coop not approved by lender: Managing agent rider insurance required

Asked by Home_buyer, Edison, NJ Mon Jul 9, 2012

I am buying a Coop. Last month, when i submit my mortgage application, the building was in the approved list of lender. Now lender is saying approval was expired in June 2012 and coop building need to re-approved. To get this done lender is asking co-op board to provide "Managing agent rider" of which co-op dose not have coverage included in insurance. Lender is saying they can't release final loan commitment until co-op has managing agent rider included.

Q1 Is managing agent rider mandatory for co-ops? or its coop decision?
Q2 If they dont take this coverage and lender wont clear the loan then what would happen to my contract and initial deposit money?
Q3 does the sale contract null and void if we are unable to close on stated date in contract? 30th of this month.

please advise!!

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First Last’s answer
First Last, , 90002
Tue Jul 10, 2012
I like Mitchell's answer too.

I would only add that it is in everybody's interest for this insurance wrinkle to get ironed out, and I would not offer to pay for that rider, as a buyer, under any circumstances whatsoever.

Because nobody will be able to sell or buy in that building if buyer's can't get loans. And that is a big problem for not just you. This is a routine thing and it was overlooked. Let's just hope the board is more on the ball on other matters.

Karla Harby
Licensed Real Estate Salesperson
Rutenberg Realty
New York, NY
0 votes
Mitchell Fel…, Agent, Brooklyn, NY
Mon Jul 9, 2012
Dear Home_buyer:

Keep in mind that I am not an attorney and cannot give out legal advise. I am also not familiar with your deal and/or contract of sale. Having said that here are some general thoughts....

I have had this happen to me on some co-op deals I have worked on in the past. Usually the co-op will get the necessary insurance to appease your bank but they are not required to, When this happened to me, several times the rider to the existing policy would have cost about $500.00 per year. Perhaps you can find out how much it would cost (through the co-op management company) and if it is not that expensive you can offer to pay for it yourself (just for the first year as usually once you own the co-op neither the co-op or your bank will need the insurance to continue).

If they simply refuse to get it, your lender will most likely deny the loan and assuming you have a mortgage contingency in the contract of sale, you would be entitled to get your down payment check back. This is the norm but you need to check it with your attorney.

With regard to closing dates, usually they are on or about dates which means there could be flexibility to that closing date. Check this with your attorney and also keep in mind that I am not an attorney and I cannot give legal advise, these are just thoughts of mine to help you based on my experience as a real estate agents who sells many co-ops.

If I can be of further assistance please let me know. Good luck!

Mitchell S. Feldman
Associate Broker/ Director of Sales
Madison Estates & Properties, Inc.
Office: (718) 645-1665/ Cell: (917) 805-0783
0 votes
Thanks for your suggestions...
Flag Mon Jul 9, 2012
Charles D'Al…, Agent, Brooklyn, NY
Mon Jul 9, 2012
I think it sounds like a bank request. The Co-op wouldn't need it.
0 votes
Home_buyer, Home Buyer, Edison, NJ
Mon Jul 9, 2012
I am taking the legal advise from my attorney.
But i was interested to get answers for Q1 related to Coop.
0 votes
Charles D'Al…, Agent, Brooklyn, NY
Mon Jul 9, 2012
All good questions have to be answered on a case by case basis . Your lawyer should answer them for you to avoid the legal pot falls.
0 votes
Anna M Brocco, Agent, Williston Park, NY
Mon Jul 9, 2012
When it comes to any legal questions, you really should be consulting with your attorney; don't simply rely on online information...
0 votes
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