Condo Boards Are the New Co-op Boards
Feb. 16, 2018 — Condos making greater demands of potential purchasers.
There are numerous reasons why so many of today’s apartment buyers prefer condos over co-ops. One of the biggest is that condo buyers don’t have to undergo intense scrutiny from a powerful co-op board.
Traditionally, a condo board’s only power has been the right of first refusal, meaning it can exercise the right to buy an apartment from the owner within a specified time frame, or must allow the sale to an outside buyer to go through.
Times are changing. It may be old news that orange is the new black, but it’s still fresh news that condo boards are the new co-op boards – or at least they’ve been acting more like their co-op counterparts in several areas. Increasingly, one of those areas is how they treat apartment sales. "They'll say, 'We'll waive our right [of first refusal] if the buyer puts two years of common charges into escrow,'" Adam Stone of the Stone Law Firm tells Brick Underground. "That's something co-ops do. Condos have no legal authority to do so, unless their bylaws say they may issue a conditional approval. But it doesn't mean they don't try."
The bylaws are the crucial factor when scrutinizing what feels like condo board overreach. "You can't make the rules up as you go along," Stone says. "If you don't like that as a board member, maybe you should be living in a co-op, where you have more control."
Stone says that most condo board members, managing agents and attorneys are well aware of what they technically can and cannot ask of a buyer. And when they step over the line, their motivations aren't necessarily sinister. "Sometimes it's condo boards who are trying to do the right thing for the building,”he says. “They're trying to pick the right purchaser.”
Though higher-end condo boards are asking for more documentation from potential buyers, they're still less intrusive than comparatively affordable New York co-ops, adds attorney Aaron Shmulewitz of Belkin Burden Wenig & Goldman. When trying to decide between buying into a condo or co-op, he says, "You pick your poison.”