Denied Application

Clarification to above: all contract prices were relatively close together, our contract price is the lowest (but in the worst market).
(above I incorrectly wrote that ours was the lowest offer, rather than lowest accepted offer/contract price)

The board/building has previously purchased similar units below this price.

Wasn't there a lawsuit about a similar situation to this related to a building on E 72nd a few years back?
Seller alleged that the building wanted to buy their studio at a low price to convert to a gym and so rejected their buyer. I am not sure what happened in the end with that one but might be worth researching.

Looks like it is this one?
https://www.sgrlaw.com/articles/bad-faith-in-rejecting-sale-of-unit-leads-to-damages-board-breached-fiduciary-duty-to-apartment-owner/

Yes, that is the one I was thinking of. I am not a lawyer & not sure how relevant, but some aspects of your story reminded me of that suit. I do not have any specific knowledge of it other than a much hazier recollection that the article you linked...

I agree it looks quite relevant. If the board offers a lower price for the unit, or purchases similar units at a lower price, I am not sure how they could claim "too low price".

right but you aren't the aggrieved party, the seller is, so better for you and your parents to move on.

On more than one occasion at 148 West 23rd Street I handled marketing for foreclosed units. The Board both had "floor prices" and did not allow investor purchases. Yet in all cases Board members bought the units well below the floor prices as investors. This is highly not unusual in terms of Coop bullshit.

As I've said many times in the past, Coop attorneys tend to tell Boards that they can do whatever the hell they want hoping for litigation.

Not as much as the seller of course, but we/parents are aggrieved.
- We spent time and money on the coop application fees and lawyer fees, which are non-refundable.
- We also did not make alternative housing arrangements for my parents in time for my baby (coming any day now).

Moving on is also tough considering I am a shareholder in the building (different unit), and would like family to live nearby.

Krolik,
It seems like You knew damn well what the situation was, but decided to proceed anyway. You're like people who have seen a certain person act a certain way in relationships over and over, but decide you're going to move forward anyway because You think you are different and the same thing won't happen to you?.

Didn't you also say right here that you really intended to use the unit as an auxiliary space for yourself?

I originally was shopping for more space primarily so that parents/in-laws have a place to stay when they come help with the baby, as our guest room will become baby's room, and partner and I both have intense jobs and need all the help. 3/4 of our parents are recently retired or about to retire and have capacity to watch the baby.

Partner and I floated to the board we would buy an additional unit, but board advised that they will not approve purchase of non-adjacent units by us because in their experience those non-adjacent units become investor units with tenants, something they are trying to discourage, and therefore have a policy against such purchases. They suggested either I or my partner remove ourselves from the title of the current unit to buy another unit, or parents buy directly instead. Parents purchase funded by a gift form us is less efficient from tax perspective, however, we decided to go for it.

Management agent has communicated to seller this denial, just like few previous denials for this unit, was due to price being too low. The unit is in poor condition and board itself offered them some time ago a price below our contract price.

Also, since several months ago, one parent committed to moving in permanently, given we were gifting $$$ to buy a place to live and we need the help.

>>It seems like You knew damn well what the situation was, but decided to proceed anyway

Not sure what you mean.
There were several purchases in the building in the last few years that were below parents' contract price per share or price per square foot. We did not expect the board to deny based on price.

I don't really get the whole price-based rejection argument. Seller is already motivated to maximize the price. Market is either willing to pay more, or it is not. Aren't you the one posting all the data about market going down? How can the board or the seller make it not so? If the contract price corresponds to a cap rate below the current treasury bond yield, why would a rational person pay more?

>>Yet in all cases Board members bought the units well below the floor prices as investors. This is highly not unusual in terms of Coop bullshit.

Did they get away with it?

you are blessed with a nice family and we all look forward to hearing about a healthy baby soon. Non-refundable lawyers and application fees and your lost time ... move on

What if you increase the contract price (recorded price as well) by $50k/$100k and get the same amount back as Reno credit from the seller? The seller will pay a little more in transfer taxes but it will get done.

It would be a shame for your child not have to loving grandparents in the building.

It would be a shame for your child not to have loving grandparents in the building.

My general recommendation in this situations is “run away”, but knowing your specifics, that isn’t really a viable option.

