Applications for a Co-Op May Be Rejected for These 6 Reasons
March 15, 2023
Nobody wins when a board rejects a co-op unit sale or purchase in New York City. The fact is, you have very little power over the board’s approval in co-ops in New York City. An applicant may be turned down by the co-op board for any or no reason. Even worse, co-ops hardly ever disclose the reason(s) why a board rejected an applicant.
Read below to see some of the common reasons a person may be rejected.
Poor Credit
Even if they have a good income and substantial assets, prospective buyers with a poor credit history—including a history of not paying current maintenance fees or rent—will probably not get much attention A knowledgeable broker will examine the client’s financial history to make sure there are no warning signs.
Way of Life
Some co-ops reject any unwelcome attention brought to their premises, whereas many co-ops permit members with established public personas. Nobody wants individuals who will disturb the calm, security, and tranquility of its investors. For instance, they would decline to sell to a rock star known for living a lavish lifestyle and throwing late-night parties.
Noise
The board may reject a purchase when a buyer intends to generate noise that will annoy other shareholders. The noise that actors, percussionists, singers, and dancers make can persuade a board to reject their proposal. In addition, they have the option to decline to collect the deposit if the apartments are soundproof.
Financials
After closing, prospective purchasers require sufficient assets. The liquid asset requirement for many luxury buildings is two to four times the amount of the acquired apartment after closing. Building boards have different requirements for mortgage payments and even deadlines. Once all closing expenses are complete, it should represent the total amount. A knowledgeable broker will be familiar with the requirements of each building and stay current on factors that change every year when new boards of directors join.
Borrowers with insufficient income aren’t going to qualify. The general norm for co-op boards is that they typically anticipate buyers to dedicate 25% of their income to mortgage and maintenance expenses. One may be disqualified if such payments for one or more residences exceed 25% of one’s gross annual income.
Pets
Brokers must find out what kind and how many dogs are permissible even if the building allows them. For instance, some apartment complexes permit two dogs per apartment but forbid Pit Bulls, Mastiffs, and Rottweilers. Some places don’t allow dogs that weigh more than 50 pounds.
Employment History
Most co-op boards want to review a person’s work history in addition to their employment earnings. People prefer a long-term employer compared to someone who changes jobs frequently. Board members rejected career changers who were wealthy because they regularly changed jobs.
