CoopAndCondo.com - Addressing the realities of Residential Real Estate

From the Law Office of Ronald H. Gitter, Esq.

Who Can You Turn To?

       
Who Can You Turn To?

The Order of Things...

As you know, the Board of Directors makes all of the decisions which affect a cooperative and a Board of Managers makes all of the decisions that affect a condominium. But how are the decisions of each entity carried out on a day-to-day basis? Almost all co-ops and condos retain the services of a "managing agent", which is a company engaged in the business of managing the affairs of real estate entities. The managing agent will take care of all the operational needs of the co-op and condo, including payment of bills, hiring contractors to make repairs, handling the building's bank accounts and overseeing the sale and leasing of individual units within each co-op or condo. The managing agent also serves as gatekeeper between the apartment owner and the Board, thereby limiting the direct contact with the Board under most circumstances. Many managing agents also have separate brokerage departments that offer apartments for sale and lease. Logistically, someone has to handle the everyday affairs of a cooperative or condominium building. Boards are made up of apartment owners who volunteer to serve and do not have the time to actually carry out the matters that are voted on. Although a few buildings are "self managed", which means that one or more unit owners attend to the operational matters of the building, most co-ops and condos are run by managing agents. 

How Does it Work?

Once a managing agent is retained by a co-op or condo, the managing agent will assign an "account executive" to work with the building and be responsible for all matters affecting the building. In addition, larger buildings may also have a "property manager" assigned to the building who will be responsible for maintenance and repair issues. There are some coop and condo complexes, with hundreds of units, that actually have a representative of the managing agent "on site". Lincoln Towers on the west side of Manhattan is a good example of that type of coop-managing agent relationship. Sales and leasing matters will generally be handled by the managing agent's "closing department." That department is separate from building management, and once an apartment is about to be sold, the people in the closing department take over.

Sales and Leasing

One of the main functions that managing agents carry out is to oversee the sales and leasing process for co-ops and condos. The closing department of the managing agent will set up the application process, prepare the sales packages and act as intermediary between the building and the potential buyer or lessee. This process is incredibly paper intensive and time-consuming. It makes sense to know the people in the closing department so you can make sure that your particular sales or leasing package doesn't get placed on the back burner. In most cases, a sales or leasing package will be forwarded to the Board as soon as a "complete" package is received by the closing department. Accordingly, make sure that the sales or leasing application package is complete in all respects when it's submitted. There are no exceptions.

There are Good Ones and Bad Ones

Like anything else in life, there are good managing agents and bad ones. By “bad”, I mean inefficient, difficult to deal with, unresponsive to problems and slow to get things done. Why buildings continue to employ agents that everyone hates dealing with is one of the great mysteries of New York City living. Further, from to time, there are scandals involving managing agent employees putting their hands in the co-op and condo cookie jars. The favorite cookie seems to be price fixing of large repair or capital improvement programs where thousands of dollars are paid by the building to contractors, engineers and architects. The prices of the jobs are inflated and everybody skims a little off the top. Just to give you an idea of how difficult a situation it is, a number of years ago, one of the people arrested was in the process of writing the ethical rules to govern managing agents. Nice. All this being said, most managing agents know what they're doing, but are just too busy handling too many buildings. As a result, it can be very difficult to get someone on the telephone. Some managing agent employees hear the telephone ringing, but just aren't sure what it is. Maybe it's phone phobia. On the other hand, there are a number of agents who are real pros and are a pleasure to deal with. They are sensitive to the needs of the individual owners, the Boards they represent and the professionals who deal with them on a day-to-day basis. A responsive managing agent makes the process of selling or leasing an apartment or resolving a problem a lot easier.

What Happens When You Have a Problem?

Sooner or later, every unit owner has an issue which must be addressed by his or her building. Whether it's a request to make alterations, a leak, a noisy neighbor, a weird smell, bugs, or a problem with a building employee, the apartment owner will need to contact the managing agent. Here are five rules to make the resolution of a problem a little easier:

Rule One: Know Thy Account Executive.

Don't be shy about introducing yourself to the account executive for your co-op or condo and keep such person's telephone number handy. These people are bombarded daily with complaints and problems from the entitlement and prima donna capital of the world (Manhattan). A little personal contact will go a long way to resolving a problem.

Rule Two: Call the Super First.

