Full renovation cost in Escrow account?

Assuming you share that fact with them, the contractors may like the idea that you've set aside the renovation costs (before change orders), but why would you bother telling them? They have the power of lien if there is non-payment, and generally wouldn't have the ability to specifically attach to the escrow account. I think the request is unreasonable, but if you want to be in that particular building, and the board has been gracious to conditionally approve you (which means they think you're borderline financially stable), then do it.

FireDragon,
Does the building want you to put it in escrow and leave it there until the renovation is over? That doesn't make any sense to me. I think it will be difficult to find any contractor that will finance your whole project. If you do i would think you would have to pay a pretty high premium

We don't fully understand the board's reason for that request. I think they just want to make sure we go through a full renovation. Financially we have enough asset to pay for the renovation, but I don't like the idea of tying up a big chunk of cash upfront.

Primer, I was later told that we should be able to draw against the account as needed, but the terms are still quite unclear. So probably this shouldn't make a difference to the contractors after all.

We still think the request is unreasonable, and hope to convince the board to take some other things as proof of our intention. For example architect's proposal.

Can the coop actually stipulate that you renovate? Surely that's your business. I know many leases on coops stipulate that you keep the apartment in good decorative order but this seems to be a step further than that. How come in coops, they don't hold the sponsor to the same standards? I bought a fixer-upper that the sponsor had been renting out for 40+ years and it was in complete disrepair. Just wondering... The board didn't inquire at all about my intentions to renovate.

I don't think the board demanded that FireDragon renovate, but when they indicated they would be doing a renovation (which sounds entirely necessary) they dictated the terms. It's not totally unheard of for a board to demand the entire cost of the renovation be put in escrow as long as they allow that to be drawn down on to make periodic payments to the contractor. the irony is that odds are it will end up costing more than the initial estimate/bid so it won't even guarantee the completion. A friend of mine used to say that renovations cost twice as much as the bid and take three times as long, but if you are really in a hurry you can get it done in only twice as long if you are willing to pay three times the bid.

What is the price of the apartment? Hard to know what $400K escrow means in absence of knowing the price of the place. Also, what neighborhood is this in?

Oh, I thought FireDragon's second post suggested otherwise: "I think they just want to make sure we go through a full renovation". What if he/she didn't want to renovate at all or wanted to do it in stages? Also, what of the seller? This puts them in a potentially tricky position if they can't find a buyer willing to agree to such terms.

To be frank, if this is a standing Coop policy then it is something the seller's broker should have known about and informed potential purchasers of. Especially if as FireDragon states it "NEEDS a full renovation."

It sounds to me like:

1) The apartment seriously needs renovation - the seller, buyer, and board all agree on this.
2) The board perhaps need some piping replaced at someone else's expense, or a bad apartment (comp) permanently improved, hence their interest in the matter.
3) The board doesn't want the buyer to back out and live in, or sell, the apartment as-is when they realize just want an enormous pain managing a full renovation is. The problem isn't so much paying for it (bank statements would satisfy that concern), as spending six or more months of your life dealing with architects, the managing agent, contractors, plumbers, and electricians.

FireDragon - what did you decide / end up doing on this? Hope it all worked out for you!

We're still in negotiation with the board but it looks like they won't budge. Will report back later.

Hey FireDragon, what ended up happening with your saga? Did your board end up seeing reason? Complex purchase!! By chance, did you get any sort of break in broker commission because of all this?