A few years ago, I purchased a co-op with my then-wife. We were separated at the time, but she was willing to be a co-borrower on the mortgage to help me get approved. As such, her name is also on the title to the apartment, but she never lived in the co-op with me or paid anything towards the mortgage or maintenance. The next year, I officially got a divorce from her and she moved out of state. Since then, I’ve remarried and my new wife and I live together in the same co-op. We want to refinance the mortgage and get her on the apartment’s title. Will refinancing achieve what we want to do? Is there anything else we need to think about?
Refinancing is one aspect of what you'll need to do, but first, you also have to speak to your co-op board, our experts say.
"In order to change the title on the co-op, you would first want to reach out to the building or management company to see what, if any, requirements they may have, says Brittney Baldwin, vice president of National Cooperative Bank (a Brick sponsor). "Typically, the person being removed from the ownership would have to sign off and acknowledge the transfer of ownership. Once you know those steps you can look to refinance the mortgage."
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In addition to having your ex sign off on the transfer, you'll need to check on your co-op's requirements for adding a new person to the stock and lease. You'll also need to review your divorce decree to see if you have any other responsibilities, such as an obligation to pay your ex-wife a sum in order to remove her name from the ownership documents, says Kevin McConnell, a partner with Himmelstein, McConnell, Gribben, Donoghue & Joseph (also a Brick sponsor.)
Another document to review is your co-op's proprietary lease.
"In many proprietary leases, there is a provision that there is no need for board approval for a spouse to be added to the stock and lease," McConnell says. "Assuming the divorce decree is complied with and board approval is not required, the transfer from the shareholder and his ex-spouse to the shareholder and his new spouse will likely require the filing of NYC Real Property Transfer tax and NYS Real Estate Transfer tax returns."
The best way to figure out whether you'll need to pay any transfer taxes, he adds, is to speak with a New York-based title company.
Depending on the proprietary lease, your new wife could also be required to get co-op board approval, which would require her to submit financial information and letters of reference to the board.
"Typically, anything having to do with changing the name on the stock and lease has to be approved by the co-op board," says Deanna Kory, a broker with Corcoran. "It is possible that you also will have to be part of the application process and submit all your financial information at that same time. You should be aware that if she is fairly new to the building, she may also have to submit letters of reference and other items may be required."
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