If you can handle the problem with the superintendent of your building (like a minor repair), don't get the managing agent involved. First of all, if you contact the managing agent for a minor matter, the account executive will give the super grief for not handling the matter inside the building. That makes the super unhappy. That's not good. Remember, account executives handle hundreds of complaints. Limit your contact to serious matters.

Rule Three: Put Your Communication in Writing.

If your telephone call to an account executive is not returned within 24-hours (or sooner when an emergency arises), fax or E-mail the account executive outlining the problem and indicate that your call was not returned. The main goal of the written contact with the account executive is to eliminate the possibility that someone will mis-characterize your request or forget that you called entirely. With very few exceptions, you will find that a letter or E-mail will work and the problem will be addressed in the ordinary course of business.

Rule Four: Call A Board Member.

If there is still no response, contact a Board member or the president of your co-op or condo, if appropriate, and outline the problem and the lack of a response from the Managing Agent. Managing Agents get hired to protect the Board from involvement in day-to-day management and problems. When an apartment owner cannot get satisfaction from the Managing Agent and a Board member has to get involved, that usually expedites the process and awakens the interest of the Managing Agent.

Rule Four: Call Your Attorney.

Unfortunately, if you have a problem that doesn't affect anyone else in the building but you, it is sometimes difficult to find enthusiasm on the part of the managing agent or Board to solve the problem. This is particularly true when the solution to your problem is an expensive one, like re-pointing a portion of a facade to eliminate water infiltration into your apartment. Often a Board will want to address a serious repair issue as a part of a larger project sometime in the future. When that happens, it can be frustating for the apartment owner and it can greatly impact the apartment owner's quality of life.

Why Involve an Attorney?

Particularly when there is potential liability on anyone's part, an attorney should be brought into the process, just to make sure that matters are handled in an appropriate manner. Yes, it's an additional cost, but when a serious matter arises involving your apartment (like an unexpected lake in your living room), and both the managing agent and the Board are dragging their feet, having someone on your side who knows what to do can help speed up the resolution process. In my experience, attorney intervention usually provokes a response from the managing agent and/or the Board, relatively prompt action and attentiveness to the problem.

Residential Reality: Going Nuclear Should Not be Necessary

For the most part, unit owners and managing agents splash in the pool together without much conflict. When a problem does happen, following the above rules should make finding a solution a lot easier.

Simplifying the complexities of Cooperative and Condominium transactions in New York City

Asked and Answered

Q

I don’t smoke, but the smell of smoke is wafting into my apartment from my neighbor. Is there anything that can be done to remedy this condition?

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I’m selling my co-op tomorrow and my bank attorney has not yet received the stock certificate and proprietary lease from my bank. Will the closing have to be adjourned?

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The seller has indicated that there was a leak in the bathroom from the apartment above that has been repaired in all respects? Can I rely on seller’s representation to that effect in the contact?

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My mortgage lender has informed me that the cooperative in which I am purchasing an apartment has inadequate insurance coverage and has requested that the co-op increase its coverage to meet the bank’s new minimum requirements. Can the bank withdraw its underwriting due to a lack of insurance coverage by the co-op?

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The commitment letter included a condition that my loan was subject to a “second review” by the investor to whom the loan will be sold. Has my commitment letter been issued?

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Can I purchase my co-op in the name of a trust?

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Can I allow the seller to remain in possession after closing?

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There’s a repair needed in the apartment that the Seller promises to remedy after the closing. Is that a good idea?

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Do I care who the bank attorneys are?

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Do I have to go to the closing?

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One of the conditions in my loan commitment states that the monthly maintenance cannot increase by more than five percent? Is that a problem?

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Can I have a roommate after I purchase my co-op apartment?

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Can I undertake renovations before the Closing?

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Do I need a home owner’s insurance policy for my apartment at the time of my closing?

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Should I let the broker do the walk through?

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Once I get a loan commitment, is my loan approved?

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When it comes to purchasing an apartment, what exactly is due diligence?

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Do I have to let the maintenance people in to fix a building system?

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Does my dog have to be interviewed by the Board?

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Is buying an apartment in a small building a good idea or a bad idea?

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Can I fudge on my numbers in my financial package to the Board?

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Should I use a mortgage broker or should I go direct to a bank?

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Should I have the apartment inspected before I sign the contract?

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Do I Really Have to Give the Board My Tax Returns?

