Buying a co-op is not the same as buying a condo or apartment in New York. A Co-op is a unique arrangement that is only available in New York and some other big areas. Here, a buyer essentially gets to buy the shares of the cooperative owning a building instead of buying the building itself. Think of it as buying shares in a corporation and getting the right to a proprietary lease of a particular portion of the building. This is generally a much cheaper alternative to buying an apartment or condo in an expensive area like New York.
A co-op might cost you 10% to 30% less than a condo of the same size and comparative quality. Also, there is a huge supply of Co-ops in NYC than Condos, which makes it a much cheaper option than them. However, buying a co-op is not an easy process. There is a lot of confusing paperwork included in this process, and one has to be cautious that they are getting the best deal out there in the market. That’s why having a real estate attorney in NYC assist you in the process is a blessing.
Real estate lawyers are well versed with the laws and regulations of their area and have even had the immense knowledge to identify when the deal is not right for you.
That’s why having them beside you while you go for a co-op in New York would not only save you a lot of money and stress but will also ensure that you find the best deal available in the market.
In this article, we will be discussing the top 3 pitfalls that one needs to avoid while buying a co-op and how experienced real estate lawyer in NYC can help them.
Pitfall 1: Incomplete Due Diligence
Unlike buying a condo, buying a co-op includes a lot of confusing paperwork. And if the paperwork is not done properly, then you might end up with the wrong deal, which might cost you a bank, and you might also not even get the benefits that you have been looking forward to.
There are a lot of things one needs to check before buying a co-op, but here are a few of the most important papers that should be a non-negotiable if you want to get your hands on the right deal:
- Building annual report statements
- The building’s board minutes
- Offering Plan
- Building Rules
How Real Estate Attorney NYC Can Assist :
Conducting thorough Background Checks
Going through all the paperwork and doing background checks on the cooperative as well as the building might seem like a humongous task, but a real estate attorney can easily dive deep into the related property history and help you uncover any potential legal issues or outstanding liabilities associated with this building. This will not only allow you to make the right decision but will also save you from fraud and potential financial losses in the future.
Re-viewing co-op board minutes and financials
Co-op board minutes are the gateway to learning about the inner functions of the building. It includes facts like disputes between shareholders, pending lawsuits, bills coming down the line for major capital repairs, and votes on issues like whether an owner can rent out his or her apartment.
That’s why it’s crucial to thoroughly study the co-op board minutes and the financial statements of the building before you make any purchase. But you might lack the proficiency to understand these crucial details or might lack the time to do a thorough study of the papers.
That’s where real estate attorneys come into play. They help you understand any potential flaws, like if the guy in 8B has a dog that barks throughout the night, if the roof needs repair, or if the building is facing a substantial financial crisis. This information will help you make calculated decisions about whether you should buy this co-op or not.
Identifying Red Flags
Real estate attorneys are no less than personal investigators. They can smell a red flag from miles away. They are better at judging a building’s credentials because they have already worked with a lot of real estate agents and have subconsciously picked up the signals that signify that a person is not trustworthy. That’s why having them while buying a co-op might save you from diving deep into a bad deal.
Pitfall 2: Financing Challenges
Financing a co-op in NYC is another significant challenge that one might have to face when they are looking to get their hands on a good co-op deal in the market. The mortgage lender you’re applying to must approve the building and your application for you to get the mortgage.
If a person owns more shares of the building, or the building’s financial statements are not up to the mark, or if the building is involved in multiple lawsuits, there might be a high chance that your application might be rejected.
Also, the mortgage lender will go through your credit history and stuff, but it requires a lot more convincing on your side to get the mortgage for the Co-op because co-ops are non-warrantable.
How Real Estate Lawyer NYC can assist :
Explaining financing options
The real estate lawyers will help you understand what are your financing options to get a co-op and which lender might be the best for you. This will ensure that you don’t have to research a lot and go through lots of rejections before getting your mortgage approved.
Reviewing loan documents
The attorney will also help you review your documents as well as the building documents to understand if any loopholes can lead to your application being rejected. The attorney will also have connections with various mortgage lenders, and his goodwill can help you get your application approved fast.
Ensuring compliance with co-op board requirements
Real estate attorneys will also help you understand the co-op board requirements in the financing option you’re going for and will help you meet the compliance and ensure that your application meets the rules set by the co-op board as well as the mortgage lender.
Pitfall 3: Co-op Board Approval Hurdles
The co-op board is a regulatory authority that makes the decisions regarding the building, including the improvements that the building can make and keeping the sane financial health of the building such that it attracts more investors.
That’s why they are very choosy about who gets the co-ops and who doesn’t, and sometimes they might even ask very personal questions to evaluate your current financial and social standing.
The most challenging part of getting a co-op is the Board Meeting, where they are going to evaluate if you are the right fit for the building. Be warned because they reject a lot of people even though they might have the financing approved and good income sources.
How Real Estate Attorney NYC can assist:
Preparing a strong co-op board package
This is where real estate attorneys come into play. This might be your first time going for a co-op board interview, but it’s not your attorney’s first time assisting someone with their board interview. Their experience allows you to get prepared for the frequently asked questions in interviews and ace it the first time without getting rejected.
Advising on communication with the board
They can also give advice on how to communicate with the board members, what they are looking for, and how to present yourself in a manner that increases the likelihood of you passing this interview and getting your hands on this co-op.
Addressing issues that may arise during the approval process
A real estate attorney in NYC can also help you address the issues with your application beforehand, what the board members might be concerned about, and how you can deal with their concerns in the right manner and remove any suspicions that they might have regarding your eligibility to buy this co-op.
In conclusion, buying a co-op in NYC rather than buying a condo is your best option when it comes to saving costs and enjoying the various amenities that top living spaces have to provide.
However, buying a co-op is not an easy process. It involves a lot of complicated processes and complicated paperwork, and if you don’t do your due diligence, prepare a financing option beforehand and ace the co-op board meeting. Then, buying a co-op might just become a pipedream for you.
That’s why having a real estate attorney with you is crucial if you really want to get your hands on a co-op and don’t want the challenges and the additional stress this lengthy process might cause.
And if you’re serious about getting a co-op and don’t know where to find a good real estate attorney, then connect with a real counsel law firm and schedule a call with us at your convenient time.