Renovation Plans at Co-op Interview

Not knowing the building or your plans, it is hard to be very specific in response to your question, AGP. But a few things...

1. You don't want to close if you can't renovate BUT you *have* to close unless the board turns you down, and you should already have gotten a good idea of whether they will approve your plans (before you signed the contract).

2. If (as appears) you don't yet know what the board's attitude is about your renovation and you don't want to buy if you can't, you must make sure the renovation is discussed. Chances are, you will only get a vague response ("submit your plans ... this committee does not directly review plans ...") with the best likely response being "we've approved similar plans in the past".

3. The only downside to the discussion that I see is a possible claim by your seller that you intentionally blew the interview by volunteering the renovation topic, but this is easily finessed if you are prepared. Talk to your agent (sounds like there isn't one) and lawyer first, but you should easily be able to drop enough hints about your plans to prompt someone to ask. Worst case, you ask at the end after someone says "do you have any questions for the board?"

4. Are your finances air tight in terms of building requirements? If you absolutely have enough liquid assets *after* taking into account the renovation costs, the board should have no problem; if your assets are borderline, consult (your agent and) lawyer first, but they may have more specific questions about finances so be prepared. Of course, if you are then borderline they may turn you down, but you seem to think that is a good think to happen so that is a feature, not a bug.

5. Perhaps I should have started with the good news, but if you are not moving gas, water or electrical lines (or, not moving them far; I see you are "keeping the same general footprint") the rest of the renovation is mere carpentry and most boards simply don't care about the details of carpentry work. In which case, your plans will be approved without controversy. But if you had asked the right people about this in advance, you'd have known all this before you signed the contract, most likely.

Good luck, AGP!

I would not bring architectural plans to the interview, if that's what your asking. That would be rude and presumptuous.

If you are asked during the interview whether you plan to renovate, I would be forthright that you would like to do a renovation of the kitchen keeping the same basic footprint, and that you would of course submit plans at the appropriate time. Some brokers advise you to hedge or even to lie, but IMO that sets you up for bad relations with the board from the start. "Oh no, we're not going to renovate...." but then you hand over a renovation packet at closing.

As Smattingly alluded to, your bylaws and lease probably give you some right to replace like with like with just a rubber stamp. Ask your attorney if this is the case.

Good answer, SMattingly.

Why is raising the issue of renovations such a delicate issue for a buyer? As you said, buyers probly don't want to close if they can't reno, but there's such a fear of discussing the reno at the interview, even though the Bd will later approve/disapprove.

I believe the answer is simple dwell Boards like to be in control. To them there is no automatic assumption a buyer is able to make that they will be approved or that they would approve their renovation plans. If someone only wants to buy if they are able to renovate the way they want then a coop is not for them. There are just no guarantees, I have had brokers tell me oh this building has a lenient board, but they would never outright say it will get approved.

Basic point is years ago I took over as the shareholder of record at a Lincoln Towers building. There was no mortgage, I was making more than enough to cover maintenance, had savings, etc. They took months just to get me to the interview point, it was over the summer, my brother had already moved to california and I was not able to move in because of the board interview. At the interview when they were asking questions, someone mentioned the gym and I said I was already paying which set some woman off on how they had not even accepted me yet. i told her it was the deal with my brother because they took so long to get me to an interview he already left. Later I was taken aside by another board member and told to ignore the woman and welcome to the building. but seriously they could have decided to not approve me which seems crazy when the apartment is owned outright.

LAD: I did not mean to imply that bylaws and lease give any rights here (in fact, they only give rights to board to approve/disapprove both buyers and reno plans). But *nearly all* boards will OK a kitchen reno that just moves the 'furniture' around.

DWELL: I don't buy into it, but the Conventional Wisdom behind advice to not mention reno plans at interviews unless asked is to avoid risk that someone on board will take exception to something you say. That's the same reason that some agents advise buyers at interviews to say as little as possible. Personally, in most downtown coops that I have seen this is a very overblown concern, but that is the CW. In this case, AGP seems to want to make sure this is discussed, so she should make sure this is discussed (and understand the [small] risks).

