So, About 3-4 months ago I signed a contract to purchase my apartment. I got everything done on my end soon after. I got my Commitment(I'm over qualified for apartment, salary etc), filled out application, and passed the Board interview. The Board promised me some of the paperwork needed to clear my "Conditional Commitment" would be soon available. That was almost 2 months ago and they still have... [more]
So, About 3-4 months ago I signed a contract to purchase my apartment. I got everything done on my end soon after. I got my Commitment(I'm over qualified for apartment, salary etc), filled out application, and passed the Board interview.
The Board promised me some of the paperwork needed to clear my "Conditional Commitment" would be soon available. That was almost 2 months ago and they still have not done it. The building has a land lease . Therefor the bank wanted the 20014 approved budget and something else since the building showed they operated at a loss last year. They still have provided nothing (Budget or anything else).
Last week the seller sent me a "time is of the essence" letter stating that the deal must be closed by next week or they intend to keep my deposit(meanwhile the board/ mgt company still have not cooperated.
My contract states the only thing the commitment letter can be conditional on is the appraisal which was done already. However, it also states I have a right to cancel if the closing is "Adjourned for more then 30 days from closing date in contract by seller or cooporative"... It also states all parties must "Cooperate" and deliver any reasonable forms/ paperwork... and states the building "Must be in good standing"( It is showing last year it has a operating loss of 6%)
Is the seller really entitled to any of my deposit? Should she try and hold it would a judge ever think her argument has any merit at all?
Appreciate any help or knowledge on this subject,
Thanks!!
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Response by crescent22
over 11 years ago
Posts: 953
Member since: Apr 2008
Not a lawyer but have been through the process and can read a contract. Here goes:
The standard co-op contract states in 18.3. Purchase may cancel this Contract as set forth below, if:....
18.3.1.3 any requirement of the Loan Commitment Letter other than one concerning Purchaser is not met (e.g. .... financial condition of the Corporation, etc.)
18.3.6 - says if this is the case, Contract Deposit shall be promptly refunded to Purchaser except in the case of paragraph 13, which goes into misrepresentations by Purchaser.
From what you have stated, it seems clear the above applies. Seller is trying to have her cake and eat it too (keep your deposit and sell for even more in a rising market). You need your lawyer to send a nasty letter back ASAP stating your cited clauses apply, not theirs, and Seller will end up in court quickly if she tries to keep your deposit.
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Response by uptown_joe
over 11 years ago
Posts: 293
Member since: Dec 2011
Agreed - sounds like you have held up your end; while it is possible the deal will fall apart, you should absolutely not lose your deposit over the building's issues.
Your attorney definitely needs to handle this quickly and forcefully. (Note that if the seller's letter actually went to you, that may be a technical violation of the standard contract's terms on delivering notices -- nothing to fuss about excessively, but a defect that might be modestly helpful if this gets to litigation.)
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Response by NYREGUY
over 11 years ago
Posts: 12
Member since: Dec 2013
@Cresent22-I just looked at my contract(Section 18) and it doesn't have that wording at all.. Also downloaded another sample contract and did not see anything? ( Sample NYC COOP CONTRACT)?
@uptown_Joe- The letter was sent to my attorney first... I don't mind if the deal falls apart and we go our own ways at this point. I need to move from where I am living and have lost my lease. They don't want to let me out of it tho. How long can they have me wait around?
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Response by crescent22
over 11 years ago
Posts: 953
Member since: Apr 2008
Well, the wording is on the two contracts I was part of last year as well as here:
Either way, you need to turn on your paranoia button right now. Your Seller might well have another bid ready to go and is trying to engineer a bonus by telling her friends on the Board to slow walk the budget to your bank and keep your deposit.
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Response by front_porch
over 11 years ago
Posts: 5316
Member since: Mar 2008
I'm not an attorney, and I can't give legal advice, but from the perspective of someone who is in the trenches --- I don't think that this is necessarily the seller being tricky.
