fifth or respond "I don't recall". As long as there's no paper trail, there's no proof that any laws were broken.
"As long as there's no paper trail, there's no proof that any laws were broken."
The judge will be the judge of that, and lying to a judge is not well looked upon by the judge.
"Why did you reject this black applicant?"
"Uhm, I don't recall."
K.W. - since you were so persnickety with me, don't you feel a need to apologize about your silly comment regarding tenancy in common for co-ops?
Steve, I'm not going to give you a primer on the RE laws on NY. Again, you make a statement of general black letter law, but ignore the particulars. I suggests you bone up on NY laws addressing how coop shares may be owned.
apt - a colossal gf, but sadly true. and the lawyer dou**e? i'm w/o speech.
NYCmatt you've seen too many mafia movies... ever been in court, it's sorta scary....
"But here's a question for the knowledgeable folks on this board: What happens in a situation where the co-op owner dies and leaves the unit to an heir who wants to move in rather than sell it. Does the board have the right to "approve" the heir and reject him/her from moving in if they deem the heir to be too young/old, whatever?"
It's funny, but the MOST OFTEN MISQUOTED CASE/DECISION BY ATTORNEYS in regards to Coop law is EXACTLY on this issue.
I'm going to stress again, this one doesn't sound like a discrimination case. If you don't want to go through the board process, buy a condo ....
But if you do want to buy a co-op, have someone experienced in the application process work with you. This is a thread full of people who would hire pros like SAT tutors in a heartbeat if they wanted to smooth the college application process for their kids, but when it comes to something that lasts more than four years, like where they're going to live, think they can fill out the board applications themselves.
And, as we've seen, sometimes that works, and sometimes it doesn't.
"I suggests you bone up on NY laws addressing how coop shares may be owned."
Owning co-op shares is not owning real estate - it is owning shares in a corporation. Shares in a corporation are indivisible. People who "own" co-ops are renters; they sign a lease, not a deed, and do not own title. It's just like owning shares of any other corporation.
Give us a link, K.W., to prove what you said. Or, just fess up, admit you were wrong.
the only time i didn't use a broker was when i bought my coop. some boards aren't worth convincing. if you need to have someone "make" you presentable, i don't know if it's worth it.
i understand being pissed off at being rejected for what feels like no good reason but i just don't understand wanting to chase after someone who has decided that they don't want to have anything to do with you. personally, professionally and particularly in a place where you live.
nycmatt is not indicative of board members that i know. (thank god.)
biggap thanks for the compliment.
"People who "own" co-ops are renters"
Co-op shareholders are holders of proprietary leases. They're not "renting".
"But if you do want to buy a co-op, have someone experienced in the application process work with you. This is a thread full of people who would hire pros like SAT tutors in a heartbeat if they wanted to smooth the college application process for their kids, but when it comes to something that lasts more than four years, like where they're going to live, think they can fill out the board applications themselves.
And, as we've seen, sometimes that works, and sometimes it doesn't"
Nice. Nothing like a little fear-mongering - classic sales tactic, by the way - dressed up as front_porch sweetness and light.
"Co-op shareholders are holders of proprietary leases. They're not "renting"."
A lease is a lease. It is not title. No co-op owner owns title to real property. You have tenancy based on a lease. The lessor is the co-op corporation.
If you don't want to say "renter," say "lessee." Works for me!
"Nice. Nothing like a little fear-mongering - classic sales tactic, by the way - dressed up as front_porch sweetness and light."
I agree completely with ali on this. The "I hate brokers" sentiment is so strong, it shocks me sometimes; apparently many would do their own dentistry, as well.
"apparently many would do their own dentistry, as well"
there was some discussion of straw man arguments on another thread earlier today. you should check it out.
why not your own heart surgery or neuro surgery?
I just bought a coop and went through the board process. We had a buyer's broker. I have to say, while not terribly helpful in finding an apartment, bidding or negotiating, they were EXTREMELY helpful in helping us prepare the board package, making sure every i was dotted and t was crosssed, etc. front_porch is right, but remember too a buyer's broker is FREE to you so why not use one, at least for the complicated board application process.
two of many reasons:
1. this free stuff is very, very questionable.
2. the seller's broker (who in the event you don't have a broker is even more motivated) is willing and able to do everything for the board package. they want the deal to close even more than you do.
I assure you that this is the FIRST time today I have been accused of sweetness and/or light.
