If you plan on buying into a cooperative apartment building in New York City, you will have to put together a board package. This three-ring binder-filled “package” is essentially your application for the apartment. If the co-op board approves your package, you will then be granted an extensive personal interview. If you pass the interview, you are then granted permission to buy into the co-op. If not, well, then it’s back to the start to find another place to buy.
Why such a laborious process? Why not just buy a condo, where no such process exists? Why go through the trouble? Buying into a co-op has its advantages, the main one being affordability. Co-ops are typically less expensive than condos. Another advantage is maintenance: co-op members pay monthly maintenance fees (which are tax-deductible), and in larger co-ops, this fee pays a crew to take care of all maintenance issues. The biggest hurdle to getting into a co-op is just that: getting in. Your agent will want you to get started on your board packages as early as possible, as it’s somewhat of a monumental task – the board requires all sorts of documents and records dating back several years. Here is a basic run-down of what is required in a board package. Listen to your agent and get started early. It may not be easy to get into a co-op. But, once in, the legwork will have been worth it.
The Application for Purchase in a Co-Op Board Package
Here, you state who you are – your name, date of birth, social, etc – and then proceed with residency/landlord history, employment and salary status, your bank account(s), and finally, the information about the apartment you’re hoping to acquire: the purchase price, your down payment, financing information, etc. This may look like a basic application, but this is the meat of it: your financials. The board wants to see substantial liquid assets. They’ll generally want to see a debt-to-income ratio below 30 percent, and money in the bank after closing to cover your mortgage and maintenance expenses for a year. The board shouldn’t have to work for this information, either. Be very meticulous in stating your financials to the cent – every loan, every bank statement – and include documentation to back up everything you’ve shared.
Additional Information Requested
In this document, the board wants to know more about you, personally. Not only the names and ages of each person who intends to live in the apartment, but what they’re like. Where did you go to college? Are you a member of any civic or social societies? What are they? Who do you know in the building? Do you have pets? Do you claim diplomatic immunity? What else should the board know about you? By signing this document, you also agree to a credit check and a background check.
Finally, there are several documents, statements, records, and letters you’ll need to include:
- Two years’ worth of tax returns
- Pay stubs from at least the last two pay periods, along with a letter confirming your employment
- Bank statements from at least the last two months
- Statements from any other financial asset or obligation you have, whether school loan or 401K, etc.
- If you’re financing: the loan application, commitment letter, and recognition agreements
- Letters of reference from your employer, your landlord, and at least three more personal references
Once complete (and do make sure that your package is complete), your broker will tie everything up nicely and send it off to the board – one copy per member. Once that happens, relax a little – you’ll appreciate the calm you’ve acquired when it’s time for your interview.
Need some help relaxing after putting together your board package? You don’t have to go far – take it easy at home by turning your abode into your own personal spa.