Buyers in New York City, especially first-time buyers are probably unfamiliar with the ins-and-outs of co-ops and condos. For starters, what is a co-op board and who sits on it; How do you obtain board approval when purchasing; What do monthly fees cover? It pays to do your research and be prepared before you start your home search so there are fewer surprises. We tapped some of our experts in Douglas Elliman’s Property Management division for their insights and advice on a few key questions that will set up soon-to-be buyers for a successful purchase. Here’s what they had to say.
What online resources could I use to research a property prior to purchasing?
When you start your property search online, you’ll want to look for photos, descriptions, history, list of amenities, applications, building policies, fees, bylaws, property management personnel with contact info, and more for the buildings you’re interested in. Since Douglas Elliman Property Management has a portfolio of more than 350 buildings, our website is a great place to start. Under Properties & Applications you’ll find a complete library of our properties with all the important information on each.
If your potential purchase is in a building that is not managed by DEPM, find out what company manages the building, and start by checking their website to see if they provide similar online information about their properties. Other useful websites include StreetEasy, PropertyShark, and Zillow.
—Rafael Niyazov, Director of Information Technology
How are rules for subletting, alterations, smoking policy, etc. determined in a co-op or condo?
Co-ops and condos are operated by a volunteer Board of Directors, elected by the residents of the building. Most boards hire a professional property management company to help with the day-to-day operations, and to oversee staff, budgeting and finance, building maintenance, compliance with City regulations, etc. Boards meet monthly or bi-monthly to review issues and make decisions on everything from property upgrades to ongoing contracting jobs to policies for subletting, alterations, pets and smoking.
In addition to board decision-making, every co-op and condo has a written set of bylaws and house rules that must be complied with. Most of these documents were put in place when the developer or building sponsor first created an offering plan for the sale of the apartments. These governing documents can be modified by a vote of the board members, or by a majority or super-majority of the building residents, depending on how the rules have been written.
The best way for residents to voice their opinions on lifestyle issues is to attend the Annual Meeting and either run for the Board or vote for the Board candidate they feel best represents their views.
—Tom Usztoke, Vice President of Management
What is an assessment and how can I research past and anticipated assessments in a co-op or condo building where I’m interested in purchasing?
Nearly every co-op and condo building will impose assessments on their residents periodically. As a purchaser, you need to be wary of buying into a building that has a history of frequent and/or high special assessments.
An assessment is an additional charge to residents, divided according to the number of co-op shares owned or the square footage of their condo, that is needed to cover certain unexpected or special expenses, such as a new roof, new boiler, or exterior maintenance work required by the local regulatory agency.
As a potential buyer, you have the right to look at past Board and Annual Meeting minutes to see what sort of issues the building has been dealing with in recent months, and what is currently under discussion. Minutes should reveal any special assessments that have been imposed, how much was needed, and what the funds were for. In most cases, board minutes can be viewed at the office of the building’s managing agent. Working through your real estate broker, with the aid of your closing attorney, you can contact the managing agent to set up an appointment to visit their office and view the minutes.
You should also look over the building’s financial statements for at least the past five years. These will reveal the annual projected budget as well as the actual budget for each year. They will show how big a reserve fund the building has, and whether they operate in the black or with a shortfall of funds. Special assessments should appear as additional blocks of income that are set aside and then spent on a specific large budget item, such as a roof repair or major upgrade.
If you can speak with the building’s accountant, in addition to the managing agent, you can ask about assessments and the overall financial health of the property. As an owner, these can have a significant impact on your own budget planning and should be thoughtfully considered before buying an apartment.