And while I like the argument that buyer's brokers are free, I'm certainly NOT. When I do real estate (I'm a writer too), I make a couple hundred dollars an hour. That's way less than my financial/businessy/creative clients make, but I by no means think I'm cheap, let alone free.
But I DO facilitate transactions. The original poster here wanted to buy a co-op, and presumably there was also a seller's broker, and yet the target co-op remains unsold and unbought. I'm just pointing out that there's an alternative in additon to a) repeating that failed deal or b) paying more money to buy a condo.
IMPORTANT BASIC PRINCIPLE THAT PEOPLE ARE MISSING HERE: !!!
Sorry to shout. Stevejhx, I often agree with you, but I have a basic point of information (maybe also for generalogoun and apt23).
The principle of not being able to discriminate in housing against a protected class is, indeed, as you note, a sacred one, and the law has little tolerance for it (once proved - - but that's a whole different story).
But, there's another big principle at work here, one that pertains to co-op boards, and also to entities like partnerships (limited partnerships). Equally sacred, YOU CAN'T FORCE SOMEONE TO BE IN BUSINESS (partnership) WITH SOMEBODY THEY DON'T WANT TO. The best analogy is between regular corporations (C-corps) vs. LPs.
A corporation is, by definition, an independent perpetual entity, that over time will be owned and run by a series of different people. A partnership is more like a family business (I'm talking in very rough terms here) - - say you own a laundromat with your two brothers, and it's a partnership. When one of the partners dies, the heirs are not automatically entitled to step into the departed partner's shoes. The normal course of affairs is for the partnership to dissolve (there can be exceptions, but I'm talking about the plain-vanilla case). The reason for dissolution is essentially that no one can be compelled to partner up with someone they didn't explicitly consent to. The implications, then, are that the remaining partners have a lopsided veto-power that can usurp what we'd consider the normal rights of a prospective new entrant into the partnership. (If one of the brothers doesn't like the widowed sister in law, even if the third brother did like her, the majority vote of the "pro" brother plus the s-i-law, isn't enough to force the other brother to be in business with her.)
Co-ops are more like partnerships than traditional corporations. Co-op members have much more leeway to be arbitrary in their preferences, because they're "getting in bed" with new co-op members, and the law grants them much wider leeway to be as picky as they want. Sorry to belabor the example, but it's more like forcing someone to accept a marriage partner, than it is to merely bringing a new investor (here, co-op member) on board.
It's not just a question of, "does the investor have the money to participate?" in this co-op. It's more like, "do I want to [marry] this person for life?"
So, that's what makes the co-op seem at once like both fish and fowl. Yes, it's housing, and you can't discriminate in supplying housing. But also, it's like a marriage, and you can't force someone to marry someone not of their choosing. Clearly, in a case like the OPs', the two principles are sorely in conflict. But what the "suing a co-op is useless" folks are saying here is just an acknowledgement of the unusual status of a co-op board, where they're allowed so much discretion that it effectively trumps the discrimination or arbitrariness issues. Now, I think it amounts to the exploiting of a technicality, but the broader principle of free choice in business partnerships is, in its own way, sacred.
ali, i like and respect you, really i do. but it's not generally in the buyers' interests to accommodate assholes. if you have your heart set on one apartment, then maybe. but i'd argue that's not a hugely sensible strategy to begin with, unless your elderly parent would be more easily watched two flights down.
and i think that this preoccupation with being conciliatory toward coop boards only perpetuates the system, which i don't think is always healthy, and is frequently toxic.
there is almost always an alternative that doesn't involve such compromise. and you know that i think brokers can add value. i just think the coop board situation in NYC is an ancient model, and i don't think that perpetuating it is wise. the financial requirements i have no problems with generally. but woe to the seller who needs to sell when the neighbors (and the coop board member) wishes to retain value, and even thinks that they may have to sell next year.
today i was talking to some friends about madonna's purchase, and school choice for lourdes (rumor, chapin. rumor, pa not happy). somebody mentioned her failed attempt to purchase a coop a few years ago. i understand the issues, really i do, with having her as a resident, but how can you seriously not allow today someone with that cash not to alleviate some seller's need? as a buyer i'd be very, very nervous. coop boards often don't react well in troubled times.
hrdnitlr, excellent summary.
"there is almost always an alternative that doesn't involve such compromise."
In the low end definitely. In the mid-end, probably. In the high to very high end, probably not. If you are looking to get into a 'premiere" building, they are pretty much all going to be a tremendous PITA. Face it, that's part of the allure: to get into the country club.
