Board's Demands Can Hurt Sellers

A co-op shareholder found a buyer for his unit, the buyer sailed through the board interview without a hitch, and the seller had already bought a new home. But the board had one last request.

The seller was told that the unit had to undergo an "exit inspection" by the super, who flagged something that had previously been approved during a post-renovation inspection. This alleged violation would require the seller to remove a middle kitchen cabinet because the fuse box, though accessible, was behind a cabinet door. The seller was given the option of informing the buyer that the cabinets were a code violation and they would need to assume the risks, or the board would not sign off on the sale. The buyer walked.

The situation was grossly mishandled by the board, says Siim Hanja, an associate real estate broker at Brown Harris Stevens. “To allow a situation where someone goes to contract and then has to have an inspection – it's ass-backwards. You need to have a rule that says if you intend to sell your place, the board insists upon having an inspection of your apartment before the closing to make sure that there's nothing of any liability to the co-op.”

The law seems to be on the side of the co-op, however. “Most contracts of sale for cooperative apartments provide that the apartment is sold ‘as-is,’” says Marc Luxemburg, a partner at Gallet Dreyer & Berkey. “Many cooperatives require the purchaser to sign a statement at closing confirming that the cooperative has no responsibility for the condition of the apartment.”

But Hanja argues that such perceived anti-seller behavior by the board can give the building a bad reputation among brokers, making it more difficult to sell apartments in the future. Such behavior can also lead to litigation by an unhappy seller.