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I am purchasing an apartment with extensive landscaping on the terrace. Can the co-op or condo make me remove landscaping that was existing at the time of my purchase?

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I have an opportunity to buy a garage space, but the sponsor is calling the arrangement a “license” rather than a “purchase”. Does that matter?

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We are considering an apartment that will require us to move the bathroom to another location in the apartment. Is such a move possible?

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The seller’s bank can’t locate the stock and lease for the co-op closing. Can we still close?

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The broker told me that I can adjourn the closing for 30 days? Is that correct?

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The Offering Plan for my condo indicates that the apartment has a “lot line” window. Is that a problem?

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My dog bit someone in the lobby and I have been notified that if it happens again, my dog will have to go. Does the Board have the power to restrict me from having a pet?

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There is an unobstructed view from the apartment I am considering, but there is a vacant lot directly in front of that side of the building. Is that reason for concern?

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The Managing Agent called and it looks like my finances will not be sufficient to get Board approval. Is there anything I can do?

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The managing agent has had our application to purchase a cooperative apartment for three weeks and nothing has happened. Is there anything we can do to move things forward?

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We are considering an apartment in a co-op where the sponsor still owns units. Is that a problem?

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The seller’s apartment presently has a storage unit. Does the storage unit transfer with the apartment?

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We’re closing in three weeks, but our lease is up next week. Can we move in before the closing?

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I just did the walk through on the purchase of a sponsor unit and we have an extensive punch list. Will the punch list be completed by the time of closing?

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I’m buying an apartment from a sponsor and the Offering Plan requires me to pay the sponsor’s transfer taxes and attorneys fees. Do I have to?

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The purchase price of my apartment is over $1,000,000.00. Is the transaction subject to the “mansion tax"?

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I’m selling my apartment, but I’m not a resident of New York State. Are there any special closing costs?

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We did the walk through and the apartment was filthy. The contract required the apartment to be “broom clean”. Can we complain at the closing?

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I have to sell my apartment in order to afford the new one I’d like to buy. Can the contract be contingent on the sale of my existing apartment?

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I’m a famous person (no, I really am) and I really don’t want my financial information given to eight strangers on a co-op Board. Is there a way to avoid that?

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I’m the executor of the estate of a deceased shareholder. Do I have to go to the closing?

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I just graduated law school and have a job with a large law firm. I have a significant salary, but no liquidity or significant assets. Will I be able to buy a co-op?

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The listing indicates that the apartment has “roof rights”. How can I be sure?

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When buying a condo, is it worth the time and effort to get an assignment of the seller’s mortgage?

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The Seller removed an expensive chandelier right before Closing. Is that permitted?

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My husband and I found an apartment we love, but there’s a bidding war. Should we participate?

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We love the apartment, but the building has bad financials. Should we go ahead?

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My closing is in December, but the lease for my apartment does not expire until the following March. What do I do with my lease?

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We are buying a condo, but we have a delayed closing as the seller has a tenant in place for the next six months. We will be able to retain our loan commitment for an extended period of time?

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Should my husband and I take title as tenants by the entirety, tenants in common or as joint tenants?

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When a gay couple buys the shares of a cooperative or buys a condominium apartment, what is the best way to hold title?

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I have not been able to make my co-op mortgage payment for the past three months. If the bank declares my loan in default, how long will it take before the bank forecloses on my apartment?

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A co-op owner asks: I have found that maintenance is usually higher in coops than in condos because of the contribution by the shareholders to the building's underlying mortgage payments. In condos, the unit owners only pay for real estate taxes and common charges for common areas. Will the monthly maintenance be reduced after the underlying mortgage has been fully amortized?

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Can a corporation or other business entity own the shares of a cooperative apartment?

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I’m buying an apartment in a building designated as a “landmark.” Should I be concerned?

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I am buying a co-op that needs major renovations. The super has offered to do the work at a significant discount. Is that a good idea?

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We just submitted the Board package and we realize that we neglected to disclose a lawsuit against my husband’s company, in which my husband is named as a defendant? The lawsuit is covered by insurance and my husband is indemnified from liability by his employer. Should we notify the managing agent and amend the purchase application?

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We are negotiating the contract and we just found out that there is a substantial assessment that will go into effect the month that we close on the purchase. Should the assessment be deducted from the purchase price at closing?