PS I would NEVER in a million years want to live in a building with Madonna. A good reason to buy a Coop.
30yrs, on many levels i agree with you about madonna. but i also don't know if dick fuld would be my neighbor of choice. or madoff. the whole concept of exclusivity seems to be fraying, is my point. (although the sadly named dick fuld seemed to do OK).
but 30yrs, given that the high end has contracted so much, is there any real possibility (other than another ginormous bubble) for that to maintain itself? we see estate sales, distress sales, etc.) i think that the efforts to reinflate will of course help many of the wealthy, but given the additional supply in condos and the horrible conditions among "some" of the wealthy, don't you see some major stress?
btw, i know the prestige arguments. and i also know a sort of highly-paid individual who sold a lovely 2/2 in a prestigious coop to buy at the Lucida.
Steve: re: ownership of shares as tenants is common: you are wrong wrong wrong that it cannot be done. You're not getting an apology from me and now I'm also calling your position on this uninformed and your willingness to mouth off on things you obviously don't understand is reckless.
Duh, we all know coops issue shares and you own the shares on not real property. But these shares are different than common stock in General Electric. The IRS decided long ago, for example, that coop shares are "real property" for tax purposes. That is why you can deduct on taxes the interest you pay on the money your borrowed to buy the shares. In addition, while it is up to each coop to decide what forms of ownership it will approve, many do permit ownership of coop shares as tenants in common.
Stevie, you can pontificate all you want on this, but you are wrong on this, just as you were when you absurdly suggested there is no "common law" in NY. Sleeping at a Holiday Inn last night cannot magically make you a lawyer and on legal points such as this, you really ought to defer to those who do know. There's a reason it is often said "a little knowledge of the law is a dangerous thing." Your posts here illustrate that.
AR: most of the apartments in the "REALLY" good buildings are strictly old money. They wouldn't let Madoff in (unless things have changed more than I thought recently). These people all own all cash, and rather than being a multiple of their net worth (as is typical of a lot of the rest of the market), the apartment price is a fraction of their net worth. Sp when you say "for that to maintain itself?", if you are talking about prices, no. Prices will NOT maintain at the former levels. But this will NOT stop anyone in these Coops from maintaining the exact same strict standards they have had for decades, through various other recessions. In most of these buildings, people can lose huge mass amounts of money, and still not be belly up on these units. And even if they were, they wouldn't find sympathy from their boards, they would face ridicule because "that doesn't happen to our kind".
Again, I see major stress on pricing. What you may find is something I recently found out is going on in Cooperative Village: I think I've made it clear that I thought that buying in Coop Village was a mistake for most in the past few years because they were buying into a game where they were in dear and thousands of others were in cheap, and that they could never sell (in a downturn) because there would always be tons who could and would undercut them and STILL make a mint windfall. I've also been rather surprised not to see it happening, except i know that the a number of the Boards down there wouldn't let low sales go through. But at the same time, they are "flip tax crack addicts" - they are so used to funding non-capital/operating expenses with "one shot" (i.e. flip tax) income that if the flip taxes stopped coming, they couldn't politically raise the maintenance to cover it.
Well, here's what I found out a couple of weeks ago from a friend who's been living (renting) down there: there ARE fire sales going on. but it's "known" that these can't get leaked out to the general public. They are all up in the various laundry rooms for sale to existing shareholders, relatives of existing shareholders, etc.
What I'm saying is you may see in these buildings sales that are shaded from the public eye. I don't know how they are going to get around ACRIS, but I'm sure some clever rich person's attorney will come up with something good, like charging and extra flip tax which they give to the city to make it look like the apartments sold at higher prices (that's just a WILD speculation; I'm just using it as a far fetched example).
Also, I think a lot of the high end are in apartments that they never have to move from. what I mean by this is: you buy a studio, eventually you need a one bedroom. You buy a one bedroom, you eventually need a two bedroom. But if you're in 5,000sf 12 room, do you ever really "have" to find a bigger place? So most of them sit on their paper losses. Look, even in the boom, you didn't see NEARLY as much turnover in these buildings as in lesser buildings. There are reasonably sized buildings which went through the entire 15+ year boom with like 3 sales.
We all like to think the "rich"; aren't really different than we are. But when you're talking about old money, they really are different in many many ways, and one of them is that unless it's some disowned drunk uncle, we don't even meet them socially. I mean, literally, in these building you need to put on a sport coat to take out your trash 9if one of your servants has forgotten to do it for you).
