Co-op Boards and closing

Do you have an attorney? I ask because this is kind of a NYC Real Estate 101 issue. First, no one can make the coop board do anything generally. Then again, the board wants to keep values up in the building and obstructing sales does not help. You have, however, unfortunatley boxed yourself into a relatively "off" time of year for coop boards. Members are on vacation preventing a requisite quorum from gathering, the July or August meeting may be cancelled or not exist, the management agent may be on a skeleton summer staff and not be able to review your packet for completeness and make the necessary copies for longer than usual.

Also, the "approximate close date" you mention is a joke. Unless a party specifies in the contract that "time is of the essense" and amends all clauses relating to timing to set a hard close date, the date is virtually never the close date. Standard terms allow for closing up to at least 30 days past the date set in the contract or even longer if neither party objects. If financing is locked at a particular rate, this all gets tricky for the buyer. Your agent and/or lawyer should be counseling you through this stage.

Thanks kylewest. I do have a lawyer but she's been on vacation for the past week and I've been climbing the walls trying to figure out what's going on and if this kind of drama is actually legal.

It would usually take 6 months to get the approval from coop board. Background check alone would take months.

6 months for approval, I don't think, but yes, with summer vacations & the seeming laxity of boards (you basically can have housewives running a multi-million dollar property - no offense to you gals at home) I wouldn't be surprised if it's some time in September when you get a yeah or a nay, That's just how the process works - and then imagine when you get ready to sell. Many of the co-op properties are stunning, as is the co-op process. Good luck!

I think he who "noes" everything is pulling your leg. I am not saying that there isn't some story out there where a board took 6 months, just that it is vastly different from my own personal experience.

As in all such matters, having a hound that knows the landscape that can push for the outcome is a big help. In addition to your real estate lawyer, this would include the brokers who don't get paid until the deal closes. If one of the brokers knows the building well they can make fairly unobtrusive inquires of the board to try to prod things along.

kimerama: inoeverything is one of this talk forum's provateurs. He's not serious.

Ha yeah, even in my current fragile state, I immediately got what that was about.

I actually sold the apartment myself (no brokers on either side) so it was just me and the buyer calling the management company for the past few weeks. Now that the package is with the board I pretty much get that this is all one big power trip and there's nothing I can do but wait and thank my lucky stars if and when I do get out.

It's just extra annoying because I know when I bought I was approved by the board a few years back (from time package was submitted to approval) in like 3 weeks -- and yes it was also in the summertime. I don't know if things have changed because of the economy or if, like I said, this is one big power trip to prolong this because I asked, nicely I might add, for this to be expedited, but I'm beginning to understand that there's nothing I can really do about it unfortunately.

A similar question came up on this board some time ago, in this case a buyer waiting for board approval. One person suggested that going forward, have the buyer's attorney write something into the contract making the timing of the board's decision a condition of the sale. Though that wouldn't help you now, it's something to consider mentioning to future buyers.

The board can take as long as it needs. It really depends on the building. If the board is small, and people are away for the summer, it could be as much as 3 months.

Process is this.

1- You submit board pack
2- Board pack goes to managing agent
3- Managing agent runs credit check and any other checks the board requires.
4- Managing agent does snuff ttest before sending to board
5- board gets packs, reviews
6- Some boards discuss over email, some wait for the next board meeting to discuss.
7- decision made whether to grant an interview
8- Interview scheduled
9- Possible wait for next board meeting, or not, depending on board, final decision rendored.

The whole process could take weeks, or could take months. Really depends on the board.

5-6 months end to end.

Since you're the seller, I would suggest you ask your buyer to stay in frequent contact with his / her lender regarding the timing of the closing. As kylewest mentions, the buyer's rate lock can become an issue, but so can the lender commitment itself (commitments are not open-ended, and, like rate locks, have expiration dates). Once the commitment date expires, the lender may ask the buyer for updated financial documentation, charge additional fees, or both. And if the buyer's financial profile has changed materially, may decline the loan entirely. I'm assuming the buyer provided you a bank pre-approval letter at offer time.

cdrvf--as long as they "need" or as long as they want? I'm trying to make my peace with the fact that I have no control over this but that doesn't change the fact that the first responsibility of a board should be to facilitate a quick and fair sale in the building. When people's lives hang in the balance it should not be a game. I know for a fact that my board meets more than once a month and that they can "grant" an approval quickly, they just choose not to when they choose not to.

johnrealestate1--good point. He did provide all that info initially and I'll check with him on that to make sure he's ok on his end. Oy.

