When you buy a co-op or condo in New York City, it's easy to focus more on the apartment (its price, size, and location) than the building--let alone the personality and temperament of the co-op or condo board that runs it.
But make no mistake: Beyond deciding whether you may become an owner in the first place (if you're buying a co-op), the board will affect your happily-ever-after--from renovation and sublet approvals, to rules and regulations that affect your daily existence, to the upkeep and maintenance of the building itself.
Below, some canary-in-a-coal-mine pointers for discerning whether the board is friendly or icy, hands-on or laissez-faire, well-run or paralyzed by infighting.
Check out the house rules and renovation policies, as well as the minutes
“Every board has house rules and bylaws and reading those can give you flavor of how the building operates,” says Jordan Cooper of Cooper & Cooper Real Estate. “The more lenient buildings are ‘yes, yes, yes’ across the board.”
Available from the building's managing agent, such rules will outline policies about pets, renovations and subletting along with other living standards that may indicate how flexible a board is.
The minutes of board meetings—reviewed by your attorney—can give you a deeper dive into the character of a board.
“If there’s a consistent pattern of rejecting applications for renovations—that might raise a red flag. Or if you’re seeing a pattern of [buyer] turndowns [by a co-op board], that’s a question to ask--what’s going on here?" says Sidney Whelan, a real-estate agent with CORE.
What's important to determine, says Whelan, is whether “the board is reasonable and consistent in its decision-making process—that’s really the concern. Boards typically have a character that remains steady over time. It really is more about the human factor than what any board can put down on paper."
In his due diligence for clients, real estate attorney Dean M. Roberts of Norris McLaughlin & Marcus looks at how recent and often the house rules have been updated, and the nature of the rule changes. Out-of-date rules could indicate a less-organized (but more relaxed) board.
“If they’re passing resolutions that determine what color the trash cans are in the laundry room, you know you have a hands-on board,” he said.
Read behind the words of the application
From the number of references required to the amount of processing fees, the application to buy an apartment can yield a number of clues, says Cooper.
“Some of the looser co-ops have very small fees for credit checks, move-in and move-out and elevator fees,” he said. On the flip side, he said, “If the pet is required to come to the interview, that gives me a sense for what kind of co-op this is.”
Here are some more indications that a co-op or condo board is more chill than chilly:
- The board package asks for minimal documentation, such as one or two months of bank statements and one or two letters of recommendation.
- Financial qualifications are approachable, e.g., 20 percent down, a 30% debt-to-income ratio, and feasible post-closing cash assets—usually up to a year of mortgage and maintenance in the bank.
- Musical instruments are welcome—even encouraged.
- Pets are permitted, with few restrictions on size or type.
- You can sublet your apartment with ease and without unwieldy waiting periods.
- You can work out of your home—no (or few) questions asked.
- Apartments may be purchased as pied-a-terres.
- Apartments may be purchased and put into a living trust for health-care and estate planning purposes.
- The approval process for renovations isn’t onerous or expensive (i.e. paying out the nose for the building-designated architects and engineers).
- It’s easy to add people onto your share certificate, e.g., a relative or domestic partner.
Ask an insider
Obviously one of the best ways to gather intelligence on the board is to find someone who lives in the building, if you can. Cooper also recommends doing some on-the-ground intelligence.
“Talk to the doorman—he can be a great source of information and give you insights into building," he advises. Through such questioning, potential buyers have found out, for example, whether the board members are in harmony with each other, which can lend a clue about their governing style and ability to make collective decisions—mainly, about you.
And as real estate broker Shirely Hackel of Warburg Realty told BrickUnderground recently, "Your real-estate investment is most protected when the board is made up of reasonable people who make sound decisions.”
Moreover, she notes, the friendliest, most relaxed co-op or condo board may not be the wisest choice.
"You don’t want to live in a co-op where the board is either too lax or too strict," says Hackel. "If a board is loosey-goosey and fails to set guidelines for renovations for example, or doesn’t put limits on the ability to sublease, then your investment could be in jeopardy down the road."
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