"In addition, while it is up to each coop to decide what forms of ownership it will approve, many do permit ownership of coop shares as tenants in common."
If I'm remembering correctly, it wasn't all that long ago that legally corporations couldn't own residential Coopss.
30yrs - you are the major voice of reason, long experience, knowledge of the marketplace, and common sense on this board. A rral voice of wisdom and not just wishful thinking.
"today i was talking to some friends about madonna's purchase, and school choice for lourdes (rumor, chapin. rumor, pa not happy). somebody mentioned her failed attempt to purchase a coop a few years ago. i understand the issues, really i do, with having her as a resident, but how can you seriously not allow today someone with that cash not to alleviate some seller's need?"
Because we as a board have to weigh the needs of ALL the shareholders, not just the seller's. And if bringing in a high-maintenance neighbor affects the quality of life of the other residents, we're obligated to turn her down.
Madonna's last turndown was from a board in a building where she lived, and I believe they prevented her from buying a FIFTH apartment in the building to add to her mega-unit complete with beauty salon and gym. To be wary of buyer concentration is a reasonable board duty, as it protects the other shareholders from a super-voter.
The other problem with celebs -- and I've hit this even with renters -- is that boards are concerned that the existence of their security people is going to make other residents nervous. One buys into a co-op to have peace and quiet, not to see goons running around.
I understand that it's in the buyer's interest not to accomodate a-holes, but submitting to the due diligence of people who will have to row the same financial boat as you doesn't have to be that. As a society, we've hit such a point of entitlement that we feel our privacy is the only right that exists. Damn the neighbors who want their investment and their kids to be secure!
The OP's story is of a financial background where he had complex real estate interests (which could seem shady if not explained) and he omitted/concealed his prior involvement with a co-op governance system. It's possible that to the board, the applicant seemed like the one who was asking for a lot of accommodation.
front-porch: I always thought Madonna's issues were at 41 CPW, not fifth ave.?
ali, just idle gossip, mostly. although it does raise interesting issues in this time of scarcity of big-time buyers. and, once again, why not reject prior to the interview?
I read a story about celebrity neighbors in NYC. A shareholder was waiting for an elevator & when it came, the bodyguard put their hand out in front of the shareholder's face: "You are not getting on this elevator." LOVELY neighbors -
Madona was at Harperly Hall, not a fabulous building (until she bought there), and she did wind up being allowed to purchase the unit above hers to duplex
she bought a townhouse in the east 80's (east of lex i think) in the last 6 months or so didnt she?
Madge bought a bunch of apartments in that dreary glorified tenement on CPW, and had her untalented brother redesign them into the worst, badly-flowing floorplan I've ever seen.
And why did I see it? For a couple of years, she tried aggressively to swap home-ownership with people throughout the UES and TriBeCa. I know one of the townhouse owners who considered the trade, and that family toured Madge's place. I peeked at the plan.
Glad she finally found that huge double-house in Yorkville, even though I'm not a fan. But I feel sorry for her neighbors for having a celebrity in their midst. Of course, they can just totally ignore her.
i wonder what that will do for the prices of other townhomes on her street. papparazzi and so forth all over the place
"Most of the apartments in the "REALLY" good buildings are strictly old money. They wouldn't let Madoff in (unless things have changed more than I thought recently)." Well, Madoff's "dope-in-crime", Ezra Merkin, was able to wedge his obese frame into 740 Park Ave.
30yrs_RE_20_in_REO--like many others on this board, I enormously respect your knowledgeable, lucid and always reasonable posts, and I don't doubt you have great deal more insight into the NYC "old money" set through your contacts and business connections than I do--definitely NOT my circle. But my gut suggests that there cannot be all that many "old money" types out there who can continue to lock up the premier buildings indefinitely with a "Kindly do not let the door hit your ass on the way out, good sir and madam," delivered with impeccable breeding and good taste, of course.
Who, exactly, are these old money types--Vanderbilts, Rockefellers, Johnsons . . . Hiltons . . . ? Unless these families are relatively infertile and unprolific, one problem with "old money" is that it can start getting quite diluted over several generations. I would speculate that although Paris Hilton may be a natural extrovert and exhibitionist, she (along with Kathy and Nicky) entered the limelight to monetize their family brand name and "social standing" because the trust fund distributions were a little too thin to support the lifestyle they felt was their due.
So, the grande dames and white-haired gentlemen can hang on for a decade or three or four, but at some point, things start fraying, even in the best families (case in point, Brooke Astor's place).