If the coop board’s motivation is to get a high mark in some ill-conceived notion of trying to hold the line for sake of the building, then 300’s suggestion seems like it could work. I also recall you saying there were other unit(s) that were in a better state, and therefore more expensive. That could help hold the appearance of a line for studios, and you could perhaps swallow/justify the higher price.

If the board is running shady shenanigans, then of course this all would not work.

I’m somewhat surprised that you were able to sniff out the non-adjacent thing with the board beforehand but not this. Did you try? It might not hurt sniffing them out on 300’s idea, or something like it.

And I should have started my post with: I’m sorry to hear you’re dealing with this BS.

I am sorry to hear that this happened to you. Board turndowns are tough and can take months to reverse. But I'm confused by your reference to ROFR -- aren't you in a co-op?

"right but you aren't the aggrieved party, the seller is, so better for you and your parents to move on."

In somewhat similar situations courts have ruled the potential purchaser had no privity

This discussion is reason number 389 that people with young kids move to Larchmont.

@George - Yup.

Of note my condo recently sent a "don't let your kids play in the hall or common areas or we will fine you" sternly written letter.
This place just does not make it easy..

@300 that idea is being discussed. Is it legal?

@Ali no ROFR since it is a coop. I was just saying that it could make sense to me had they offered to buy the unit at the same price. But they offered 100k less.

100 percent legal. Govt is making more in taxes and seller incentives/concessions are allowed. Bank financing the purchase, if any, need to know that the seller Incentive. Broker should get paid on the net and you can write that in the contract.

——-
@300 that idea is being discussed. Is it legal?

>> This place just does not make it easy..

I’m fine with that one. One of the benefits of being a parent in NYC living is that others will explain to you how parenting works.

I was sitting on the sidewalk at a neighborhood restaurant a few months ago, and a couple of women sat down across the sidewalk in the dining shed with two kids. The older one (8?) was at the table mostly, stood & fidgeted some, acting like a normal kid. The younger one, 4 years old or so, spent most of the time picking up pebbles from around the sidewalk tree and throwing it around. Made a big mess, threw it towards the waitstaff as they were working, threw it towards people sitting on the sidewalk, their dogs, etc. Mom made half-assed attempts to control the kid every 5 minutes or so, but mostly she was chatting with her friend and allowing the kid do what he wanted. She drank her wine and honestly looked like she needed a break from her unruly child.

My wife & I watched with a mix of entertainment and judgement. Same with others. Eventually, an elder woman with a walker strolled by with her small dog, and she started chatting with some older ladies dining at the sidewalk (presumably neighbors).

Toddler of course starts throwing pebbles in her direction and towards her small dog, who becomes obviously apprehensive. The older lady takes one look at what’s going on and begins her tirade, in a proper NY accent. First, gently at the kid: “Stop in, can’t you see you’re scaring my dog.” But then, she lays into mom: “What’s wrong with you? Your kid is throwing rocks everywhere, at me, at my dog, at people sitting here! You can see what’s going on, but you’re just sitting there! What’s wrong with you, don’t you know how to raise your child?!??”

I looked at this and thought, “Ahhh, this is what makes NY so great!”

300>> 100 percent legal

What happens on capital gains/loss basis? I assume the reno credit is taken out. Otherwise, in this situation the seller wouldn’t care (profit less than cap gains exemption, presumably, with or without the higher price), and the buyer would get a higher basis (which could come in handy upon an eventual sale).

“Of note my condo recently sent a "don't let your kids play in the hall or common areas or we will fine you" sternly written letter.”

I live in a condo with no kids but don’t have any problem with kids. But I am perfectly ok with this letter/warning. Common areas in a condo are not meant for kids horsing around. If parents don’t like it they can buy a unit in a building that has a children’s playroom, it’s not such an uncommon amenity in many newer, bigger condo buildings

You are supposed to keep closing statements for your cost basis which have all the adjustments. Recorded price is only one component of cost basis.

—-
What happens on capital gains/loss basis? I assume the reno credit is taken out. Otherwise, in this situation the seller wouldn’t care (profit less than cap gains exemption, presumably, with or without the higher price), and the buyer would get a higher basis (which could come in handy upon an eventual sale).

Got it, thanks 300.

As 300 noted, this kind of "adjustment" happens all the time -- and experienced real estate attorneys will know how to structure the credit -- a main point being to structure it so that it is transparent to the mortgage bank and the parties get a sign-off from the lender (because otherwise, it's mortgage fraud)

Not a lawyer, none of the above to be construed as legal advice

All you need to do it disclose the seller's concessions to the bank. You can structure is anyway you like but seller's concessions language is standard and commonly acceptable.

