Even with a cooling market, some co-op boards haven’t eased up on demands they make of potential buyers.
It’s unclear how many applications are reviewed by co-op boards each year, but brokers and co-op lawyers estimate that the rejection rate falls somewhere between 3 and 5 percent, the New York Times reported. This sounds like a small number until you consider how many co-ops are sold in the city each year. According to StreetEasy, these sales hit 16,015 last year.
Rowann Gilman, who was rejected from a one-bedroom Unit On Sutton Place South, took the news particularly hard.
“I can feel the burn on my cheek from the slap on the face,” she told the Times.
Her offer of $922,000 was accepted, and she provided the seller with a 10 percent deposit. While she was on vacation, the board requested $46,000 for two years worth of maintenance fees — a not uncommon demand. But before she had a chance to respond, the board rejected her application, citing that she didn’t respond in a timely manner.
“I just want to strangle them,” she said.
Marc Luxemberg, a partner at law firm Gallet Dreyer & Berkley, said it was becoming increasingly common that co-op boards hold deposits and force the applicant to pursue litigation. The co-op board and its manager, Brown Harris Stevens, declined to comment.
The seller also refused to return Gilman’s deposit, citing unspecified “damages.” Gilman ultimately agreed to let the seller keep two months worth of maintenance fee — $4,000 — to avoid litigation.
Often boards reject applications on basis of the applicant’s financial stability, but sometimes the rational for their decisions is less clear. It might even have to do with health or political leanings.
“There are cases in which it’s a total mystery,” said Frederick Peters, the chief executive of Warburg Realty. “The people have plenty of money and the letters are lovely and you just have no way of knowing if they had a fight once with the board member’s sister in the elevator of Saks.”
Famously persnickety boards like the Dakota — which has turned down Billy Joel and Cher — have faced lawsuits after rejecting applicants. The former co-op board president Buddy Fletcher sued the board claiming racial discrimination. It was dismissed. [NYT] — Kathryn Brenzel