Proprietary lease

The proprietary lease per se doesn't matter, as the co-op will just change the date sometime between now and then.

The cons, then, are just the generic small-coop issues. E.g., if one owner craps out, the other nine's maintenance could go up by 11% to cover the shortfall until the co-op recovers the arrears.

Unless, of course, the co-op doesn't own the land and the proprietary lease's expiration coincides with the ground lease's expiration.

The downside is that your bank may not be willing to lend you the money for your mortgage if the Proprietary Lease expires before the term of your mortgage. The bank may force the Cooperative or the managing agent to write a letter noting that at the next Annual Meeting or a special meeting of the Shareholders at large that the Expiration Date of the lease will be extended. You can extend it to the end of the Century. I wouldn't expect that a Cooperative would allow itself to expire, so you should make sure that they have an intention to rectify the situation in the near future.

I believe the coop owns the land. And the residents are fairly affluent (with the potentia exception of me, of course). And I am just looking for a 5/1 ARM. Was just curious to see if there would be reasons why a coop might argue against extending the lease. Thanks.

It just gets extended and/or renewed by a vote of the shareholders. Perfunctory.

Why would the co-op "argue against extending the lease" since the co-op are the shareholders?

Are you sure a small co-op will allow you to do a 5/1 ARM? Not all are going to look favorably on that. I'd see if you can find out if it's been done in the (recent) past and/or have your broker float the idea by the board.

Realize also that small co-ops may involve a bit of a process when it comes to your mortgage. Our mortgage broker had to clear our < 10 unit co-op with banks and get a Fannie Mae Waiver in place(Fannie Mae apparently doesn't like when one owner holds more than 10% of the shares, which in a small co-op, nearly everyone does.) You'll benefit from a mortgage broker who has the networks in banks to do this quickly and efficiently (and has backup options if all else fails).

If you're below 5 units, mortgages can be very tricky/hard and you may end up with a higher rate or having to turn to a portfolio lender.

careful with those 5/1's. Most can reset with an additional 5 pts. of interest. The co-op, if they would not rule it out of hand altogether, would look very, very closely at your finances. If you are at the low end of financial range in that building, I would say you chances for approval are not good.