Thanks.

Note to self: in the future when looking at comps, only consider transactions where a bank was involved.

Bank can be involved but they can just reduce the amount financed if they are seller concessions more than certain percentage of price. So bank involvement doesn’t mean much.

I am told it's usually an all cash deal and if it's not (if it's financed) it's never for more than a few percentage points of the total sale price. No idea if that's accurate.

Bank will allow no more than 6%. But 300 is right, after that they can just reduce amount financed. So presence of a bank is not a guarantee there wasn’t a size-able concession.

>>Of note my condo recently sent a "don't let your kids play in the hall or common areas or we will fine you" sternly written letter.<<

Um, yeah, this is 100% appropriate. No condo or co-op allows kids to play in any public space (save for those buildings that have designated playrooms). This is generally expressly mentioned in condo/co-op bylaws. Clearly your building has had problems with this, hence the letter.

That letter is dangerous because it could be used to argue that the Board is engaging in family status discrimination or harassment. And to what end? To give smug satisfaction to some childless busybody who can't distinguish normal from excessive domestic noise? A smart Board would address the issue directly with the parent involved in a carefully worded communication documenting how the child(ren)'s noise is sustained and goes beyond normal domestic noise -- which it probably doesn't. A widely-distributed written document like a memo concerning a protected class is asking for trouble.

@George - exactly
I'm not a parent, so not my fight, but I was never bothered by any noise in the hall/lounge/outdoor space.

Our board was previously a bunch of parents, the new one is not (despite the building having 3x as many kids now). They have also converted a lot of the common areas (lounge, outdoor space) to be less/non kid friendly.

The stern letter broadly mentioned "common areas" without carving out any areas (lounge or outdoor space etc) where play WAS permitted, which, if I was a parent, would be a bit distasteful.

The joys of condo/coop living. You're only one board election away from stupidity here.
At least if it was a rental I could vote with my feet.

Condo owners constantly complain about this rule and that rule and why are my condo fees so high, why do we need an assessment to fix the elevator etc, etc. But in my experience, when there are calls to serve on the board, nobody says a word. Nobody wants to bother, too busy with other stuff. And the monthly board meetings that are open to all owners that are once a month (at several condos I own). Again, I would say barely 10% bother to show up. If you don’t like the way your condo is run, attend meetings, get your neighbors to attend, get your viewpoints across and run to be a member, I realize it’s not often quite that simple but the amount of griping I hearing with total lack of interest or participation in how the condo is actually run is astonishing

@911turbo - I sat on the board a few years previously, it has its own pain points and not much upside.

You need a thicker skin than I have for the amount of hours you put in for zero pay while receiving pretty deranged mail on nights, weekends and holidays from the craziest 5% in the building about the smallest of trivialities.

And so you are right - no one wants to run, I tried to recruit many neighbors who had strong opinions but no one wants to be bothered.

>>That letter is dangerous because it could be used to argue that the Board is engaging in family status discrimination or harassment
And to what end? To give smug satisfaction to some childless busybody who can't distinguish normal from excessive domestic noise? A smart Board would address the issue directly with the parent involved in a carefully worded communication documenting how the child(ren)'s noise is sustained and goes beyond normal domestic noise<<

It is not 'harassment' if it is spelled out in the bylaws (which owners/shareholders must adhere to).

Children playing in hallways and other common areas expose the co-op/condo to potentially serious legal and insurance problems. What if a child is injured? What if something is damaged? Any parent allowing their unsupervised child to run around the building's public spaces is not only inconsiderate to their neighbors, but also an idiot for putting the child in potential danger. "Normal domestic noise" should be expected from inside apartments, yes. But not in hallways, stairwells, etc.

It is likely the building-wide letter was sent after failed attempts to curb the problem directly with repeat offenders.

>> It is likely the building-wide letter was sent after failed attempts to curb the problem directly with repeat offenders.

In my experience, that tends to be the case. If you’re friendly enough with the building staff and ask “We need a rule for ???”, they won’t name names but will give you a hint that “Well yeah, but a certain resident has repeatedly been doing despite being asked to stop repeatedly by the board, resident manager, etc.”

