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I have a bone to pick with the appraisal process for Co-op units in NYC. That bone is that this process does not generally take into account the financial health of the co-op corporation.
Let's face it, Co-ops are a hybrid: half real estate(ish) and half corporate investment. From my limited perspective, appraisers take a look at the real estate side of the transaction but rarely have I seen them take into account the comprehensive financial health of the co-op organization.
Not all co-op corporations are created equal. While mortgage information is often listed on appraisals (and often incorrectly I might add), I have never seen the corporation's cash and reserves listed.
There is a positive value attributable to each share for each dollar in working capital (cash), capital and operating reserves, escrows & self-escrows, pre-paid expenses and valid receivables. I have never seen these amounts taken into account on an appraisal however they can significantly impact the value per share.
For example, a unit within a 100 unit co-op with $10k in cash & reserves is not as valuable as a similar unit in a co-op with $1 million in cash and reserves. Assuming that each unit has equal shares for the sake of simplicity and each building has an equal mortgage, then each unit would have a potential value adjustment of $100 or $10,000 based on the above example, respectively.
In the era when making informed real estate decisions is very important, I believe that increased disclosure can only help the sellers/buyers make informed decisions.
Is there any support out there to ask the NYC Council make it mandatory for appraisers to make this information available on appraisals performed within the City of New York for Co-op valuations?
Maintenance apportionment
Reference:
http://disc.yourwebapps.com/discussion.cgi?disc=94379;article=11863;title=Habitat%27s%20Board%20Talk;pagemark=40
Each year our co-op office sends 1098's documenting the amount of interest one has paid prorata (e.g.: based on shares) as well as taxes one has paid prorata as well. The amounts, interest and real estate taxes, are shown in block #5. If there are two owners in a unit each receives a separate 1098. Thus if the unit paid $1,800 in taxes and there are two owners, each receives a 1098 in the amount of $900 for taxes while the interest expense is similarly split.
These are sent before the end of January each year in compliance with IRS rules.
Further, our co-op bills (itemizes) the assessment separately in the monthly bill. For tax purposes, the yearly assessment (yes, the assessment is every year as our co-op is 43+ years old and capital improvements are de rigueur) is billed over a lesser number of months. This is to avoid any question or challenge by the IRS that the assessment was just part of the maintenance. It is also important when selling the unit in computing the gains, less capital improvements..
Is there any legal precedent to compel a sponsor to sell his unregulated apts. We have a 32 unit coop in Brooklyn in which the sponsor owns 6 (2 regulated and 4 which he charges market rent). It would obviously improve our owner-occupancy percentage
Can anyone recommend a good, reasonably priced lawyer that can assist with borderline disorder coop board?
Two directors on our Board would like to make a rule about when residents can move furniture and impose fees if it's done without getting prior permission.
However, my understanding is that fees can be imposed only if the proprietary lease allows for it. Is that so? Or is it co-op by co-op?
What do underlying building mortgages and the recent changes in lending programs have in common?
Answer everything.
True story.
A nearby coop has an underlying mortgage total of $ 50,000 average per apartment.
A buyer wished to buy a $200,000 apartment with 20% down ($40,000) and an 80% ($160,000) mortgage.
The bank looked at the $50,000 underlying mortgage per apartment and computed ($50,000 + $200,000) as the base amount for risk assessment and told the buyer the only way to obtain a mortgage is to put down 80% of $250,000 or $50,000 down for a lending mortgage principal of $150,000.
Real reality check for buyers, for boards and for sellers. No doubt it is worse for a co-op does not have a retirement program for the underlying accumulation of first, second and in some cases third mortgages. Balloon payment mortgages can be a death knell; for buyers and sellers.
Is the roommate of a shareholder legally considered a tenant?
Or a spouse, if the spouse's name does not appear on the certificate?
I couldn't answer this question - hoping someone else out there can.
Thanks.
My neighbor is selling her 2-bedroom unit to a college student, with the student's parents paying cash.
I hope I'm not coming off as ageist, but I'm concerned that the new owner may not be the best possible buyer, but given the market and the all-cash offer, I can imagine why my neighbor jumped on this offer.
Our board, which I'm a part of, has been lenient with approvals (we've never turned down a buyer or subletter in the 7 years I've been on the board) but our walls are as thin as tissue paper.
The college kid would not be able to afford the place if he had to pay out of his pocket ($600K, $1100/month maintenance). An interview will not be enough to tell if he will have friends over often or play the drums or whatever, and without a mortgage, the board has a lot less leverage over the new owner.
Can I do or say anything that is in the building's best interests, without coming across as selfish or paranoid against a new buyer?