"I actually sold the apartment myself (no brokers on either side)"

Do you think you're being punished for going FSBO? 3 weeks for management company review sounds a little long but not too crazy, but I'm wondering if the board is now going to go slowly because it's summer and people are away, or if you've violated a secret protocol by not using a powerful board member as your broker or not quietly shopping your apartment to other board members who might have wanted it.

Every building is different, but I wonder if there's a political element here. . .

ali r.
{downtown broker}

Hey, kimerama, in another trend you were wondering whether to buy in Manhattan right away, in this one you're trying to close in Astoria. You're a real estate Juggernaut, man!

front_porch, please withhold from using scare tactics on FSBO sellers. Though in Manhattan, I believe an agent is helpful, many RE brokers do not add value. Those that are useless will quit with due time. I applaud FSBOs and as a board member of my coop, I would not discriminate against it. As long as the applicant has solid financials and don't say anything too left field at the interview, they will pass. At times, we hold the application due to time constraints, but no more than 3 weeks.

Trompiloco--ha no. Selling in Astoria to buy in Manhattan sums it all up really, no other deals on the side :)

FWIW, during all the countless coop purchaser board packages that I've reviewed as part of an admissions committee, we never even considered penalizing participants in an FSBO deal because the package may have lacked some of the polish that packages from some agents may have. Yes, a professionally edited and assembled package made our job easier, but if no agents were involved, we understood there may be an item or two out of place or that needed further clarification. I think we were fairly typical in that we focused very, very strongly on content of the package, financial security and stability of the applicant, and whether the applicant would make a responsible, considerate neighbor.

On the other hand, where agents were involved in the deal, if there was a clearly unqualified candidate presenting a package through an agent (rare, but it did happen), the agent(s) involved got a long-lasting black mark in our book for having wasted our time with what was obviously a purchaser whom we would never approve. Future submissions from that agent(s) on the same and other units were subjected to a hightened level of scrutiny because that agent(s) no longer had our trust and we felt they may be trying to put another one over on us.

You know I didn't even realize that agents helped with board packages until this discussion. My agent didn't help me with mine at all four years ago and I mean it wasn't hard. You pull together info, make photocopies and send or bring to management company. Maybe things are done differently in Queens but it really was no big deal and I was approved very quickly.

Oh, I wasn't throwing a scare tactic; I have said repeatedly that I think people who want to FSBO should. It makes much more sense, to me, for sellers to go unrepresented than buyers.

But I have dealt with buildings where the boards were political and that might be an explanation for the "5 weeks."

Eight weeks from application submission to interview is not uncommon, and clearly the main problem here is that the buyer and seller didn't allow for that.

But having gotten themselves into that hole, they are now looking for ways to get out, and that's a matter of politics.

Maybe a nicer way to put it is that sometimes when a board member sells, or someone with connections to the board -- broker or not -- sells, it's easier to get the board to assemble a last-minute meeting.

ali r.
{downtown broker}

"Eight weeks from application submission to interview is not uncommon, and clearly the main problem here is that the buyer and seller didn't allow for that. But having gotten themselves into that hole, they are now looking for ways to get out, and that's a matter of politics."

Um what? Maybe you should scroll up. As I have repeatedly stated, I was approved very quickly in this building and from what I knew, it's how they had done things in the past. It's inconvenient that it's not happening as quickly now and perhaps political, but it's not exactly a "hole." I was simply asking about it to get a feel for what is normal, but please don't assume irresponsibility on my part or the part of the buyer. Thanks

For anyone reading re: prep of a board package with or without an agent's assistance...

Some coop boards ask for extensive materials (e.g. 3 years of tax returns, 3 personal letters of recommendation, 3 business references from superiors, bank verification letters, employment verification letters, up to 3 months of statements from every account--banking and investment--the buyer wants the board to take into consideration, letters of good standing from prior management companies of coops previously owned by purchaser, a letter of introduction, etc). An unmarried couple or couple with separate holdings obviously can double the paperwork needed. Sometimes, one's particular situation adds wrinkles making it difficult to know how to satisfy some package requests. There is also, of course, the extensive application form. As in all business transactions, neatness counts and a smartly presented package starts everyone off on a positive note.

