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Iheartny, Other/Just Looking in New York, NY

Are Co-op board turndowns common?

Asked by Iheartny, New York, NY Sat May 5, 2007

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Not really, very rare if your agent is any good they will know if you are qualified. Give them a complete picture, be honest and a good agent will rarely have a problem. My "Approval" rate for applicants is over 97% and every rejection but two were due to misrepresentation by the buyer..and the others? one was due to a board member knowing the buyers had a substance problem, the other due to the owners major problems with the board--multiple illegal sublets and an incredibly bad track record of paying maint--they were not going to approve anyone (as the listing agent knew and did not tell me)
1 vote Thank Flag Link Wed Feb 10, 2010
IMHO I think they are becoming more common. I have only had two board turndowns in my real estate career. While many coops do not disclose their financial requirements the standard rule is: 25% income to debt ratio (housing expenses including mortgage and maintenance payments and credit card debt should not be more than 25% of income) Liquid assests after closing should be enough to cover 2 years worth of maintenance or 1 year of mortgage and maintenance payments. Again every building is different and the financial requirements vary from building to building.
1 vote Thank Flag Link Sun May 20, 2007
Mitchell Hall, Real Estate Pro in New York, NY
MVP'08
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i have had a turn down for sale of my co op to a lovely financially solvent couple.
No reason given. Apparently no responsiblity on there part to do so.
Calls from myself, the realtor, and the buying attorney have gone unanswered.
Is this legal?
0 votes Thank Flag Link Sat Mar 17, 2012
Hello everyone I am new to this site. How's everyone doing today? I really like it here! I hope to learn a great deal hopefully even make a few new buddies! :)
0 votes Thank Flag Link Tue Mar 16, 2010
I am the co-op queen and I know first hand that turndowns aren't that common at all. But the secret to getting through to a co-op board is having an experienced agent that knows what the board required from their applicants. Co-op boards want to approve applicants that can afford to live in their complex and someone that will fit into their community. Follow all the requirements and ask your agent to prepare you for this board meeting and you'll be fine.

Rhonda Holt
Licensed Sales Agent
Weichert Real Estate, H.P Greenfield
Cell: 646-725-5941
Email: HelpMeRhonda1919@yahoo.com
http://www.KandHhomes.com
Web Reference: http://www.KandHhomes.com
0 votes Thank Flag Link Fri Mar 5, 2010
They are possily more common than one would anticipate. Still, I would say they are not common. Sometimes, a board can reject the application package before it even gets to the interview.

At this point, there is no law that would compel a coop board to state why a potential shareholder has been turned down. You might have gotten a fantastic price. Coop boards do have to look out for their shareholders valuation. Sometimes a righteous deal may be lower than the board would want to see happen.

This then brings up a number of other questions about the buyer.
The best way a buyer can sail through the process in Manhattan is by being brutally honest with themself regarding their ability to purchase in any given building. Make sure your debt to income ratio is no more than 28% or lower. Credit must be at least 740. If financing, be prepared to put down 30%-50% of the purchase price and always check what the board requires. This always speaks to any board.
Make sure your post-closing liquidity is high. Some buildings want you to be liquid to the amount of the unit price. Some are OK if you have two years + of liquidity. Borderline buyers may be asked to leave up to one years maintenance in escrow.

It's truly about income, assets and credit. Nothing new there. Manhattan purchase requirements are quite stringent.
0 votes Thank Flag Link Mon Feb 8, 2010
Richard Nixon was turned down by a coop board after he served as President. See http://www.reuters.com/article/idUSN1030383320070812

That same article makes an interesting point about lenders and qualifying financially.

Just remember the Grouch Marx quote (a telegram to the Friars' Club): PLEASE ACCEPT MY RESIGNATION. I DON'T WANT TO BELONG TO ANY CLUB THAT WILL ACCEPT PEOPLE LIKE ME AS A MEMBER http://en.wikiquote.org/wiki/Groucho_Marx That kind of captures my sentiments.

So, it varies. Common? No, but frequent enough.

Hope that helps.
0 votes Thank Flag Link Fri Feb 5, 2010
Don Tepper, Real Estate Pro in Fairfax, VA
MVP'08
Contact
A recent NYC Council bill would have required that co-op boards give applicants a list of reasons for denial within five days of rejection, identifying specifically how the applicant failed to meet standards. Failing to do so would result in fines ranging from $1,000 to $15,000 for a first offense.
About two-thirds of the City Council initially signed on to the bill, with proponents saying it would protect applicants from arbitrary rejection by co-op boards. Critics contended it would encourage litigation and scare off prospective board members. At about the same time, a state bill was introduced that would have gone even further than the city legislation. In addition to a list of reasons for rejection, this proposal would have required the co-op board to either reject or approve an applicant within 45 days. The penalty for noncompliance? The applicant would automatically be granted acceptance.
Neither bill became law, but what was defeated in New York City has come to pass with a new law in bellwether Suffolk County — the first in the area to ban smoking in restaurants and talking on cell phones while driving.
The Long Island country now requires cooperative apartment boards to reveal in writing their reasons for turning down potential residents. Board members could be brought to account more easily in discrimination lawsuits, and be held personally liable. Entitled "A Local Law Requiring Fairness in Cooperative Home Ownership" (Intro. Resolution Number 1763-2009, Local Law Number 36-2009), it also requires that co-op boards provide the same application to all applicants, along with information on the relevant Fair Housing and anti-discrimination laws. Once an applicant turns in an application, the board must acknowledge within 10 days that it has received it, and must inform the applicant whether the application is complete or not. The board must come to its decision to approve or deny the completed application within 45 days.
Web Reference: http://www.clovelake.com
0 votes Thank Flag Link Wed Feb 3, 2010
Hopefully NYC will adopt this rule also. The Long Island Board of Realtors announces new Fair Housing Law in Suffolk County. Suffolk County Executive Steve Levy, flanked by members of the Long Island Board of REALTORS, signed landmark legislation Monday which provides protection for prospective cooperative home buyers against discrimination. The new Suffolk County law, the first in New York State, requires cooperative boards to provide a written explanation for denial within 45 days, and provides enforcement powers to the Human Rights Commission.
Web Reference: http://www.clovelake.com
0 votes Thank Flag Link Sun Nov 15, 2009
In the last few years Co-op board turn-downs, along with apartment prices, are at an all time high in New York and are becoming more common every day. When I was a VP, Sales at Corcoran from 2003-2005 I saw a huge increase in board turn downs amongst the brokers in my office, which was located at 660 Madison Avenue, the heart of toughest Co-op boards in New York, including buildings on Madison Ave, Fifth Ave & Park Ave. However, most of the turn downs we got were not on those streets, but in more "everyday" buildings full of young professionals. There is no question that its harder than ever to get into a co-op building in NYC, so if you are not qualified (ask your agent) then don't waste your time. You are better off paying the 10-15% premium for a condo.
0 votes Thank Flag Link Mon Jul 23, 2007
A great deal depends on the complex. In my area (Westchester county) there are some boards that are notorious for turning people down. Other boards are more reasonable. The financial qualifications vary a great deal. Overall, turndowns appear to be more and more common and there is increased pressure for accountabiity on the part of the co-op boards.
0 votes Thank Flag Link Mon Jul 16, 2007
Board rejections are not common. They are especially unlikely if you use an agent familiar with a co-op Board's requirements.
0 votes Thank Flag Link Sat Jun 2, 2007
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