FYI, I've heard we had this situation before - parents bought a unit for their child who created a lot of noise issues for the building. The incident predates the entire board so there isn't at the moment any talk of that last situation.
i noticed the last couple of years when reading the annual financial statements for the co-op , that there is a statement from the accountant that says the reserve fund is kept in accounts where it may go over the fdic insured limit, however the accountant states that they see no problem with this.
5 years ago, when i first noticed this saw this i didn't worry too much, but i think the realities of what happened in the financial world in the last couple of years would say that this is not a sound idea, especially when your dealing with other peoples money.
Banks fail everyday.
Any comments.
As the renovations to Lido Towers draw to a close (so I am told), the total budget for this project is in the neighborhood of $18 MILLION DOLLARS. What I cannot understand is what portion of this large sum has gone to improving the lives of handicapped residents?
My mom has been a resident for OVER 7 YEARS. I have Secondary Progressive Multiple Sclerosis, in January when it became unsafe for me to live alone I moved in with mom. Shortly after that, it became necessary because of MS for me to use a Power Wheelchair.
IDEALLY I would like Lido Beach to be my now & forever home because when my mom passes the condo will revert to me HOWEVER living here is so bad that after only being here 4 months I am considering a NURSING HOME.
For 184 UNITS (realizing MOST have more than one car) & a LARGE NUMBER of VISITORS particularly during the summer there are 5 HANDICAPPED PARKING SPACES. 1 in the "A" lot (near the pool) 0 in the "B" lot that would be considered the MAIN LOT since this is MOST residents & ALL visitors enter & where the Lobby is located & 4 in the "C" lot. When you enter the "C" lot from the "B" lot there are 2 IMMEDIATELY to your right then there are 2 a long distance away by the BBQ area. The spaces I am told are on a first come first serve basis for resident & guests alike so if a resident such as myself REQUIRES handicapped parking space because of accessibility & they use a wheelchair they still have a 1 in 5 chance of getting a handicapped parking space otherwise they need to park in a regular space which in my case IS NOT wide enough for my van. I WAS offered another regular space that is "slightly" larger because it is an end space but it is almost in the BBQ area.
The lobby IS NOT accessible to the handicapped from the parking lot. Nearby is the service entrance. By law the service entrance CANNOT be the ONLY MEANS of wheelchair access yet this is where they want to put a ramp for me (currently that entrance IS NOT accessible because of a "lip" at the door). Going around the bend a bit on the way to the "C" lot is d another door this door ironically is almost in my apartment but it IS NOT accessible. Then if you go all the way thru the "C" lot over by the BBQ grill (where the 2 handicapped spaces area) is the ONLY DOOR currently accessible (sort of) to a wheelchair. It DOES NOT have a "lip" preventing the chair from entering HOWEVER it has a very heavy fire door then a small hallway & another heavy door.
I submitted a LETTER OF REASONABLE ACCOMMODATION as the law requires. As I said, I was offered a regular parking space all the way by the BBQ grill. They also said they COULD put a ramp at the Service Entrance so I WOULD NOT have to go around the world to get in (though I still might have to go around the world to park). Additionally they AGREED to make the door with the ramp (service door) AUTOMATIC (as I requested) but it would be done AT MY EXPENSE.
Even the CLOSEST parking space is NOWHERE close to the Service Entrance where they want me to come in. If I COULD NOT find a handicapped parking & needed to park in the regular space they want to assign me near the BBQ area I would need to pack a suitcase to get to the Service Door, which they would put a ramp on & I could pay for an automatic door too. Furthermore, law says they CANNOT designate the Service Entrance as a handicapped entrance.
The entrance that I am going in currently is accessed by going up a walkway that is barely wider than my wheelchair. When I need to turn to open the fire door with the key my back wheels go off the path (it is not wide enough) & into the dirt & gravel. The “trick” is then for me to hold the fire door open, get my key out, direct the chair out of the gravel, hold my service dog & get in the door. Rarely is anyone in this area to help me. On average, it takes between 15 & 20 minutes for me to get in the building. In ONE MONTH: I destroyed a brand new cup holder & a beautiful large button of my Service Dog & I from the door slamming closed on me. I broke my reacher & badly dented my coffee cups the same way & my saddlebag is TORN from getting caught in the door. Not a lot of people use this entrance particularly in the off season so if I should fall – or worse – it would be RANDOM when help would arrive.
There is another whole issue with my Service Dog, which is equally ridiculous, but irrelevant here.
What I am talking about & hope someone can answer is – how can Lido Towers justify spending $18 MILLION to repair & renovate a building & grounds & exclude handicapped residents?
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You are correct. In your example each apartment should be valued very differently, but likely is not. This is a major flaw in appraisals as well as potential purchasers evaluation.
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