All of this being said, an agent can help and if you have one, I'd expect the agent to step up and assist here since they stand to make a substantial sum given the limited actual number of hours they probably spent on the deal (I mean, really, a $20,000 commission would come out to $400/hr if the agent spent 50 hours on it). By "help," I mean you can give the agent the pile of material, the agent should organize it, make the requisite copies (or work out with the co-broker which of them will do it), and review the package to see that everything requested was provided. The agent should also do a substantive review and offer advice/critiques on letters of recommendation, the intro letter, or perceived weaknesses in the application and ways to mitigate them.

It's perfectly fine to prep the package oneself, but if an agent is being paid for something, I my view it is his/her expertise in the building/area/board dealings/etc and drawing on that is prudent and sensible when asking the agent to help with the application.

kimerama - It is as long as they want. You are absolutely correct that the board should get back quickly as they have a fiduciary responsibility to the building, its shareholders, and the seller. Some boards are very responsive, some are not. It really depends on the building and board. There is unfortunately no straight answer and unfortunately no rules on how long a board can take.

In my building, a clean board package decision is usually rendored within 7 days of receiving to either grant an interview, request further information, or decline outright. I think our board is unusually quick.

Remember also that the board pack take a bit to get together. Its usually a lot of info. Once the info is gathered, usually the real estate agent takes 1-2 weeks to properly order it and put it together.

I would check your contract as the earlier poster is partly right, at least looking at my contract. There is a closing date listed in the document, and if you don't close by that date, there's an automatic extension for 30 days - however beyond that either seller can decide to opt out and the deposit gets returned with no penalty except fees already paid to brokers, lawyers, etc - if the prospective buyer gets fed up you are out your time, any fees, and need to find a new buyer and start the whole process again.

Very true and very scary but the truth is the buyer would also be starting again if he pulled out and I can't imagine he'd want to go through this again. He did tell me he lost his initial interest rate that was around 5.5 (I asked after that was pointed out earlier in the thread), but the loan itself is ok. Also, if he starting again, he'd be getting a higher rate than he'd get today. I mean listen if he just decides he doesnt want to buy anymore then I'm out of luck and have to do it all over. If he does want to still buy I don't see him walking away. The fact that he's buying an Astoria co-op also works in my favor cause there are so few to begin with so there isn't a lot of greener grass to wander to.

Still, should I maybe ask my lawyer to adjust the contract to lock in a little longer if that's possible?

Re Ali R's thoughts of a possible political element here, I'll venture the odds of that are probably slim to none. I think the odds of a Board member being a vindictive Real Estate agent are fairly remote, as are the chances of a Board member being bitter about not having the opportunity to buy the apartment beforehand. Possible? Yes. Likely? Not really.

Agree with kylewest about a package's "polish", as content always trumps style. I would add, however, that the most likely problem with (some) buyer constructed Board packages is clarity, not neatness. As a buyer broker, I've done dozens of Board packages. My goal is always to ensure that everything is as clear and concise as possible - the last thing I want to hear is that there is something in the package that the management firm / Board does not understand. Of course a buyer can assemble his / her own Board package, but a Real Estate pro will (usually) do a superior job.

To kimerama, and expanding a bit on kylewest's comments, it's my belief that a buyer agent should prepare, not just assist with, the Board package. My last buyer purchase was a parent / adult child co-purchase, with a Board package of 170 pages (and 10 copies) - it's just part of the job. It sounds like kylewest's building takes an "enlightened" approach to Board packages, which is to be commended. But I would venture that many Boards want things just the way they want them, and you really only have one chance to make your Board package the very best it can be.

Update: my lawyer just got back from vacation and said that once the 30 days pass from the original close date on contract he can't get out of deal anyway cause he asked for an extension on the 45 days we gave him on the loan originally or something to that effect, so it prolongs contract I guess. Basically the only way this deal doesn't go through is if board doesn't approve him. I'm not quite sure I get the legality of it all since when I bought 4 years ago I was under the impression that if we didn't close by 30 days after date of close on contract the seller could walk away (of course different market then so the seller was the one in control and not me).