Whether you're shopping for a co-op or condo, finding the apartment that you'd want to call
home can be a lengthy and exhausting project. If you've been on the market for a condominium, you can start planning the move to your new home once your bid has been accepted. But if it's a co-op you've found, having your bid accepted is just a preliminary step to the board review process.
After signing the contract, the co-op buyer puts together a package, based on the requirements of the building, which usually includes a credit report, bank statements and letters of reference from employers, friends and neighbors. The paperwork is forwarded to the board or its committee for review. If everything is in order, the committee schedules an interview with the buyer after which the committee takes a vote on whether to accept the buyer into the building.
The particulars of this procedureas well as the time framevary widely from building to building. In some cases the buyer can find out in a week whether he has been accepted by the cooperative corporation. Other times the approval process requires much more stamina. The buyer's patience may be repeatedly tested as he puts his plans to move on hold. What is the proper etiquette for scheduling, conducting and reporting the results of a meeting with the buyer? The key component is courtesy: every buyer should be treated as a potential neighbor.
When Courtesy Takes a Backseat
In those cases in which the buyer is made to wait while the approval process drags, all is usually forgiven once the buyer becomes a shareholder and has a vested interest in who his neighbors will be. But what happens when the buyer's application is rejected? One such couple, who had fallen in love with a spacious, pre-war apartment in Queens, was so turned off by the way the board handled their review process, that they've put their apartment search on hold indefinitely.
We feel as though we wasted a big chunk of our time, and all for nothing, explains the rejected buyer, whom we'll call Mary Doe. Our bid was accepted in late July but the board didn't meet with us until November. Later, when we learned that our application had been rejected, we were stunned. We had already started packing. It had never occurred to us that we might not be moving. Our only concern had been that we weren't moving soon enough.
In retrospect, Doe and her fiancM-i are relieved that their application was rejected. We don't think we would want to have those people as neighbors. Besides the fact that it took them so long to schedule our interview, they were lacking in common courtesy, she says. When the applicants arrived for their interview, they were informed that the board needed to meet first in private.
We called the broker and she came over to let us into M-our' apartment where we waited for at least two-and-a-half hours, until finally my fiancM-i was summoned (but not me). As the primary buyer, he was interviewed extensively about his finances, and then told that the board would call him to schedule another meeting that would include Mary. Later that week the couple got a call from the broker telling them that their application had been rejected.
Naturally we were disappointed that we didn't get the apartment, says Doe, but what we really found offensive was the board's tota ffb l disregard for our time. The fact that we were summoned to meet at a specific timeand were then left hanging for hoursis very rude. The apartment was unfurnished, so we hung around with nowhere to sit, wondering what was taking them so long. The committee was meeting right next door. You'd think someone would have come over to offer us something to drink, or at least keep us informed as to how much longer we could expect to be delayed!
Streamlining the Process
How long it takes to schedule an interview and notify the buyer whether the application has been approved depends upon the size of the building, whether it has a committee set up specifically for this purpose, the style of the board and the level of efficiency of its admissions committee and managing agent. Some boards do stand on ceremony, explains Bruce Cholst, a partner at the Manhattan law firm Rosen & Livingston. If the application isn't received by the cut-off date, it's held over until the following month. However at other buildings the process takes from one week to ten days. The buyer is given several dates to choose fromthis is part of the etiquetteso that the dates are convenient for the buyer, not just the board members. Some boards, however, will insist that they only meet with prospective buyers on set days, say the second Thursday of every month.
The admissions committee typically consists of three board members. Having more than three people creates what Cholst describes as an inquisition environment. Any more than three and the process begins to become unwieldy. It's difficult to get everyone together, much less to come to a consensus about a buyer's application, Cholst explains. However, in very small buildings where there may be as few as 15 apartments, it's common for a representative from each unit to be given the opportunity to review the paperwork and attend the interview. The purpose of the interview is to evaluate whether or not someone would be a good neighbor. According to Cholst, this should be a friendly chat in the living room of one of the committee members.
If you have any inkling that you might want to reject a buyer, you need to do it before the interview, Cholst advises boards. The board can reject an application for any reason, or no reason at all (except for illegal discrimination); but, keep in mind that once you get involved in litigation, you do have to supply a reason for the rejection. Cholst adds that some boards have been known to let an application die (the bank usually requires the application to move forward by a specific date) so that they can get out of formally rejecting it. Afraid to incur a lawsuit, they depend upon the bank to kill it. This is a terrible practice. Any building that does this gets a poor reputation among the brokerage community.
Delays Do Happen
According to Marilyn Harra Kaye, president of Prudential MLBKaye International Realty located in Manhattan, the more people there are dealing with the application, the slower the process is likely to be. Delays typically occur around the holidays or during the slower summer months when a key person might be out of town. If you feel the process is dragging, you can have your attorney speak to the seller, Kaye suggests. Most boards are reasonable when they hear about special circumstances, like the buyer needs to move quickly because he will be closing on his current apartment.
Buyers (who may, themselves, one day sit on a review committee) need to realize that the board consists of unpaid people who are volunteering their time. Many have other responsibilities including full-time jobs and families. Another consideration to factor into the equation is the copying and distribution of the application packet which can be sizable. It's not unheard of for a buyer to be asked to come back for a second interview because a key person on the committee was unexpectedly absent due to illness or an unforeseen emergency. The financials are the crux of most decisions, Kaye adds. The committee needs to make sure that everyone can c7b pay maintenance and cover any assessments.
In a very large building, where the committee meets with as many as seven people a month, the interviews might be conducted during the day at a board member's place of business. This doesn't mean it's a bad meeting, just a bit more business-like, explains Kaye. The notification process in a small building will also tend to be more prompt than in a big building where it can take a couple of days for the committee to make its findings known to the rest of the board.
The Golden Rule
According to Cholst, the board should follow the golden rule when dealing with applicants: My general feeling is that the buyer should be welcomed as a prospective neighbor and treated as board members would want to be treated, says Cholst, who wore the buyer's shoes not too long ago when he and his family purchased a co-op apartment in Manhattan. We received a call that same night to let us know we had been accepted. This was a nice gesture. I don't see any reason to keep the buyer waiting.
Ms. Mosher is Associate Editor of The Cooperator.