The application and interview stages of buying a unit in a cooperative do not have to be a mystery. Below are explanations on the overall process towards becoming a shareholder.
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Long Island Co-op Applications and Interviews
What Makes Cooperatives Different Then Other Types of Homes?
It is important to understand how co-ops differ from other types of communities. Co-ops are structured like a corporation. Therefore, applicants who purchase a unit within one are purchasing shares and are referred to as “shareholders.”
In Cooperatives, Is Board Approval of Buyers Required?
If you are planning to purchase a unit in a cooperative, an application process may be required. Applications are processed by management and are reviewed by the board of directors.
What Role Does the Property Management Company Have In the Application Process?
Management will typically facilitate the sales process but does not have any say in the approval or denial of the application.
What Is The Board’s Role in the Approval Process?
The board of directors is a group of elected volunteers (usually shareholders or owners of the community). They act on behalf of the best interest of the community and are responsible for ensuring that buyers will be able to contribute to the financial well-being of the cooperative (hence the application and interview process). The board approval process is thorough to ensure the corporation stays in good financial standing.
What Are The Co-op Application Requirements?
Each communities’ requirements will vary. However, the application will ask for items such as financial details, employment verification, tax information, occupants, pets, etc. Credit reports will be done on all applicants.
What Other Financial Items Will The Board Review?
The board will want to ensure that your income outweighs your expenses and debt. Generally, one’s housing should be 30% of their gross income. The debt-to-income ratio should be 3x the total debt. See “Assets & Liabilities Sample Form” and “Estimated Income & Expenses Sample Form” for examples of what boards look to review. Additionally, the board will want to verify employment and income.
What Other Factors Do I Need to Consider During the Application Process?
Boards will want to ensure that applicants will abide by community rules such as pet policies, extra occupants, etc. Therefore, it is common for boards to ask questions relating to the current community policies during the interview process.
I Was Approved By a Bank for a Mortgage. Shouldn’t This be Enough to Satisfy the Board of Directors?
No, boards look at a buyer’s finances more in-depth than lenders. For instance, a board will usually require all expenses a shareholder will incur each month. This might include expenses such as utilities, insurance, food, and entertainment. Note that these are items that are often not reviewed by lenders.
Why Does the Approval Process Take So Long?
There are multiple parties involved in the application process from start to finish. While interviews are scheduled as swiftly as possible, it can be challenging to schedule interviews around board members’ schedules.
Additionally, a good rule of thumb is to make sure you provide all application requirements upfront and promptly. When insufficient materials are sent to the sales department, it can slow down the process.
What Control Does the Board of Directors Have in Regard to My Unit, Rights, etc.?
The board has a responsibility to uphold and enforce all governing documents within their community. It is imperative that you understand your house rules and bylaws and that you abide by them.
Who Conducts the Co-op Interview?
The co-op interview process is conducted by the Board of directors. Management does not have a say in this process and will not interview prospective shareholders, but may help to coordinate the interview time and date, etc. on behalf of all parties.
What Can I Expect During the Board Interview?
At this point in the process, the board has reviewed your application and may request additional information regarding your application. The board may also review community rules to ensure that the applicant(s) are aware of the policies and will abide by them.
Do You Have Additional Questions About the Application and Interview Process?
Visit our sales department page for additional information regarding the co-op applications and interview process.