There are two parties that are not budging here, your lender and the seller's building, and someone needs to bring them together, and possibly the t of e is being used simply as a cudgel.
Your atty should of course respond to the t of e, but at this point seller's broker needs to deliver whatever paperwork he/she is going to get (for example, many co-ops operate at a loss annually for tax reasons, so it might not make sense to sit around holding your breath until you see a positive operating statement) and then your broker and you need to explain to your bank that this is the paperwork that there is and will be.
I think it's likely with a round or two of negotiating and finessing you'll end up closing.
ali r.
{downtown broker}
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Response by NYREGUY
over 11 years ago
Posts: 12
Member since: Dec 2013
@front porch We actually both have the same Brokers office representing both of us. I've spoken to the Board president and he promised the budget 2 months ago. Do you think maybe I should be applying with a different bank?
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Response by NYREGUY
over 11 years ago
Posts: 12
Member since: Dec 2013
or is the current year opp Budget something that all banks are gonna request?.. Thanks for your help!
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Response by Flutistic
over 11 years ago
Posts: 516
Member since: Apr 2007
The only contract's wording that matters is the one you signed.
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Response by crescent22
over 11 years ago
Posts: 953
Member since: Apr 2008
FP is right it's not necessarily shenanigans driving Seller's behavior. I still submit it doesn't need to for OP to flash warning lights when his deposit is at risk.
Why does the Seller presumably knowing of the lack of documentation (esp given the brokers are at the same firm) decide to take the hostile route and threaten to keep the deposit instead of working with the Board to get it done? Unless Seller thinks OP can close without the mortgage, it should be taken as an indication of adversarial intent and OP needs to defend accordingly.
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Response by NYREGUY
over 11 years ago
Posts: 12
Member since: Dec 2013
I can not close without a mortgage... Not even come close. What do you mean defend accordingly? @crecent22.
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Response by crescent22
over 11 years ago
Posts: 953
Member since: Apr 2008
I mean get your lawyer to be tough with the other side and dissuade them from following through with their threat to keep your deposit.
This is an interesting question for the board- can a Seller's lawyer, the escrow holder, unilaterally declare a Purchaser in default and transfer the deposit out of escrow?
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Response by front_porch
over 11 years ago
Posts: 5316
Member since: Mar 2008
@NYREGUY,
If the board president promised a budget and it hasn't been delivered, why not? Does board president have long-term medical or personal issues and is unable to fully function in this role? Or was a budget proposed and board has yet to approve it?
Those are two scenarios that I can think of; I'm sure that there are others. However, the takeaways for you are 1) if the bank thinks that a budget will be forthcoming, they're not going to lend money until they see it (as opposed to say, a small-building scenario, where the building has never really put together a budget) and 2) seller has acknowledged that your purchase is dependent on mortgage financing, and it's incumbent on him/her to deliver the documents to help make that happen so 3) it is the job of seller to lean on the board to get the budget delivered.
I can't even imagine how you as buyer ended up talking to the board president, but at this point, your attorney should be leaning on the seller's attorney to get the budget delivered, I should think. Of course you can also talk to the broker and point out that you've requested the document, you're waiting on this document, can seller please intervene to get this document to you?
Again: Not an attorney, so take this simply as horse sense, not legal advice.
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Not a lawyer but have been through the process and can read a contract. Here goes:
The standard co-op contract states in 18.3. Purchase may cancel this Contract as set forth below, if:....
18.3.1.3 any requirement of the Loan Commitment Letter other than one concerning Purchaser is not met (e.g. .... financial condition of the Corporation, etc.)
18.3.6 - says if this is the case, Contract Deposit shall be promptly refunded to Purchaser except in the case of paragraph 13, which goes into misrepresentations by Purchaser.
From what you have stated, it seems clear the above applies. Seller is trying to have her cake and eat it too (keep your deposit and sell for even more in a rising market). You need your lawyer to send a nasty letter back ASAP stating your cited clauses apply, not theirs, and Seller will end up in court quickly if she tries to keep your deposit.
