Who Makes the Cut in New Jersey's Co-ops? Assessing Buyer Financials

Imagine this scenario: you’re trying to purchase a co-op apartment, but also in the midst of a divorce. The board, concerned you may have to shoulder additional child support and alimony payments, fear that you might be unable to meet your financial obligations to the building, and demand to see your divorce settlement paperwork. As additional reassurance, they also request that you put a year of maintenance payments into an escrow account…just in case.

That was exactly the situation Christine Toes, a New York City associate real estate broker and Citi Habitats vice president, recently navigated with a client. “My customer had two years of payments in reserve, he was putting more than 20 percent down on the apartment, he had a great job history, a credit score of 770 and had a 26 percent debt-to-income ratio.” Still, the board balked.

Jumping Through Hoops

Welcome to the wonderful world of buying a co-op. While condos are by far the more common form of home ownership in New Jersey’s urban and suburban neighborhoods, co-ops are an option that appeals to buyers for an array of reasons. If you are buying a co-op, however, be prepared for a deluge of paperwork, and some serious scrutiny into your personal business.

While New Jersey’s co-op boards are not as notoriously picky and hard-to-please as those on the Upper East Side of Manhattan, for example, co-op buyers must still be prepared to provide boards with a great deal of financial documentation. Everything is fair game, from tax returns, credit reports, investment income statements and pay stubs to letters from accountants, net worth statements, and more. If that’s not good enough, they’ll ask for even more.

“The sky’s the limit—except where it constitutes discrimination,” says Edward M. Taylor, an attorney in Smithtown, New York. “In some cases, [boards have] even asked if a buyer has sufficient health insurance coverage so that they would still be able to pay their monthly maintenance if they need extensive medical care.”

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