30yrs_RE_20_in_REO - your posts are very enlightening, thanks.
what do you mean by Cooperative Village? thanks.
"I read a story about celebrity neighbors in NYC. A shareholder was waiting for an elevator & when it came, the bodyguard put their hand out in front of the shareholder's face: "You are not getting on this elevator." LOVELY neighbors -"
I think that was the story I told about Madonna when she was LOOKING to buy an apartment and was working with an agent in my office.
"what do you mean by Cooperative Village? thanks."
The Grand Street Mitchell-Lama complexes.
princetonbabe: "But my gut suggests that there cannot be all that many "old money" types out there who can continue to lock up the premier buildings indefinitely..."
But there doesn't need to be all that many. Not many buildings at that rarified level, and not many apartments in each building. Take 834 Fifth. Big building, but only 24 apartments, and a sale every couple of years. When the building went bust in the '30s, most of the original owners stayed on (having lost the cash they'd invested,) paying enormous rents instead of enormous maintenance. Then when MetLife took it co-op again 20+ years later they bought *again* and went back to maintenance instead of rent. I know of one apartment there that's only on its second owner since 1931. Lots of stories like that.
Not that there isn't turnover, but there is much less of it, as 30yrs said. It's amazing how long a couple hundred million (or its equivalent 70 years ago) can last, even with taxes and kids.
"Well, Madoff's "dope-in-crime", Ezra Merkin, was able to wedge his obese frame into 740 Park Ave. "
740 Park Ave has always been known as different in their criteria. It's always been less blue blood and more "big swinging dick". In other words, they want the richest people in the world as owners, not the one's with the most exclusive provenance. He, they let Kikes and Chinks buy in there, how exclusive could it be? (I'm Jewish and married to an Asian, so relax).
NWT, i know a number of people who sold in "top" buildings recently. and i know a few who would really like to. one is a family, very well known, who can afford to live but not so well on the income and expense ratio. half floor park avenue apartment, 700s or low 800s. intentionally obscure because..
and i know a few others, some who have moved, some who never moved in (flowers), who have a crap load of high end stuff out there.
i think this development round changed things a bit. not entirely, because of course in the condos you also had the russians, etc. but you still had a large amount of higher end properties that some wealthy people would PREFER to coops. not just choose, but back in the day they might have been happier.
of course that wasn't so huge, but then again that market isn't so huge. and so on, and so on...
i think i didn't make something clear that is becoming clear to me. many very good buildings, top but not the "top", if you know what i mean, had zero listings from 2004-07. and now that's not true.
maybe that should be a separate thread, because I sense a very interesting discussion coming on. I know it will take you some time, but could you flesh that out, especially with examples and do a thread with your thesis?
30yrs, i truly appreciate your support here. we are at an unusual time, no? because ACRIS gives me info starting generally in 2004. as anyone who has tried to do a fabulous research project on the graduate level knows, sometimes your best opportunities come with a certain time frame.
Well, the problem is that we won't be able to make as definitive statements about what occurred 2004 - 2007 (as opposed to earlier than that) although some here may have private data points to help with that. But it will be interesting to see post 2007 vs pre-2007, even if "pre" may not go as far back as we would want.
and i've got some lovely tarty friends who might be of some help. it would be a fascinating history and not done just as tht boring as crap book on something Park Avene (i'm sorry i'm showing my lack of qualifications here, is it 720?) was.
Did you find a new co-op? You might have saved some major money by being rejected.
ab_11218 - can you tell me the name of the case in your building you mentioned earlier where the coop board was sued because they rejected buyers unfairly? Or if anyone else happens to know similar cases that were successful, it would be greatly appreciated.
about 2 years ago
ignore this person
another thing it could be is revenge for the seller doing something. this ocurred in my building. one apartment had 3 turndowns. the seller sued and won. unfortunately, it was a lot of time wasted.
>> it could be is revenge for the seller doing something
Like selling FSBO?
I was in contract on a lovely apartment about 10 years ago... seller fsbo. No broker on either side of the transaction. Seller was an attorney. We never got an interview. Never found out why -- we were more than qualified financially. I became friendly with the seller after sharing the unfortunate event... seller called me a few months later bitching about the board turning buyer # 2 down as well...
Seller sold successfully on the third attempt, using the "building's broker" who was on the board.
Litigate? But the seller just wanted out.
