co-op foreclosure

I would advise trying your best to ascertain whether the current owners are cooperating. If yes, then should not be a problem at all. If not, then it may be a very long and tedious process that would require law enforcement to get involved. There are plenty of horror stories out there about existing owners refusing to leave the premises or even damaging the premises (ripping the copper wire out of the wall) before vacating.

thanks. is the process of eviction different for Co-ops than condos?

I would not buy an apt. with a tenant in place. Evicting them could take years. Unlike condos, a coop has a proprietary lease. One never knows what the tenant could claim.

in this case the occupants owned the apartment before the bank took the shares to foreclosure. I dont think they have a proprietary lease . Am I missing something, I don't know real estate law?

That's assuming the co-op board even approves you in the first place. Co-op foreclosures are particularly thorny if the board is not cooperating with the foreclosure process.

TECHNICALLY, the bank cannot take ownership of the physical unit; it can only take ownership of the shares; the apartment itself is always and forever the physical property of the building. This, of course, can (and has) been challenged. But expect that legal challenge to add about another year and a half to your sale.

And a foreclosure sale not only hurts the building's comps, it leaves a black mark on the building itself. If the shareholder is a beloved longtime resident, the board can simply reject each and every prospective buyer ad infinitum until such time as the shareholder gets back on his/her financial feet.

If the board wants the shareholder out, you've at least got an ally in this process. But if it doesn't, it could be *years* and close to a full-time legal fight before you ever call that apartment "home".

Many thanks for the input. Assuming I am successful in buying the place and the board accepts me, it sounds like I need to evict the occupants thru a holdover proceeding in housing court, or an ejectment action in Supreme court. If this is right, do you know how long this process typically takes?

Tribecaa, that is an enormous assumption.

I personally know of only ONE board that willingly worked with the new buyer in a foreclosure proceeding (out of at least a dozen cases I know of).

But assuming you hit the lottery, optimistically, if everything goes your way, it'll be at least a year.

Assuming the foreclosed owner doesn't declare bankruptcy. If THAT happens, add on another year.

How badly do you really want this apartment?

I would only be intersted if I could make a good return on it. I have no idea if the bank would sell it to me for below the mortgage owed. But they did, it might be interesting. I would have to factor in the cost of lawyers. Urgghhh.

You may get some helpful answers on this SE Board; however, you really should immediately take your questions to a Manhattan Real Estate Attorney; presumably the Attorney who will be handling your Purchase.

Preferred, should be the Attorney who has handled Cooperative Foreclosure Sales...

You should be able to get a few Attorney recommendations here, and from anyone in your personal/professional circle.
Contact a few Attorneys by phone.
State your case and ask your questions.
Gut instincts should tell you who you'd like to follow-up with for an In-Office visit...

Here are 2 you might consider:

Steven Ebert O] 212-290-4000 Extension 304 Steven.Ebert@EJLaw.net

Eric Gonchar O] 212-376-5588 C] 917-734-2231 GoncharLaw@gmail.com

GOOD LUCK!
Manhattan Real Estate is a process of one Adventure after another!

Despite what NYCMatt says, most co-ops will cooperate with the bank in a foreclosure proceeding for a few reasons.

If the co-op owner has defaulted on their mortgage, they have also more than likely defaulted on their monthly maintenance. Technically, the bank is responsible for the maintenance and then has recourse to recover it from the owner, but the bank may not be so quick as to hand over the money to the co-op (especially if the co-op is rejecting everyone trying to buy the place) and so the bank may withhold payment of accumulated maintenance until a sale is completed. So it's in the co-op's best interest to cooperate with the bank and foreclose on the deadbeat owner and replace them with a more financially solvent owner.

But yeah, it could take awhile.

"If the co-op owner has defaulted on their mortgage, they have also more than likely defaulted on their monthly maintenance."

Another huge assumption.

In half of the cases I know of, while the shareholders defaulted on the mortgage, they remained current on the maintenance (at the very least, to keep the building happy so IT wouldn't initiate eviction proceedings).

thanks all. this may too big a bite to chew for a individual investor like me. Probably best left to the investment firms.

Every coop owner has a proprietary lease.

Landlord tenant court in Manhattan still favors the tenant that's in the eviction proceeding. Beware.

Do check out the owner. I lived in a place where there was a foreclosure. The owner hadn't paid either her mortgage or maintenance in 2 years because she discovered it takes a long for court ordered evictions. When the owner finally moved out, the new owner discovered the toilets, tub, sinks, and kitchen cabinets had been destroyed with a sledge hammer. Paint was poured all over the wooden floors.

Odd comments on this thread. My understanding is that, while the board has the right to review prospective buyers after foreclosure, the Aztech agreement gives the bank the unconditional right to kick the defaulter out and have the apartment sit vacant. So firstly, it's not clear that the board could do anything to keep the old tenant in place. Moreover, such a strategy entails the risk that the bank sues the building claiming a violation of the Aztech agreement, which would be tremendously costly for other residents (legal fees) and is therefore highly irresponsible. In addition, most boards know that once a resident becomes troublesome, they tend to stay troublesome.

Most likely outcome is that the bank and board cooperate to remove the owner as rapidly as possible and remarket the apartment. That is what the board's lawyer would likely advise.

The OP should ask the listing agent to clarify whether the bank-seller is promising to deliver the premises vacant. Normally banks do not sell foreclosed homes with the old owners still hanging out in them. This may also be a time where co-op title insurance is worth considering.

What is co-op title insurance?

Lookup "eagle 9 policy"

No way would I buy a co-op foreclosure without one.

Old thread, but responding to the comments by @mucuk. His comment assumes that the apartment was not purchased before the standardization of the Aztech agreement. If there was no agreement in place, then you don't know what to assume. I was in a similar situation to tribecaa looking to buy a foreclosed co-op. The apartment was empty, and the foreclosure auction had been completed years ago. However the old owner still remained in possession of the apartment -- I assume this was due to something in the co-op's proprietary lease. Over a year has gone by with the apartment still empty, decaying from a lack of repairs. I'm grateful I haven't had a year's worth of maintenance payments on a property I can't live in or rent. I also suspect the co-op's finances aren't great with all the legal costs. What a mess!