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Thread: How do you evaluate a co-op? - Questions about Co-op purchas

  1. #1

    Default How do you evaluate a co-op? - Questions about Co-op purchas

    I would like to know some of the key issues to look for in evaluating the health of a co-op. How can you tell if the board is competant? What does it mean if the maintenance is high? *How do you know whether the structure is in good shape if you can't send in a bldg insptector? Is it kosher to try to talk to residents? What does it mean if the place has less than 75% owner-occupancy? What sorts of pit-falls can that create? What does it mean if it's a landmark bldg? I know that your attorney is supposed to look into this stuff but ours has told us that there is no way to tell about structural stability, etc. Any advice, etc. would be greatly appreciated.

  2. #2
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    Default How do you evaluate a co-op?

    Sorry I'm a bit late in responding, but as I live in a co-op, I printed your post out and showed it to my parents (who were members of our co-op board for 12 years) for them to answer. *The following is more or less their answers to each question in the order they were written:

    1. *Your broker might have some previous experience dealing with the board, so you can ask him/her whether the board is competant.

    2. *If the maintainance is high, it could mean several things: unduly high operating expenses partially due to a high interest rate underlying the mortgage; high plumbing repair expenses; high fuel costs; high employee wages, etc. *Don't hesitate to ask for an Annual Statement.

    3. *If you're unsure of the building's state of repair there's not much you can do aside from ask your broker.

    4. *It's okay to talk to residents, just not in the presence of a broker (who probably knows the answer anyway). *Remember, the broker isn't your friend; the broker works for the person offering their apartment to you—who will be charged 6% of the purchase price.

    5. *The term "75% owner-occupancy" means that the sponsor (previous owner of the building) controls a large block of voting shares and hence has significant influence in electing board members. *In this regard, ask the broker if the board has term limits. *If not, there is a huge risk of an entrenched board that can begin to act as if they own the building and fail to seek other shareholders' opinions. *Bad news.

    5. *The façade of a landmarked structure in New York City cannot be altered without the approval of the Landmarks Commission. *Every exterior detail, including windows, frames, etc. falls under this jurisdiction; and lobbying the Landmarks Commission for an alteration to the exterior is generally a costly and protracted undertaking.

    You should also ask for any documents concerning by-laws, house rules, and alteration agreements, which may cover any changes, including painting, you make to your apartment.

    If there are any more questions, I'll be more than happy to run it by my parents.

    (Edited by TLOZ Link5 at 10:17 pm on Aug. 3, 2003)

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