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The bank attorney was two hours late to the closing. Was that my attorney’s fault?

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I’m buying a cooperative apartment in Manhattan, but I move out to the Hamptons from June to the end of September each year. Will I be able to sublet the apartment each year when I’m away?

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I just got the purchase application package and it's twenty pages long. Should my broker be helping me with organizing the required documents?

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It’s the day before the closing and I just found out that the maintenance for the apartment is higher than the maintenance stated in the contract. Is that grounds to terminate the contract?

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The financials for the condo are more than a year out of date and there is a delay issuing the new financials. Should I be concerned?

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The contract requires “official bank funds” in the form of certified or official bank checks. Can I bring “official" checks from my brokerage account?

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My parents want to buy me an apartment while I’m in graduate school in Manhattan. Will a co-op allow me to purchase the apartment, if my parents are co-owners?

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I obtained sole ownership of my condo in my divorce, but the deed for the apartment is still in both of our names. Will my ex-spouse’s cooperation be required when I’m ready to sell the apartment?

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I just found out I have to pay a fee to have my mortgage recorded. Is that right?

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I am buying an apartment in a small building and I just found out that the elevator is being renovated and will be out of service for three months. Do I have to close if the elevators will not be operational on the closing date?

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My husband and I own a co-op and we would like to transfer the shares to an irrevocable trust that we recently created for estate planning purposes. Will our cooperative allow us to make that transfer?

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The seller is a foreign citizen and does not have a social security number. Does that prevent the seller from selling the apartment?

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An “assessment” was imposed by the co-op Board after the contract was signed. Is payment of the assessment the seller’s responsibility?

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There is a leak in my apartment and the Resident Manager is not being responsive. Should I call the Board president?

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I just bought an apartment and I am only refinishing the floors and repainting. Do I need the consent of the Board before I get started?

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The co-op I’m interested in is pet friendly and I have a dog. Is there any chance the Board could approve my application without approving my pet?

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We purchased our apartment in January, but our first mortgage payment is not due until March 1st. Why isn't the first payment due February 1st?

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I’m buying an apartment from a sponsor and the contract does not provide for a “mortgage contingency”. Is that a provision that I can negotiate into the contract?

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I am buying an apartment from a sponsor and the contract provides for the buyer to pay the sponsor’s transfer taxes and legal fees? Is that normal?

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I'm buying a condo and my attorney just ordered the "title report". What's a title report?

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There is a leak in my apartment and the Resident Manager is not being responsive. Should I call the Board president?

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My boyfriend and I are interested in buying our first apartment in a new construction condominium. Our mortgage broker tells us we should qualify for a 90% loan, but it will be a close call for the bank. The sponsor wants us to sign a “no contingency” contract. Is that a good idea?

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We are considering a condo purchase in a new development that is only 25 percent sold. There is a bank that has approved the project and will make the loan, but should we be concerned about the number of units that the sponsor still has to sell?

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We are buying an apartment that has been extensively renovated. Among other things, the size of the master bath was significantly increased. Can we rely on a representation in the contract that all required approvals were obtained from both the Cooperative Corporation and from the New York City Department of Buildings?

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We received a draft of the contract of sale for the cooperative apartment we are buying and our social security numbers are on the front page! Our attorney told us that we will have to provide our identification numbers to the managing agent for a credit check as a part of the Board package, so it’s not a big deal. Do we have to list our socials on the contract?

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Q

The listing stated that the apartment was 1,100 square feet, but the appraisal measured the apartment at 900 square feet. Can we cancel the contract and get our money back?

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Q

I'm about to pay off my co-op loan. What evidence will I have from the bank that the loan has actually been paid off?

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I am considering an apartment in a new construction condominium. There is park under development by New York City that will greatly enhance the value of the condominium when it’s completed. Although the sponsor’s salesperson indicated that the first phase of the park will be completed in the next year or so, the Offering Plan contains a “Special Risk” that states that the sponsor gives no assurance as to when, if ever, the park will be completed. Who and what should I believe?

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We are in negotiations to purchase a co-op apartment on the Upper East Side. Our lawyer reviewed the minutes and discovered that the building has a bedbug infestation. Should we go forward with our purchase?

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My purchase application was approved by the co-op Board, but it is conditioned upon my providing a maintenance deposit and guaranty by my parents. Do I have to comply with the conditions?

