PURCHASING A CO-OP? THREE THINGS THAT COULD DELAY YOUR CLOSING
By Kim Williams of Sovereign Associates Inc.
Navigating a Cooperative (CO-OP) purchase demands foresight and preparation to overcome potential challenges that might extend the process and hinder your closing. Here are a few valuable tips.
1. Thoroughly Prepare Your Board Package:
Creating a comprehensive Board package is a pivotal step when initiating a CO-OP purchase. This application, accompanied by supporting documents, extensively examines your financial standing, requiring details such as tax returns, bank statements, and a full accounting of all of your assets. Meticulous preparation is critical in preventing delays. Any discrepancies can trigger additional scrutiny, making it essential to enlist the assistance of a proficient buyer's broker. A skilled broker ensures clarity and orderliness in your application, smoothing the path toward approval.
2. Understand the Co-op Board's Meeting Dynamics:
Each CO-OP board operates uniquely regarding the timing and frequency of their meetings. Some boards may not convene during specific summer months, while others assemble only as necessary. Timing is critical. If, for instance, you submit your board package at the end of July and the board does not convene in August, your application could languish for over a month before review and a potential board interview. You can avoid this situation by having your broker inquire about the board's meeting schedule and frequency. This knowledge will empower you to submit your package strategically, minimizing the risk of unnecessary delays.
3. Ensure Seller's Closing Documents are in Order:
Delays are not exclusive to the buyer's side; sellers must also ensure that their closing documents are in order. A CO-OP seller needs the original stock certificate and proprietary lease to validate ownership and the right to sell their unit. In the event of a lost or unlocatable stock certificate, the seller faces a potentially lengthy process to re-establish ownership before closing the sale. Before committing to a sales contract, confirming that the seller possesses these crucial documents is prudent. This proactive step safeguards against unforeseen delays and ensures a smoother closing process.
By proactively addressing financial, legal, and scheduling considerations at the outset, buyers can confidently navigate potential delays, moving efficiently toward their goal of CO-OP ownership.