MIKEV: Yes, boards like to be in control, and yes, there are no guarantees. But most downtown boards will have someone who can give a good faith response to a renovation question in advance, usually of the "we have never had problems with plans like that in the past" variety. And most downtown boards would work with a shareholder presenting plans to eliminate the small issues that might cause issues in a reno plan. Not knowing where AGP is in contract, I can't say.

And the problem you (almost) had at Lincoln Towers is the kind of experience that supports the CW in my response to Dwell, a problem that an agent might have helped you avoid in that case (I realize there was no need for one in your case) and often helps buyers avoid in other cases, by knowing what ticklish points there are in a particular building.

Don't bring plans or drawings to the interview. The board will likely ask you during the interview what, if any, renovations you are planning. You can mention your plans at that time.

Do keep in mind that when doing a kitchen reno you will need to adhere to your building's wet-over-dry rules--meaning you won't be permitted to move any water-producing objects (sink, DW, etc) out of the designated wet zone.

Don't bring it up unless they ask. If they ask, tell them that the kitchen needs some cosmetic updates. Be honest, but vague, and do not volunteer any info.

SMattingly, isn't there usually a reasonable requirement for renovations that's contained in the Lease?

We have the standard "shall not unreasonably withhold consent" language for alterations. Our Board has the view that we have no power to reject a like-for-like renovation as long as the shareholder notifies us of his or her plans, is current on maintenance, complies with all applicable building code, and conducts the renovation in accordance with the house rules.

Dwell,

imagine a building where all the kitchens are twenty years old, and that's what all the board members have, and you show up at the interview, and say, "wow, we can't wait to get rid of that horror of a kitchen" ... how did you just make them feel about their homes?

Sandy is right, this can be a very building-specific topic, and a good agent will know his/her building's board.

ali r.
DG Neary Realty

LAD -- I was not dealing with this on the level of rights but practicalities. *IF* a board wanted to do something that shareholder thought was unreasonable in response to a renovation request, the Business Judgment Rule provides a lot of cover, even in a "shall not unreasonably withhold consent" situation. I agree with your basic premise: that board won't "reject a like-for-like renovation", but leave wiggle room for any given board to do something ... irrational. (Not that they would be right, just that they sometimes do.)

If renovations are a "must" for you, you would be foolish not to raise it during the interview, imo. But to do so appropriately (as I'm sure you would) and not in a confrontational or challenging way (which I'm sure you wouldn't). Perhaps request a copy of the building alteration policies ahead of time. When asked if you have reviewed the house rules, you could volunteer that you have and that you've also taken a look at the alteration policies. That will lead to a discussion of what you intend to do, and you could discuss cabinetry and appliance updates or some minor movement of appliances within the existing footprint. You would acknowledge that you have no intention of seeking permission to extend the "wet area" of the kitchen in any way (that would be a siren and red flag to the board since it is virtually never permitted). It is always good to speak to the super to get his/her read on the prospective plans and recommendations for contractors that s/he feels has done a good job in the building in the past. These things, properly presented, show you are someone sensitive to feeling out the "way things are done" in the coop and that you aren't some maverick trouble maker. You can never make friends with the super quickly enough. If these things work against you in an interview, it may not be the right building for you anyway, so nothing lost.

This is the type of thing I LOVE having a broker for--be it buy side or the sell-side broker. Let them do the initial asking and then you follow up. They can provide you with non-tangible info like the super's personality, what the building has liked or rejected in the past, whether board members themselves have done recent renos, if a board member is adjacent to your apt and likely to be concerned in a selfish way about reno noise and dust, etc. Info is king and a broker can really help you get it in this kind of situation; and not only can they help nose around, but if something backfires or they rub someone the wrong way, it isn't you who catches the direct heat--the broker can take most of the flack. It's an advantage of using an intermediary in negotiations so long as you remain in control and in charge. It's a skill, but I find it very effective when done well.