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At my closing, I had to reimburse the Seller for his New York State “STAR” rebate that appeared on the maintenance statement for the month following the Closing. What exactly is the STAR rebate and will I be able to obtain the rebate as well?

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I'm selling my co-op next month and my attorney aked me to "freeze" the line of credit I have with my bank. What exactly do I have to do?

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I just found out that the seller will be unable to close for an additional two weeks. As a result, I will have to extend my rate lock, at a cost of $1,200.00. Is the seller obligated to reimburse this cost?

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I am buying a new construction condo and the Offering Plan is over 400 pages. Do I need to read the entire Offering Plan?

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Q

We ran across a co-op that has a few “sponsor owned” apartments for sale. Is there any advantage in buying one of the remaining sponsor apartments?

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I am about to make an offer on an apartment, but I have not been provided with the current financial statements for the co-op. Am I entitled to review the financials before I make my offer?

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We are selling our apartment to our neighbor, but our neighbor can’t afford to purchase our apartment unless she sells her apartment. Her lawyer wants the contract to provide that the purchase of our apartment is contingent upon the sale of her apartment. Our lawyer is advising us against including a provision that makes the transaction contingent on the sale of the buyer’s apartment. Should we go along with the contingency?

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We are selling our co-op and the buyer is not obtaining a mortgage in connection with the purchase. The contract required the Board package to be submitted within 10 business days after the fully-executed contract was returned to the buyer. The buyer is two weeks late in submitting the package. Is the buyer in default?

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I’m selling my condo and I have not been able to pay my common charges for the past six months (I lost my job). I have a buyer for the apartment, but the Board of Managers will not release the Waiver of the Right of First Refusal, unless I pay the outstanding balance of the common charges. I’m between a rock and a hard place, as I don’t have the money. What should I do?

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I am combining two adjacent apartments that I own and I want the co-op to issue one stock certificate for both apartments. There is an outstanding UCC lien against one of the apartments. The other apartment is owned free of any liens. Can the co-op object to the combination?

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My attorney asked me to contact the managing agent to verify the maintenance and assessment information that's disclosed in the contract for the apartment I intend to purchase. Isn't that my attorney's job?

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Our application to purchase a co-op was turned down by the Board without an interview. Although our attorney asked the managing agent to disclose the reasons for the Board’s decision, none were given. Can the Board just turn our application down without any explanation?

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My bank issued a loan commitment, but then withdrew its underwriting because private mortgage insurance was not available. Will I have a problem canceling the contract and getting my deposit back?

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The seller has a storage bin, but the contract indicates that the apartment does not come with a storage bin. If I buy the apartment, can I be sure that a storage bin be avaialable?

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I’ve been asked to serve on the Board of my co-op. Could I be held liable if the co-op is a party to a law suit?

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I am buying a co-op in Manhattan. The managing agent is located in Brooklyn and refuses to send a closing representative to the attorney’s office for the buyer or seller located in Manhattan. Will everyone have to go to Brooklyn for the closing?

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We are purchasing a condo that was occupied by a tenant at the time the contract was executed. We just did the walk through and there is damage to a portion of the floor that was hidden by the tenant’s furniture. Are we entitled to a repair credit at Closing?

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A loan commitment was issued, but the bank requested an explanation for a $14.00 missed credit card payment that occurred nine years ago. Could the bank withdraw its commitment as a result of this missed payment?

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I'm selling my co-op, which I own with my mother and father. Is it okay to have the closing checks made out to the three of us?

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A leaking pipe inside the wall of my co-op was recently replaced. The following month, my maintenance account was charged $1,000.00 on the theory that the pipe only serviced my apartment. Am I responsible for this repair?

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A condo buyer has a mortgage contingency, but the closing will not take place for six months as the seller has a tenant in the apartment. When should the purchaser apply for financing?

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We submitted our Board package a month ago, but the Board has not scheduled an interview or asked for any additional information. To make matters worse, the managing agent won’t give us any indication as to what’s going on. Is there anything we can do?

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Q

My co-op contract included the seller’s flat screen, but the bank underwriter required that it be removed from the contract as it was “impacting” loan to value. Can the bank do that?

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Q

I am buying an apartment in a small co-op that is self managed. How does the bank obtain the required “co-op questionnaire” in order to complete its underwriting?

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Contact Ron Gitter

Buying or Selling? Email me at