Agreed - sounds like you have held up your end; while it is possible the deal will fall apart, you should absolutely not lose your deposit over the building's issues.
Your attorney definitely needs to handle this quickly and forcefully. (Note that if the seller's letter actually went to you, that may be a technical violation of the standard contract's terms on delivering notices -- nothing to fuss about excessively, but a defect that might be modestly helpful if this gets to litigation.)
@Cresent22-I just looked at my contract(Section 18) and it doesn't have that wording at all.. Also downloaded another sample contract and did not see anything? ( Sample NYC COOP CONTRACT)?
@uptown_Joe- The letter was sent to my attorney first... I don't mind if the deal falls apart and we go our own ways at this point. I need to move from where I am living and have lost my lease. They don't want to let me out of it tho. How long can they have me wait around?
Well, the wording is on the two contracts I was part of last year as well as here:
http://www.nytitle.com/_fileCabinet/ContractofSaleCoop.pdf
Either way, you need to turn on your paranoia button right now. Your Seller might well have another bid ready to go and is trying to engineer a bonus by telling her friends on the Board to slow walk the budget to your bank and keep your deposit.
I'm not an attorney, and I can't give legal advice, but from the perspective of someone who is in the trenches --- I don't think that this is necessarily the seller being tricky.
There are two parties that are not budging here, your lender and the seller's building, and someone needs to bring them together, and possibly the t of e is being used simply as a cudgel.
Your atty should of course respond to the t of e, but at this point seller's broker needs to deliver whatever paperwork he/she is going to get (for example, many co-ops operate at a loss annually for tax reasons, so it might not make sense to sit around holding your breath until you see a positive operating statement) and then your broker and you need to explain to your bank that this is the paperwork that there is and will be.
I think it's likely with a round or two of negotiating and finessing you'll end up closing.
ali r.
{downtown broker}
@front porch We actually both have the same Brokers office representing both of us. I've spoken to the Board president and he promised the budget 2 months ago. Do you think maybe I should be applying with a different bank?
or is the current year opp Budget something that all banks are gonna request?.. Thanks for your help!
The only contract's wording that matters is the one you signed.
FP is right it's not necessarily shenanigans driving Seller's behavior. I still submit it doesn't need to for OP to flash warning lights when his deposit is at risk.
Why does the Seller presumably knowing of the lack of documentation (esp given the brokers are at the same firm) decide to take the hostile route and threaten to keep the deposit instead of working with the Board to get it done? Unless Seller thinks OP can close without the mortgage, it should be taken as an indication of adversarial intent and OP needs to defend accordingly.
I can not close without a mortgage... Not even come close. What do you mean defend accordingly? @crecent22.
I mean get your lawyer to be tough with the other side and dissuade them from following through with their threat to keep your deposit.
This is an interesting question for the board- can a Seller's lawyer, the escrow holder, unilaterally declare a Purchaser in default and transfer the deposit out of escrow?
@NYREGUY,
If the board president promised a budget and it hasn't been delivered, why not? Does board president have long-term medical or personal issues and is unable to fully function in this role? Or was a budget proposed and board has yet to approve it?
Those are two scenarios that I can think of; I'm sure that there are others. However, the takeaways for you are 1) if the bank thinks that a budget will be forthcoming, they're not going to lend money until they see it (as opposed to say, a small-building scenario, where the building has never really put together a budget) and 2) seller has acknowledged that your purchase is dependent on mortgage financing, and it's incumbent on him/her to deliver the documents to help make that happen so 3) it is the job of seller to lean on the board to get the budget delivered.
I can't even imagine how you as buyer ended up talking to the board president, but at this point, your attorney should be leaning on the seller's attorney to get the budget delivered, I should think. Of course you can also talk to the broker and point out that you've requested the document, you're waiting on this document, can seller please intervene to get this document to you?
Again: Not an attorney, so take this simply as horse sense, not legal advice.