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First Timers' Club: How to Help New Owners or Shareholders What Condos and Co-ops Can Do to Break in Newbies

First Timers' Club: How to Help New Owners or Shareholders
It's helpful for a condo or co-op board to ease a first-time buyer into the fold (iStock).

In any real estate market, purchasing that first home is a daunting proposition; it's often the biggest investment of the buyer's life up to that point. And with today's high cost of urban living, it's exponentially more intimidating.

Just because a condo or co-op unit doesn't afford the sprawl of a suburban home doesn't mean that the purchase is a smaller feat. From saving the necessary funds, to a potentially rigorous application process, to figuring out how to engage with a community with its own rules and shorthand--there is no shortage of cause for anxiety.

Thus, it's helpful for a condo or co-op board to ease a first-time buyer into the fold from the minute that one emerges as a reasonable contender. The more welcomed and informed a buyer feels from jump, the more they may end up offering the community down the line.

Ground Rules

While spending a ton of money on something at least semi-permanent is certainly a source for consternation, there's only so much a board can do to assuage first-time buyers about their purchase. Where boards can help, however, is in navigating their incoming neighbors through the governing documents of the association.

“The best thing that a board can do is familiarize new owners with the offering plan, especially in regard to the house rules and bylaws,” says Alvin Wasserman of Fairfield Properties in Melville. “All too often, new owners are unfamiliar with the nuances of what they bought. Proactive education by the board will avert misunderstandings and potential problems down the line.”

Of course, a buyer should have done their homework well before signing anything formal. “Anybody that's purchasing for the first time should appropriately have their lawyer review the minutes to ensure that they're comfortable with how that condo or co-op conducts itself,” advises Burt Wallack of Wallack Management in Manhattan. “Our company sees to it that the application will include the building's house rules, the alteration agreement, and other pertinent info which owners should know, in order to ensure they understand the rules and so-on. Then, at the closing, they get a proprietary lease, which also includes the house rules. They should read it and learn what their obligations are to fellow shareholders and the co-op corporation.”

And some boards go even further than laying out the ins and outs of the association, by helping new residents acclimate to the greater neighborhood beyond the property. “We have one particular building in Carnegie Hill that now provides to new purchasers a package from Carnegie Hill Neighbors Association, which informs them of their surroundings,” says Wallack. “I think that's a nice and proactive way of introducing a newcomer to how wonderful the area is and all the amenities that are available outside their doors. It's a great idea, and that came entirely from the board.”

Altered States

It's extremely important to inform first-time purchasers about the rules regarding alterations in their units, as there are uniform regulations in place that apply to everyone in the building.

“When you're doing alterations in co-ops and condominiums, there are time limits,” warns Wallack. “If you don't meet those time limits, it ends up costing you a lot of money. Thus one of our requirements is that the owner or shareholder or a professional architect or engineer brings an entire package of proposed alterations to our office, such that we can sit down with them and go over it to make sure everything is being done appropriately.”

Experienced owners or shareholders may realize that they are under tight constraints in regard to this type of project, but the green buyer will need a little more of a hand-holding, at least.

Participation Trophies

Most professionals involved with condos and co-ops profess the value of having newcomers on a board, as they can offer a fresh and valuable perspective. But how new is too new? Is it worthwhile to court first-time buyers to take up a board role early in their residencies?

“The answer depends upon the talent available in the building, and the number of people willing to serve on the board,” suggests Martin Kera, a real estate attorney and president of the Manhattan-based Bren Management Corp. “In a larger building, you tend to have people who want to serve and have useful skills, such as accountants, financiers, or attorneys. In those cases, I would recommended letting any newbies get their feet wet unless they have specific talents that could be put to use.”

In small-to-medium properties, however, potential participants may be more scarce, and even more so when it comes to those with applicable expertise.

“We manage a small building where the only person with any financial expertise sold his apartment to someone in private equity, so we put the latter right on the board,” recalls Kera. “At another property, we had a lot of construction issues. So when a prominent architect bought in, we put him on the board in order to sort that out.

“Where Wall Street types are concerned, they're often traveling, so it's difficult to get them to a meeting,” he continues. “People are hesitant to be on the board at first, because they don't know what work that entails. I've also found that some competent people serve for one year and have no desire to continue. They've demanding jobs and little free time, and quickly learn that board membership is a lot of work and they don't want to attend monthly meetings.”

So it may best serve a board to ease in first-timers, make them feel welcome, and subtly encourage them to stay involved in the community. And who knows? That nurtured seedling me grow into a full-fledged board president plant.

Mike Odenthal is a staff writer at The Cooperator.

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