Bills Would Impose Time Limits on Co-op Purchase Applications

There are currently half a dozen pieces of legislation under consideration in New York City and Albany that could change the way co-op apartments get bought and sold. Co-op advocates are not pleased with any of them. Some of these bills would give boards 10 days to declare if an admissions package is incomplete; others would impose a 45-day limit on boards to act on purchase applications; and others would require boards to provide written reasons for rejecting an application.

Legislating a time frame for admissions would affect not only co-op boards but management companies as well. Purchase application packages land on the desks of management companies’ closing agents, who review them and make sure they’re complete before submitting them to a board. Depending on the number of co-ops managed, the size of the closing department at a management company varies. Larger firms have several closing agents, each representing a set number of buildings. Smaller firms may have one closing agent handling all activity.

Here are the factors that determine how long the process takes:

How many packages need to be reviewed? Depending on the time of year and the vibrancy of the market, a closing agent might come into the office and find from one to fifteen packages awaiting review. It typically takes one to two hours to review a package. Every building has slightly different requirements, so the review takes this into account. Additionally, packages are usually reviewed on a first-come, first-served basis. It’s important to understand that admission package review is only one of many tasks that closing agents perform. They also handle closings, and leasing agreement review and processing.

How complete is the package? If the package is complete, the closing agent will run a credit check and a criminal background check. If not, the closing agent will begin the back and forth with the broker and buyer to get the missing pieces of information. Typically, closing agents say to expect the review to take two weeks, which gives them leeway to juggle their other duties. A package’s completeness is often based on who has submitted it. If an experienced broker is involved, it is usually complete, while an inexperienced broker is more likely to submit an incomplete package. If there is no broker involved, the package will probably be missing key pieces of information.

How soon can the manager set up an interview with the potential buyers and the board? After a package is deemed complete and the Social Security numbers are redacted from all documents, it goes to the board. Some boards want to receive packages electronically, some on CDs, and some on paper. Once the board reviews the package, a date is set for an admissions meeting with the purchaser. Often the closing agent is the one trying to coordinate this date between the two parties.

Finding a convenient time to meet can be challenging, depending on the time of year and how often the board assembles. Once a board meets with the purchaser and approves the admission, there is additional back and forth to get the stock, proprietary lease, and recognition agreement signed before a closing can occur. Closing agents report that from package submission to close, buyers can expect to wait eight weeks if everything runs fairly smoothly. It is always the outliers – packages that are incomplete, and efforts to get information that are not met promptly or forthrightly – that make the process take longer.