I always feel like such letters are legal cover against targeting an individual specifically. Like the constitution’s equal protections clause. The bylaws say these are the rules. They also say the board may impose fines for violations of the rules, but they do not spell out the fines one by one. The letter formalizes the board’s commencement of fines for a specific violation. Sending that letter to just the annoying resident seems legally questionable as it would be targeting a specific resident. Therefore the letter goes out to everyone.

If no one has ever spoken to you about your kids using the common spaces as a playroom, you weren’t the intended audience.

We don't know the circumstances, but I wouldn't be surprised if this is a situation of a mom with 3 kids who sends the 6 year old and 3 year old out the door while she straps in the baby, who then throws up. Anyone with kids has BTDT. Meanwhile the kids are running and screaming and the childless old crank next door can't hear Fox News and takes a half hour to write a letter to the Board saying mom is letting them play outside. Then the Board sends a nastygram to everyone. Not the way to do it.

Haha, George, you paint a rosy picture indeed! Sorry, though, but I'm afraid your argument is thin soup.

There are squeaky wheel cranks in every building and the board knows exactly who they are. A board/managing agent isn't going to take the time and effort to draft and send out a building-wide memo on baseless 'one-off' complaints from chronic bitchers.

Over the years I have heard legitimate complaints from residents in various multiple-dwelling buildings about parents letting kids (and pets) run free in common areas. Games of catch in hallways. Racing up and down stairwells. I once lived in a building where a family let their kid race his bike back and forth in the hallway because he was making too much noise inside the apartment for them to sleep in. So they just put him and his siblings into the hallway and let 'em go wild. If you cannot contain your kids, maybe apartment living is not for you.

Like someone else said earlier in this thread, this is why places like Larchmont and Mamaroneck exist.

So many of you are dissing us folks without children. Seriously? Think you are generalizing and insinuating all are foxnews, newsmax .. watchers is ridiculous. Those of you who have done it sound just like those on those sites. Shame on you

oh no no no. Having lived in a co-op with a kid (and therefore being the "noisy" ones despite 80% floor coverage, etc.) I think our neighbors without children were extremely accommodating to us!

Happy ending here: application with a revised price got approved!

Nice!! So recorded price higher than net price to you?

Congratulations x 2

Alright don't take my advice.

@30 thanks!
@300 yes!
@Rinette :)

@Krolik - Congrats! Happy for you and your folks :) Stoked for you

General question: doesn't the practice of seller concessions make comps unreliable? Is there a way to know in advance of making an offer?

Conrats, Krolik!

Questions:

- What is the percent difference in the two prices?
- How does this compare to reno costs you estimate you'll need to pay?
- Is the reno credit tranparent to the board? I.e., this is all for show?

Kudos to 300 for setting you on this track.

MTH the practice of seller concessions makes comps extremely unreliable. One thing brokers try to do is to keep track of cases where they know that a concession occurred so they can adjust the comps.

Ali, For an apartment in largely move in condition, it is very true. However, for an apartment that need a lot of work, which is in the comps, fudge factor to compare it to a finished property is pretty large.

>> MTH the practice of seller concessions makes comps extremely unreliable.

Is this mostly a thing for new dev and coops? In both cases, someone in control has an interest in remaining opaque -- the developer in the case of the former, the coop in the case of the latter. However, for a resale condo or houses, does it happen? The downside is higher taxes, with little upside for anybody as far as I understand.

@front_porch - Thanks! Yes, I imagine people move in with plans to 'make the place their own' which is, after all, one of the draws of ownership. So I guess ideally you want a broker that has done a lot of deals in the building. I look at so many places and, while the space might have a lot going for it, my second thought is -'what were they thinking?' Am told what might otherwise be considered light renovations can run 2x in NY what they'd cost anywhere else.

@inonada - Yes, so you're not going to get this information from...a lot of people, come to think of it. Almost everyone has an interest in higher prices.

>>>Am told what might otherwise be considered light renovations can run 2x in NY what they'd cost anywhere else.

More like 4-5x if we are talking about an apartment in manhattan! I did a renovation in a 2 bed 2 bath apartment, without touching wet areas, layout, or heat/condition/electric and it was over 50k…

On "Reality TV" they completely renovated a 2 BR house in Las Vegas for $13,000.

@Krolik !

@30yrs :D Nice fresh housing stock in the West must make it easier. Manhattan has a lot of older buildings. Beautiful, to be sure, but also (I'm guessing) fiddly for contractors