After months of apartment searching online, you've finally found the perfect listing--plenty of space, light, an affordable maintenance, great neighborhood. But a second look reveals that pets/guarantors/washer-dryers/[insert dealbreaker here] are approved on a "case-by-case" basis.
What, exactly, does "case-by-case" mean--and how can you ensure that yours will be approved?
Generally speaking, “case by case” means that a co-op or condo board's rules are not cut and dried, and that board deliberation will be necessary.
Unsurprisingly, some real estate experts we spoke with equate "case by case" with "big headache ahead."
“It's an immediate red flag that further due diligence is required before the contract is signed" and that all the case-by-case issues need to be "independently verified,” warns Manhattan real estate lawyer and blogger Ron Gitter.
Others hinted at a darker meaning, saying that case-by-case consideration can be used to steer away buyers considered undesirable for some other reason.
But Corcoran broker Abra Nicolle Nowitz sees the "case by case" standard as a possible signal that a board may be open to compromise. It's the job of your broker, she says, to find out more about parameters and what the board really is comfortable with.
"While on the one hand, case by case may seem arbitrary and unfair on the surface, it also gives potential buyers and sellers the wiggle room to compromise," agrees Keller Williams real estate agent Michael Shapot, "and address their individual concerns in ways they may not have considered before."
That's the 30,000-foot view. Here's what case-by-case means in some specific contexts:
If you already have a dog, or think you might want to have one someday, it’s safest to steer clear of buildings that aren’t openly dog-friendly and have weight, breed or height restrictions.
“As a general rule of thumb, most co-ops either allow them or they won’t,” advises Gitter, who frequently writes about this furry issue on his blog. (Note: cats are generally less of an obstacle, though there may be limitations on the number that may reside with you.)
Also, be prepared that a "case-by-case" pet policy can mean a board "interview" is required for Fido, and that limits on size, breed and temperament are likely.
Even if your pet passes muster, Gitter recommends having an attorney negotiate having them live there as part of the contract once the board package has been approved.
2. In-unit washers and dryers
If the building in question permits residents to own a washer and dryer on a case-by-case basis, don’t start pricing out the latest models at PC Richards just yet.
That’s because many New York boards are stil not exactly pro-washer/dryer,“especially in older buildings where there could be potential plumbing issues and also because when you have outside vendors providing laundry services, it cuts down on revenue,” explains property manager Kimberli Freeman of Midboro Management.
Some buildings only allow them in certain lines and combinations depending on the piping that is affected. And there may be a more permissive attitude toward groundfloor apartments, as there is less concern about back-up overflow.
But with demand on the rise–and buoyed in part by both newer buildings offering these appliances, and even some older pre-wars relaxing longtime bans–your chances of being approved are better than they used to be.
If you can demonstrate there won’t be leaks and it’s a question of livability and convenience, then you may be able to strike a balance, says Shapot.
“Most buildings have a wet over wet rule,” says Doug Heddings of The Heddings Property Group. “In other words, they may let you have a washer and dryer as long as it meets certain space requirements and is located directly over another person’s kitchen or bathroom, which diminishes the chance of any severe damage in case there’s a leak.”
Note that the chances of being pre-approved for a washer-dryer before you buy the apartment are almost nil.
As co-op and condo attorney Robert Braverman of Braverman Greenspun recently told BrickUnderground, "There are too many potential pitfalls. What is the capacity of the washer dryer? Where is it going to be located? You can make it conditional but very often those types of preapprovals become subjects of controversy."
It's also a slippery slope, opening the door for future buyers to bother busy boards with more requests for preapprovals, notes Braverman.
“It’s almost impossible to get a construction plan approved in advance no matter what the case-by-case rules say,” warns Gitter. “You can get guidance, but you can’t get anything approved beyond sanding or painting, so if your plan is to gut renovate and add new rooms – except to the extent you know that similar configurations have been approved in the past – you’re going to have to be prepared either scale back or change your plans.”
4. Running a home business
Though New York has long been a mecca for home-based businesses, this can be a thorny issue when it comes to getting board approval, depending on the type of venture, the number of employees and how much foot traffic it will bring.
Bottom line: You’d be much better off writing a novel than running a daycare center, giving music lessons or dispensing psychotherapy. Loud, noisy, neighbor-disturbing professions--or those that present a perceived security risk in terms of increasing foot-traffic (especially in a non-doorman building)--are less likely to land on the positive end of the case-by-case spectrum.
If you are buying a co-op and suspect that a short-term move out of the city may be in your future, you’d better make sure there’s a board that will take that into account, says Keller Williams’s Shapot.
He notes that buildings have become stricter about subletting since the market rebound. During the height of the recession, four or five years ago, many people who couldn't sell were turning to subletting, but "nowadays, it’s not nearly as common, although some boards will still do it because it increases the pool of potential buyers exponentially," Shapot says.
Heddings agrees and says most co-op boards vary widely on their policies depending on individual circumstances. He says the most common scenario is when an owner is relocating. To enhance your chances of getting the sublet approved, Heddings recommends, find someone with solid employment, credit history and good references.
6. Pieds-à-terre and parents buying for kids
“It all comes down to the mindset of board members,” Shapot says. “On the one hand, they want to know who will be living there, and if somebody buys this as a pied-à-terre there’s a natural concern that it will be an invitation for their kid to crash and have a wild party. That said, I think that if that if you can prove otherwise, then it’s less of an issue – especially if you can afford it and demonstrate that your kids are responsible.”
“There are a lot of gray areas and it all obviously depends on both the financial picture and the personalities," says Heddings. "Boards want to be able to approve based on how the apartment will be used and the criteria of the financials."
Heddings says it's less likely for, say, a California couple with two kids who go to college in New York to get approved for a pied-à-terre than it is for a closer-to-New York couple who wants to use the apartment themselves on the weekends. If there's a sense that the apartment could become a party spot, it's not likely to gain favor in the eyes of the board.
(For a more detailed discussion about buying an apartment for a son or daughter, see this recent article on the subject.)
7. Downpayments & financing
While most co-op buildings require a 25% down payment, some require significantly more.
“There are certain buildings that require 100 percent cash, typically the white glove buildings on Fifth Avenue and Park, while others permit 50 percent financing max and some even more,” Shapot says.
The listing itself will almost certainly not indicate "case by case" exceptions to the downpayment requiremetnts.
“However," says Shapot, "if you can demonstrate you are going to be a good citizen and a good shareholder, there are ways you can get around certain policies, particularly if you have a strong standing in the community, a solid employment history and can provide good recommendations...particularly if you have strong relationship with a lender who may not require a recognition agreement with the co-op.”
In the current lending environment, however, few lenders are willing to issue these so-called "negative pledge loans"--in which the lender forgoes the recognition agreement that would have allowed them to place a lien on co-op stock shares--since they would essentially be making an unsecured loan, says mortgage banker Marc Kunen, managing director of Luxury Mortgage Corp.
The rare lenders who continue to make negative pledge loans will do so only for the "1% of the 1%," says Kunen--meaning that practically speaking, this option is of interest only to super-wealthy buyers trying to avoid liquidating non-cash holdings to buy an apartment.