The board should always interview anyone that wants to purchase an apartment unless several board members have previously met the individual.

You should check your PL and attorney. Im not sure "family" members need to go through formal interview. You could set up a meeting just to meet and introduce new person to the community.

All perspective buyers need to be interviewed by the board or an interview committee. Bad move if you do not interview.

Jeanne - Did you not interview based on your familiarity with the purchaser, or did you not interview because you intend to reject the purchaser's application?

There seems to be some points missing from this conversation that Steve R. started. (Thank you for bring them up Steve!) First: Your Management company should be vetting the application package for completeness and acquiring any and all credit reports, criminal reports etc. whatever your Coop requires, once complete is is sent to the review committee. Any additional financial questions should be sent only through your Management Company to their Agent for acquiring the necessary answers and additional info. If the applicant doesn't pass the Board internal financial review of their application package then you should not interview. A failure to properly provide adequate answers is grounds for rejection. You never interview unless financials are passed as it opens the door for a lawsuit that you rejected them for one of the myriad 'protected' reasons. IF they pass the financials and they are acceptable to you then you must do an interview to uncover any possible other issues that might be a cause for rejection, or as an opportunity to answer their questions as a courtesy and last chance evaluation. Your interview committee should be well versed in technique and also what they can not ask. As much evaluation subjective conversation should be on the phone or in person by review Committee members. All email is evidence in a court case under rules of discovery. Second: As far as I know, they only time where a member of an immediate family has an inside track/special circumstance definition in the HRs or BLs is in the transfer of a specific unit directly from one immediate family member to another. It still requires financials and stock transfer but is mostly, but not entirely, a free-pass through situation.
Third: A family member purchasing an available apt otherwise, is no different than any other outsider and is treated accordingly. It is, however a confrontational issue if rejected, and the possibility that the existing shareholder takes umbrage, this needs to be handled diplomatically and carefully. You are accepting them on the merits of their application, NOT the merits of your friendship, or lack thereof with the family member already in residence. If their financials fail, the family member is under no obligation contractually to render support unless they are a contractual guarantor of the purchase.
Four: The shareholder in your face should be referred to the Management company for answers, even though it technically is not their place to ask as they have no standing in the application if not a co-signatory of the purchase. Only the applicant can ask, or their Agent (and they will likely receive no meaningful satisfaction). Board members should be cautioned to say absolutely nothing as anything can be misconstrued or altered to create a lawsuit. All legal answers should be contained in the acceptance/rejection letter.

All excellent points, dsi1. In particular, I'm always astonished by comments that a person "didn't even get an interview," as if the purchase application barely mattered and the real accept-or-deny decision was based on the interview. It's just the opposite: the purchase application is everything, and the interview is of very little importance.

Not that boards should dispense with interviews; they're good both as a meet-and-greet and as a final validation of claims on the application. Maybe the applicant's "small, quiet dog" turns out to be a barky Great Dane. Or maybe the applicant goes nuts and tries to dismember one of the board members with a hatchet. Well, probably not. But it's only for such objective, egregious failures that a board should reject an applicant once the process reaches the interview stage. Otherwise, as dsi1 notes, you're opening yourself up to a possible lawsuit if the applicant can claim discrimination based on a physical attribute that was unknown to the board before the interview.

All this brings up the question of ... now that you've passed on the financial package and have proceeded to the interview phase what questions can you ask prospective shareholders without opening up a can of worms? Should it just be a review of their package? On our Board the President lectures on how the co-op works such as we are responsible for the pipes in the walls etc. I've always thought this is not an interview but considering the sensitivity of the situation perhaps it is to avoid possible lawsuits from any kind of questions. I'd like to know what you and other Boards consider to be an interview? Also, isn't any rejection based on that interview other than unveiling a lie on the financial package open to accusations of some form of discrimination? Thanks

Both Habitat Magazine and The Cooperator Magazine have published articles in the past year about what kinds of questions can or shouldn't be asked at the interview. These articles are a good place to start. You can also do a Google search, but I think the two sources above should provide most of the information.

As Carl and others have stated, the purchase application is where most of the allowable reasons for rejecting a purchaser originate. They doesn't have to be financial either. Application questions can include diplomatic status, legal history, occupational (as in running a business out of the unit that has client traffic or excessive package deliveries and pick-ups, etc), form of unit ownership (trust, LLC, etc instead of normal tenancy), firearm ownership and storage, etc. If everything in the application passes review, rejection after the interview if fraught with dangers and potential legal liability.

Interviews are interesting, this is where you can also, legally, carefully delve into ambiguities that weren't cleared up in the financial and application review. Let me stop and make a point here, the full application package includes financial info, but is not limited to that, and within the limits of the law should be able to reveal all sorts of interesting other info as well. We include notarized no dog ownership or harborage docs which cause people to step back on the misrepresentation of no pet, and insurance requirement docs as well, and various other items and checklists that can cause things to 'pop'. Everything has to pass review by our very conservative, straight up Board Attorney. It is a work in progress for 25 years. We have discovered claims to be a covert CIA operative with demands for immediate approval as they were leaving on an extended mission to the mideast, along with being told that we couldn't call their references due to the fact that the references would deny knowing them... 2X counting of assets by 'relabeling them' discovering that there was a child at a local Univ (they brought them to the interview, so fair game) and all the paperwork contraindicated a move from out of state for the parent, a real life mobster/wise-guy with a problem showing all the income as there is no W2 for loansharking, what proved to be a bid for a secret love nest for an out of town Exec due to his furious fight for us to not contact his wife for her references, and a few others of note. So, the interview is fraught with potential, we hold them in the back room of a local restaurant with wine service... In the end result, you are shopping for good neighbors. They don't have to be 'your kind of people' just good decent people with the appropriate level of assets, no egregious baggage issues you can discover. You can't discover glaring hygiene issues from an application. We've had them arrive drunk as well. You never know what's walking through the door, but I am pleased to say we have approved just about every kind, type, color, race, religion, and jobs, with relatively few errors. The interview helps.

dsi1 - I definitely do not want to diminish the importance of purchaser interviews, but boy, would I love to sit in on some of yours! <chuckling> Ours are so boring and plain vanilla compared to what you've had to go through. We have a hard time getting more than 2-3 board members to attend because there is never anything controversial. Sometimes I wish we were handed a questionable package, just to shake things up.

I'm sure there are two sides to every story, and I imagine it is not easy having to deal with some of these oddball cases. You are right though, they can be fraught with potential.

Thanks for sharing,
--- Steve