Board Business 2013
“Can I get into the building?” In recent years I hear that question more and more from anxious buyers of New York City co-ops, who have all read or heard horror stories about seemingly qualified people whose purchase applications have been turned down by co-op Boards for no apparent reason. Unfortunately there ARE some baffling turndowns, and never more so than in 2012. But usually the careful preparation of a Board package and some knowledge beforehand about the building will minimize the risk. Here are a few things you need to know:
* New York City has the most stringent fair housing laws in the country. And co-op Boards are no less liable than any other landlord. So it is actually ILLEGAL for them to deny admission to an applicant based on race, color, creed, marital status, sexual orientation, or numerous other criteria. The law prohibits the Board from rejecting a single woman because they do not know whom she might marry, or a gay couple because they ARE a gay couple. While it is true that Boards do not have to give a reason for a turndown, they have no wish to be sued. So they cannot ask you questions (as one Board member did a number of years ago of an Orthodox Jewish couple) like “Do you need to use the stairs on Saturdays?” And please, if you feel your rights are being violated, assert them! It creates a better world for us all.
* Most turndowns have to do with either money or the terms of your occupancy. If you plan on using the apartment for six weeks a year, find out in advance how the building feels about pied-a-terre buyers. If you are buying for one of your kids, make sure the building permits that usage. Do you have a huge dog? Check it out in advance. Some buildings interview the pets! Has your sixteen-year-old daughter been boasting on Facebook or Twitter about the beer pong at the parties she likes to throw when you are out of town? Clean it up.
* The best reference letters are from people who really know you, live in similar co-ops to the one on which you hope to buy (where ideally they serve or have served on their own Boards), and know the neighborhood. The letters cannot be perfunctory. They should present you from as many different angles as possible: history, philanthropy, family, recreation. And increasingly, Board members actually contact the references, so tell your friends to be prepared.
* Many Board rejections are financial. That said, the range of monetary expectations varies enormously from building to building. Interestingly, in the super luxury market, the Board requirements are usually less stringent. For example, many of the buildings where apartments sell for $20 million or more do not require tax returns. On the other hand, some buildings where apartments are far less expensive have a list of requirements and reports as long as your arm. As a buyer or seller, you must make it your business to understand what the building’s financial personality is. Will the Board count bonus money in reviewing your income? (In the wake of the recession, some won’t.) Are they looking for a two or three time multiple of the purchase price in liquid assets? Do you have a very large income which you can use to offset the fact that your asset picture might not be so strong? Do you have a friend or business associate who lives in the building or is friendly with a Board member who can vouch for you? Frequently deficits in one area of your financial profile can be made up with advantages in another.
* Above all, make sure that every part of your submission is clear and complete. There is no second chance. If you need to write a cover letter (or have your accountant or attorney write one) to make sure the intricacies of your presentation pull together, please do so. The clearer and more transparent your circumstances, the better your chances.
Finally, work with an agent who knows her stuff. The better firms have a multiple review process for packages, in which a manager has to sign off on the package before it is sent to the co-broker for review. This makes it that much more unlikely that something important will be forgotten. Your agent is your best advisor on how to dovetail the elements of your presentation for maximum impact. Be sure you choose an agent with the experience and expertise to make that package speak for you!