Just as the downturn is over, New York City condominium and co-op boards welcomed a new real estate phenomenon, the turndown. The financial scrutiny for buying condos and co-ops, and the number of sales that were vetoed in 2011, was unprecedented, brokers, real estate lawyers and property managers told the New York Times.
It was a year where normal real estate logic did not apply, the paper said. Condo boards, which normally should not be able to reject prospective buyers, were creating obstacles to purchase in order to maintain some scrutiny over who can buy, and co-op boards looked more favorably upon buyers with mortgages than cash buyers because they found them to be more financially stable.
“People that would have passed boards two years ago, offering to pay all cash, aren’t passing now,” said Leslie Modell Rosenthal, a managing director at Warburg Realty.
Some brokers reported buyers being asked to put as much as 10 years’ worth of maintenance fees into escrow before buying, the Times said.
More selective boards mean longer escrow periods, among other obstacles, which can impact the seller negatively.[NYT]