Sunday, March 3, 2013

How many of your secrets do you have to tell to get into a co-op? Or condo?

There’s no question that buying a co-op involves a serious invasion of the buyer’s privacy.  But the truth is, today, buying a condo is often just as invasive.

If you want to buy either, you’re just going to have to bite the bullet and prepare to bare.  Your consolation is that so does everybody else. 
And in a co-op, it means that your neighbors are all highly qualified and nobody’s going to default, sticking you and the other tenant-shareholders with their share of the maintenance.

The typical co-op or condo board application requires most if not all of the following:

A highly detailed application form of several pages which includes, among many other things, employment information and history, memberships in any clubs, societies, fraternities or boards which the applicant believes would be beneficial to the building, and whether not the applicant and/or any other proposed occupants of the co-op has ever been convicted of a felony. 
(The one I’m looking at says “If yes, please explain,” but I would say if yes, forget about it.)

An equally highly detailed financial statement including an itemized schedule of cash, stocks, bonds, mutual funds, real estate, and other assets.  Verification of all of these--current statements--is required. 

Answers to many other personal questions about any bankruptcies, judgments, foreclosures, lawsuits, defaults that may be lurking in the applicant’s past. 

The contract of sale

If the purchase is financed, loan information including the application, commitment letter and recognition agreement.

Applicant’s  most recent two to three years’ income tax returns and W-2 forms

Letter from employer verifying employment, annual salary, bonus if any, position and length of employment.  If self-employed, a letter from CPA or accountant stating income.

Three business and three personal reference letters

Reference letter from current landlord or managing agent stating length of residence and payment history.  (Yes, you can leave this out if you currently live in your own house.)

Personally, I have always thought that the financial information should be reviewed ONLY by the managing agent and the treasurer of the board, and they should deliver a yea or nay.  If it’s yea, then the board could review the personal and other, non-financial information. 
But nobody’s asked me what I think.

The law says that a co-op can reject a buyer for any legal reason it wants to, including (as one seller reminded me) an objection to the shape of the buyer’s ears. 
Of course, it’s illegal to reject a buyer because of race, color, creed, religion, sex, sexual orientation, military status, age, disability, ancestry, familial status, national origin, or any other grounds prohibited by city, state or federal law.

A condo can not reject a buyer.  All a condo board can do if for some reason they don’t want the buyer in their building is buy the apartment itself at the contract price. 
This happens approximately never.  But they still want approximately the same amount of information.  I don’t see why this should be, but once again, nobody’s asked me.
Your broker takes care of all the organizing, typing, etc.  All you have to do is gather the information.
Do not for one second imagine that you can leave any space blank or omit anything that's requested.  The managing agent will send your package right back to your broker and will not accept it until it's complete.

If you’re buying a condo, there’s one way out of this:  buy it via a limited liability or other kind of corporation.  The corporation’s information will have to be disclosed, but not yours.  Establishing a corporation requires a legal process. Ask your attorney for details. 

Many celebrities buy through corporations because, as sales information is public, it’s a way of hiding a home address.   
Co-ops, as a rule, do not allow this kind of purchase.  (They also do not allow purchase by anyone with diplomatic immunity, as there’s no way to collect maintenance charges if the buyer defaults.)

The only real way to maintain privacy is to buy a house.  With cash.  Because if you want to borrow the money, you’re still going to have to answer a lot of nosy questions.

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