What Do Co-op Boards Ask For - Require?
A: Detailed personal and financial information. If you're a first time buyer of a coop below is the typical information and documents required to be submitted with a coop board package. All coop purchasers (except sponsor sales) are required to submit a board package. The board will review the package, if it looks in order they will schedule an interview with purchaser.
A Co-op board will require complete financial disclosure. They will look into your financial history, current and past income, assets, liabilities and references when evaluating your board package.
The following documents are required for most Co-op boards.
Completed Purchase Application
Contract of Sale
Credit Check Authorization
Financial Condition and History
Last 2 Years Federal Tax Returns w/ W2's (some buildings require 3 years)
Statement of Financial Condition Net Worth (All Assets & Liabilities) Signed
Copies of Bank Statements (Last three Months)
Proof of Assets (Bank, brokerage statements verifying information in purchase application, real estate deed, title or stock certficate.
(3) Three pay stubs
Up to 5 Personal References
Up to 3 Business References
Employer verification letter stating position, salary, & length of employment.
Letter from Bank confirming accounts and balances
Landlord Reference letter
In addition to all of this you will need to gather these loan documents from your lending institution (usually takes the longest to receive): Many coops will not accept risky loan products or interest only loans and require a 20%-30% downpayment.
(many coops will not accept risky loan products or interest only loans and require 20%-30% downpayment)
Copy of Loan Application ( information on loan application needs to match information on purchase application)
Copies of Aztec Recognition Agreement (3)
Copy of Loan Commitment Letter
Typical Board Requirements: (what the board is looking for)
1. 25% Income to debt ratio. Housing costs should not be more than 25% of income.
2. At least 1 years worth of mortgage + maintenance in liquid assets or two years of maintenance after closing costs
3. Increase in salary from previous year, potential future earnings
Other items the board may ask for can be copies of personal ID's, certificate of foreign status, listing agreement or the contract of sale if you are selling another property. They may ask for a cover letter or essay. They may want to meet pets and family members.
The listing broker has a responsibility to their client to pre-qualify (the buyer) for purchase of the property. The seller broker should be well aware of what the board will look for in terms of financial and situational (such as no parents buying for children or no pied-a-terre) and should NOT allow their client to accept the offer of a buyer not financially qualified to pass the board.
If you plan to buy a Co-op be prepared to fully disclose a complete personal and finacial picture. Original and seven collated copies of everything noted above are required and possibly even more, for the board to review. Also keep in mind that you will be in a position later on when you sell where you will have to pre-qualify the potential buyer.
It is very important to work with an experienced Manhattan coop broker when selling or purchasing a coop.