It’s common for both banks and buyer’s attorneys to request answers to their own survey questionnaire for cooperative purchases from a co op’s managing agent. However, managing agents charge dearly for the answers. The cost of each questionnaire can be up to $500 these days.
A Head Start on Due Diligence
A seasoned real estate attorney knows that managing agents can take their time in responding to a survey questionnaire for cooperative transactions, so they’ll typically send the attorney questionnaire as soon as they begin the due diligence process.
Please see below for a sample survey questionnaire for cooperative purchases in NYC.
Please note that the questions can vary depending on the attorney and the bank financing the deal.
Sample Survey Questionnaire for Cooperative in NYC
Please provide a five year history of maintenance fee increases.
Most real estate attorneys prefer consistency for this answer. For example, regular 3-5% increases in maintenance fees per year in line with inflation may be acceptable. However, it may be a red flag to see a 18% increase one year and a 2% increase the next year. This could mean that the co op board doesn’t have its house in order.
Are there any expected or upcoming increases in the maintenance fee?
Please provide a five year history of any special assessments.
This is a great way to determine whether the building is using regular co op special assessments as a way to avoid raising maintenance charges.
Are there any expected or upcoming building special assessments?
Especially important to find out as you can potentially negotiate who pays an upcoming special assessment with the seller. You will also want to know if there are any especially large special assessments coming down the road which may affect the desirability of your purchase.
What is the pet policy?
A good real estate attorney will insist that the pet policy goes into the purchase contract if the client has pets. You do not want to buy an apartment only to find out that the building’s pet policy prohibits your pet Chihuahua from living there!
Is there any history of leaks, odors or smells in the building?
We’ve heard from various real estate attorneys in the city that a building’s managing agent is not legally responsible for their answers to a sample survey questionnaire for cooperative transactions in NYC such as this. However, it’s still a good idea to ask these questions and hope that the managing agent is truthful and does their job!
Is there storage space availability?
Sometimes a managing agent will just respond yes or no, which means your attorney will have to ask them to specify whether there is a wait-list, what the price is, and whether the storage units are individually deeded.
Is there parking in the building?
Some buildings may have a garage. There may be a wait-list. You’ll want to find out the price, and whether it’s open to the public or just residents. If it’s open to the public, you’ll want to check if there is a discount for residents of the building.
What is the status of Local Law 11 work for the building?
Was an inspection or work recently done? Is there any upcoming Local Law 11 inspection? If an inspection just happened, what was the result? If repairs are mandated, what is the estimated cost?
What is the sublet policy of the coop?
The co op sublet policy is extremely important to determine if you ever need or want to move to another apartment without having to sell. Sublet policies will vary by co op, but most cooperatives prefer primary residency and will restrict subletting in some form. Most coops will also charge fees to sublet.
Does any single entity own more than 10% of the outstanding shares?
Important for evaluating concentration risk. Banks will also use this figure as a threshold and require due diligence of the entity before approving a loan.
Is the sponsor current on its obligations to the coop?
If there are unsold shares or sponsor units remaining in the coop building, then you’ll want to make sure the sponsor is on good terms with the rest of the building and not in arrears on its maintenance.
Are there any mold issues in the unit or the building?
Most people are concerned with mold of the toxic variety, but even common mold can be dangerous to your health.
Any known pest, vermin or bedbug issues in the building?
You’ll want to know if other shareholders have complained about cockroaches and rats, or if the building has been treated recently for bedbugs.
Is there bike storage in the building?
Given the explosion in the number of bike paths in New York City over the past few years, bike storage is more important than ever for NYC coop residents. Or you can just use CitiBike!
Please confirm the square footage of the coop apartment.
A managing agent will never answer this question for the same reason that co op listing agents typically never advertise a square footage. That’s because there often isn’t a written record of a coop apartment’s square footage vs a condo. Sometimes, you may see square footage numbers listed in the original condo or co-op offering plan.
Are washer dryers allowed?
You should ask this question even if the apartment already has a washer and dryer. That’s because the coop house rules could have changed and the apartment is simply grandfathered in with the old rules. If that is the case, what happens if it breaks and needs to be replaced?
Are there banks who will lend in the building?
It’s a good idea to find out if any banks have already project approved the building. This will make the NYC mortgage process much easier for the buyer to work with one of these preferred lenders.
Are there material renovations on file and have they been approved?
If the unit has been renovated, you’ll want to make sure that the work was filed properly and approved by the building. That means the seller properly signed an alteration agreement and got the finished work approved by the building’s architect. You’ll want to be especially careful whenever you see a combination unit. You’ll also want to make sure that the work has been closed out fully and that there are no open permits. You can check this for yourself on the NYC Department of Buildings website. You can learn more on our list of useful real estate websites for NYC.
How much money is in the reserve fund?
What types of investments are the coop’s reserves held in? Scrutinize the coop building financial statements to see if the coop is actually borrowing money from the reserve fund without reducing the balance (i.e. “funds due to” or “funds due from”). Note that Restricted Balances are funds that are not readily available and therefore should not be used when determining the amount of reserves a building has.
Does the building have a ground lease?
What happens when a land lease expires in NYC? What are the terms for renewal and step ups in payments?
Does the coop have a flip tax?
How many transactions does the coop have on average per year? Is the coop flip tax a percentage of the sales price, a percent of profits or some fixed dollar amount?
Are there any written or verbal complaints from shareholders about water pressure or noise?
This is a great last attempt to fish for more color from the managing agent. The last thing you’ll want to do is to move into an apartment only to find out that you can’t sleep because of loud banging sounds from the water pipes at night. You’ll want to know if the previous owner has complained about loud noises day and night from the building’s gym downstairs.
What percent of maintenance is tax deductible?
Remember that a high percent of tax deductibility is not necessarily a good thing. Why would you want more of your monthly charges to be going to the government via taxes and the bank via the building’s underlying mortgage?
Are there any lot line windows?
The last thing you’ll want to do is to buy an apartment in NYC where the windows will be bricked up in a few years at your own expense. Worse still, some of your bedrooms will stop being a legal bedroom in NYC if they lose their source of air and light!
Disclosure: Hauseit® and its affiliates do not provide tax, legal, financial or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal, financial or accounting advice. No representation, guarantee or warranty of any kind is made regarding the completeness or accuracy of information provided.