I would ask the OP if there were brokers on both side of the deal... I have heard about more than a few turndowns of FSBOs.
PS -- hindsight: the turndown was a great experience and saved me about $200,000. Many times, these situations are "always for the best".
This thread's two years and still kickin. The classics never die.
fsbo88, Your observations sum it up nicely. Congrats on dodging a bullet.
If rejected purchasers really want to make a difference they should keep in touch with the owners of the apartment and make yourself available to them when they inevitable end up in a legal battle with the Coop over malicious interference.
The list of unscrupulous reasons that coop boards may reject is too long to list. (although many are right here in this thread). As ab_11218 points out, sometimes they do it just for the sport.
And the fact that "they" do not have to answer to you OR the shareholder should tell you a little about what's in store for you if you do end up "buying" a Coop.
You can find dozens of horror stories on this board alone, hundreds via google.
Coops are dangerous and their conduct in almost any other form of commerce would be considered criminal. But through very clever manipulation of the Business Corporation Law (BCL) over the past 30 years or so they now function as an independent municipality who does not even have to answer to the courts in most situations.
How many other markets (real estate or otherwise) can prevent an owner from selling?
There needs to be a transparent process with clear cut criteria that can be measured and planned for. Anything short of that IS discrimination. But there is barely a legal mechanism in place to challenge it nor a governmental or public advocate in place to police it.
And as far as the assertion that "price protection" wouldn't get to the interview stage is simply nonsense. It gives them plausible deniability. Maybe 15 years ago that would have happened but these parasites keep evolving to meet each challenge that they are faced with.
It always astonishes me how apparently intelligent people are tripping over themselves to buy into this ponzi scheme.
andwin, you may have told us before, but I forget. What was your co-op trauma?
Love this thread. Thanks for the update to fsbo88! As a younger buyer in Manhattan, I vote with my money against coops. The threat of "a frat house" next door is utter bs, and certainly not enough to justify trusting your financials to an obscure legal entity like the coop board.
The ability to let, inherit, and liquefy the asset is clearly a better investment, even for a primary residence. My hope is for coops to continue to decline in value as condos and condops proliferate. Cheers all.
"'The threat of "a frat house" next door is utter bs"
Actually it's not.
isn't the "frat house next door" situation more common in rental buildings? (i won't deny that, long ago, i contributed to said nuisance)
I live in a co-op in a 1 bedroom apartment. My wife gave birth to our son and while she was pregnant we decided to purchase the apartment next door to us (a studio) to expand. There are tons of combos in my building. I met all of the ratios and financial requirements of recent sales in the building and was paying top price for the adjacent apartment. I was rejected by the board and no reason was given to me. I have since sold my apartment to a cash buyer who had even better ratios than myself and 20X the annual carrying charges in liquid assets. My board has rejected the sale of my apartment and again would not give me a reason In the time between these 2 incidents over a dozen other apartments have sold.
Is there any recourse that I have since it seems that I cannot buy, cannot sell and no guidance is given about how I can proceed?
Don't disclose your address but tell us more about your building.
The studio: a board member living nearby didn't want the noise.
Your own place: The price.
I agree with crescent on your place as the most likely problem. If not that, then we need more info.
With the combo: Did you have 2 years' worth of monthly maintenance plus whatever debt service you planned, in the bank, in liquid assets, at closing? Plus enough money to cover the construction costs?
Often combos end up with maintenance charges that are higher per square foot than other kinds of apartments.
Do you have dogs?
The Board's afraid of the dawg's music.
bnash - become the neighbor from hell, when you leave the house play the music as loud as you can, borrow a dog that thinks the carpet is street, invite horrible relatives to hang out in your common space. Trust me your next buyer will be approved. Sounds sneaky but the board members probably don't like you already and look forward to making life hard for you.
Bnash: when was the last combo approved? Look through the DOB records, pretty straightforward to figure out. Is there anyone on the board with whom you have at least a smiley-elevator relationship? Leave them a note with your phone number and ask them to call or ask the staff who the most approachable member is, and maybe make a house call. Be very, very obsequious - it can't hurt.
Maybe ask a broker who has sold multiple listings in the building under the current regime. Also re-list with said broker. Sometimes, it's better to go with the flow if you want to be out of there. Don't waste your energy being the neighbor from hell.
How large is the building? Would combining the two apartments bring your total share allotment out of proportion with other tenants' shares? I've heard of this happening but it seems odd that it would be the case with a combo of two relatively small apartments unless it's already a very small building...