3 things to note before buying a co-op

On Behalf of | Nov 22, 2019 | Residential & commercial real estate transactions |

The idea of a real estate cooperative is something many people can get behind. Knowing you share ownership with others and can form your own small community with like-minded people is often a huge draw. However, buying a co-op requires good business analysis because you are investing a substantial (if not complete) part of your life savings in a multi-million dollar corporation which is being run by individuals who, like yourself,  probably don’t have a lot of experience in real estate management. You want to make sure that buying a co-op in New York will be beneficial to you in the long run both in lifestyle and financially.

The New York Attorney General offers some tips and advice to help make your experience with buying into a co-op the best it can be. Here are three things in particular that you want to keep in mind as you start looking for a co-op and considering your investment.

  • Review the Offering Plan Carefully

The Offering Plan is the document that was created by the Sponsor of the building when it was first converted to cooperative ownership.  You should always read the plan in full which means making sure you get any amendments which were filed to the Offering Plan. Make sure you understand everything in the plan and pay particular attention to the items which were listed as Special Risks.  Even if the building was converted years ago, there is crucial information contained in the Offering Plan. If you have questions, consult an expert who can help you figure out what the document says or what certain clauses may mean.

  • Inspect Everything

Make sure you inspect the physical condition of the Apartment before you close.  Was everything delivered as promised.  Just as important, in deciding whether to purchase, make sure you do your due diligence and inspect the corporation’s minutes and financial statements.  Make sure you ask about upcoming work or problems in the building and look to see whether housing or building code violations have been filed against the property. Check that everything you agreed upon is as it should be.

  • Do not focus on the wrong things

When buying a co-op, your first instinct may be to focus on its location and how nice the apartment looks.  Make sure you take a good hard look at the building and its amenities. Look also at the plumbing, electrical and HVAC systems in the unit.  You want to find as many issues as possible before you invest so you do not incur a lot of unanticipated expenses.

To ensure your co-op investment is a sound financial decision, make sure you take the time to approach this as you would any major business decision.  Make sure you do the right research and call on an experienced, knowledgeable attorney to help you through the process.