The Real.Est List
The Board Room: What co-op boards should ask (and tell) buyers at the interview
As a lawyer representing co-op boards for nearly two decades, I’ve spent a fair amount of time explaining what not to ask buyers at a co-op board interview in order to avoid discrimination claims by rejected buyers.
For the same reason, I also suggest that boards resolve all concerns or questions over a buyer’s financials prior to scheduling an interview, as a post-interview turndown based on finances can trigger allegations of discrimination. (“You had my finances all along but didn’t reject me until you found out I was [gay/Asian/Jewish/etc].”)
So what should a board ask—and tell—prospective buyers?
The answer is that there’s no one-size-fits-all checklist, in part because a board interview is first and foremost a temperature-check to make sure a buyer will integrate well into the community, and co-op communities vary.
The interview is also a critical opportunity for education on hot-button issues of the building, to put future shareholders on notice about everything from policies on renovations and pets to whether they can bring their own trainer to the on-site gym.
Accordingly, many of the questions below serve two purposes: To help determine whether the prospective buyer will make a good neighbor and to divine the areas where some education on the building’s rules and policies may be warranted.
- Tell us about yourself. What do you do for a living? Where do you live now? You should already be familiar with much of this information from the application materials. This question is a softball—a warm-up to ease into the interview
- Have you ever served on the board? Would you be interested in serving on the board or one of its committees? The answer may be especially important in a small and/or self-managed building that relies on actively involved shareholders.
- What do you do when you’re not working? What are your hobbies and interests? Are you involved in any volunteer organizations? This is a good way to get a read on who the person is—what is important to them, how they spend their time.
- Do you plan on doing a lot of socializing or having frequent visitors? This is a convenient segue into building policies on guests, large parties, quiet hours, etc. With regard to frequent visitors, you should confirm that the prospective buyer is going to occupy the apartment (ask who, if anyone, will be occupying the apartment with them), to ensure this isn’t a parent buying for a child.
- Are you planning on doing any renovation? If the answer is “Yes, a gut rehab,” this is an opportunity to review key renovation policies—such as the fact that only 3 renovations are allowed per year and the buyer won’t be able to start for 18 months, that central air conditioning is not permitted, etc.
- Do you plan any musical instruments? What are they and do you plan on playing them in the apartment? Pianos or drums aren’t necessarily cause for a turndown, but this is an opportunity to be clear about quiet hours, sound-dampening techniques, and paper thin walls.
- Will this be your primary residence? A pied a terre may be fine with your building...so long as the owner can afford it. Accordingly, if the buyer is financing a large percentage of the purchase, this could be a red flag.
- Do you have pets or do you plan on getting one in the future? Better that the buyer know now that only one dog per apartment is allowed, and dogs must ride the service elevator.
- Why did you pick this building and this neighborhood? “Because Tribeca is cool” paints a different picture than “the public elementary school is fantastic.”
- Have you ever been a party to a litigation? Overly litigious people can make for very difficult neighbors.
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