What exactly does co op board approval entail for home buyers and sellers in NYC? When do you find out about coop board approval and who will hear about it first?
We’ll explain everything you need to know about the co op board approval process and even show you a sample co op board approval letter in the following article.
What Is Co op Board Approval?
Co op board approval is the formal acceptance of a co op apartment purchaser’s board application and a formal notice that the buyer has passed the coop board interview. Co op board approval means that the coop board has not only reviewed and accepted the buyer’s purchase application, but has also agreed to approve the buyer as a future resident of the building after meeting them in person at the coop board interview.
When Do Buyers Get Co op Board Approval?
Buyers will receive notice of the coop board’s approval after they have completed the coop board interview. How much time it takes to receive co op board approval post interview will vary depending on the building. However, some lucky buyers will receive an informal, verbal co op board approval at the end of the interview. Don’t expect this to be the norm however, even if you had a really good interview and felt a lot of rapport with the board. It’s more common to have to wait at least a few days to receive a formal written notice of co op board approval or co op board rejection.
If a coop board is divided over your application, perhaps because your personal financials are on the cusp of being acceptable, it may take much longer to receive a decision on coop board approval. It could take weeks for the board to decide and come back to you, and they may come back to you with a requirement to put money into escrow or to purchase with a higher down payment vs an outright decision. So be prepared for a longer wait time if you feel like you barely qualify per the co op’s financial requirements!
Who Gets Notified of Co op Board Approval?
The managing agent of the building will be the first to hear from the board regarding their decision. Once they have the board’s decision, the managing agent will send around a formal notice to the attorneys and seller’s broker. This notice is typically sent via email today, though the letter itself will usually be attached as a PDF file.
Who Gets Notified First?
Therefore, it will usually be the seller’s broker or the real estate attorney who will get in touch with the buyer regarding the board’s decision. Who the managing agent sends the formal notice to can vary depending on whose contact information they have on file. However, it’s more common for the real estate listing agent and the seller’s attorney to know the seller’s building management better.
Sample Co op Board Approval Letter
This letter will serve to confirm that the Board of Directors of the Cooperative has consented to the above referenced sale. Please read the information provided below carefully as following the instructions noted will expedite the scheduling of the closing. If we have email addresses or facsimile numbers for the Purchasers, Sellers and Brokers, we have copied them on this letter. If not, we ask that you immediately notify them of this letter and provide them copies.
Conditions of the Approval
The consent of the Board of Directors of the Cooperative is subject to the purchaser(s) complying with the following conditions (Note: Only the items specifically checked apply):
Guaranty: have agreed to act as guarantor(s) of the obligations of the purchaser(s), and the guarantor(s) will be required to execute a guaranty agreement in the standard form used by the Cooperative at the closing.
Maintenance Escrow: The purchaser(s) have agreed to place an amount equal to 4 (four) months maintenance in escrow to be held by the Cooperative for at least one year, and thereafter as determined by the Board of Directors in its, discretion. Purchaser(s) must deliver the escrow amount and execute an escrow agreement in the standard form used by the Cooperative at the closing.
Trust Ownership: The approval of a trust entity as the purchaser is conditioned upon the following:
– If not already done, the Trust Agreement along with any amendments thereto must be reviewed and approved by the attorneys for the Cooperative at the expense of the purchaser(s).
– Execution by __________ of a Use & Occupancy and Guaranty Agreement in the standard form used by the Cooperative at closing.
– Submission of an opinion letter by the attorneys for the Trust affirming that (i) the trust was validly created and is currently in existence; (ii) the trustee has authority to purchase the apartment and enter into the Use & Occupancy and Guaranty Agreement; (iii) that a true and complete copy of the trust agreement together with any amendments thereto has been delivered to the Cooperative; (iv) and that the opinion letter is being delivered to the Cooperative to induce it to consent to the transfer of the shares and assignment of the proprietary lease to the apartment.
Financing Secured by the Apartment