How to get approved by a co-op board
Nov 13, 2023
Whether you’re buying a co-op or a condo resale, your purchase usually must be approved by
the building’s board. This involves submitting a 45-page-long, invasive, much bemoaned
application package assembled by you and your broker that includes tax returns,
recommendation letters, financial statements and much, much more. Some applications only
reach back a couple of years; others go all the way back to the day you graduated from
college.
As explained earlier, condos may make you work just as hard as a co-op, but basically have to
accept you, unless they exercise their right of first refusal and buy the apartment out from
under you. This almost never happens. And in new construction, there is not even an application package.
There are also a couple of situations in which a co-op cannot reject you:
● “Condo-ops” A few buildings (sometimes referred to as “cond-ops” for their condo-like approvals power) are actually forbidden by their own bylaws from turning down a buyer who satisfies basic
conditions for buying .
● Sponsor sales
Secrets to creating a stellar co-op board package
You’ve finally found a co-op you want, negotiated the price successfully and signed a contract,
and the near-mythical board interview is next. But in between is an all-important stop along
the road to NYC apartment ownership that’s just as crucial: preparing a no-fail co-op board
package. While your broker does a chunk of the heavy lifting, your role is equally significant.
Co-op board interviews may be the stuff of lore and apprehension, but the vast majority of
turndowns occur beforehand while the board is reviewing your “package.”
Board packages should be airtight: Consistent, complete, easy to understand and raising no
unanswered questions.
And oh, yes: You and your broker must assemble this masterpiece within 10 days after the
contract is signed.
The buyers have to get all the documentation together. The broker’s job is to make it look
pretty and clean it all up. Usually, there are one or two rounds of back-and-forths, but you can
cut down on time between offer and closing if you do it well and together.
Another way to think of the sometimes-laborious package-gathering process: It’s a means to
an all-important end. Handing it in is like subjecting yourself to a pre-interview that gives
board members a first impression that could make or break your transaction.
Here’s how to ace it.
1. Follow directions
It seems easy: Usually, a management company or brokerage will send you a “how-to”
explaining exactly what you need to include in your package. The bottom line: Include everything asked for and don’t put in more than needs to be there. Including photos is a big no-no!
2. Start preparing early
Just before you sign your contract, ask for a sample application with all of the documents you
need for the board application. It gives you time to request statements by mail in case they
are not available online. You will be surprised how many retirement accounts and bank
statements are not available online.
● Retrieve copies of your last three years’ federal income tax returns
● Collect previous three months’ bank, credit card and brokerage statements ● Ask three
friends, three professional contacts, and your landlord or property manager to draft
reference letters
● Get a letter from your employer attesting to your time and position in the organization ●
Ask your accountant to vouch for you and your income in writing if you are self employed.
3. Include all essential financial details
If you’re financing, you’ll absolutely need a commitment letter from the bank and that usually
takes 30 days to get. If you’re paying cash, we suggest leaving 10 to 15 days to get the
package together.
While co-op board requirements vary from building to building, there are some nuts-and-bolts
requirements: financial statements that show assets and income, specifically tax returns and
bank statements. Those are the heart and soul of the package in broad strokes.
Usually, the board will want two years of tax returns and your most recent bank statement.
When it comes to stocks and retirement account reports, the most recent paperwork is usually
fine, too.
All the documents you submit should be tied to the date on your financial statement. Don’t try
downloading the latest brokerage amount if the date falls after what you put on the
statement.
4. Binders are your best friends and so is typing EVERYTHING except your signature We are
hoping web-based co-op board packages are the way of the (near) future; but for now, the
vast majority of boards want everything on paper.
Nothing in the board application package, especially that financial statement, should be
handwritten. And don’t forget to sign your tax returns.
Make sure you are organizing the board package exactly the way they ask for it and use as
many dividers as you can—for example, for the financial section you should make dividers for
each section (cash, investments, etc.) so that the board can easily slip back and forth to verify
information. Avoid leaving anything blank. Even if you don’t have financing, still have a divider for that portion and then include a small letter saying that this section is blank because there is
no financing.
The best board packages are the ones that are the most organized. Co-op board members
don’t want to have to search through the binder for missing documents. Make it as easy as
possible for them.
5. Include a cover letter and table of contents
This lets board members easily find what they need. We believe in two (2) cover letters: one is
the table of contents and one explains who you are, where you put your income, your assets
(post-closing), and your debt-to-income ratio. So if a board member doesn’t want to read the
whole package, they get everything they need from these two parts.
Though not usually required, a cover letter such as one that you might craft when applying for
a job can be helpful. It is an opportunity to eloquently puff your sense of responsibility, your
future devotion to a new community, your love of the building and the city, and your other
attributes. The letter also gives you another chance to offer additional explanations if
necessary.
6. Flattery will get you everywhere (only if you’re sincere). Compliment the building (honestly)
in the buyer’s intro letter, because every member of the board chose to live in the building. By
adding a few lines highlighting the pros, it’s a great way to acknowledge the smart financial
choice they once made.
7. Don’t allow for unanswered questions
Co-op board members are volunteers (with jobs and families in many cases) and they don’t
want to spend a lot of time going back and forth with you asking for more from your
package—plus the longer it takes for them to approve the package, the longer it’ll take to
close on your apartment—so make sure all claims you’re making have back-ups. One of the
most common, and biggest, screw-ups is paying cash and not showing that amount of cash on
the financial statement. It makes the board wonder where on Earth you’re getting the money.
For example, sometimes people will say there will only be two occupants in the apartment,
but their tax returns show they’re liable for other people. You need to explain that. Discrepancies need to be clarified. For instance, if the building doesn’t allow for new pets, but your pet is therapeutic, be prepared to provide documentation to verify that.
Anticipate every question. Add a note to your package when an item might confuse board
members, overstate or understate debt and income, or involve pending income such as a
bonus or home sale. For example, if you’re recently divorced be prepared to give detailed
information about alimony payments, whether you give or receive.
Be absolutely consistent. Your loan application is often part of your board package, so make
sure the numbers match your financial statement. There must be no discrepancy between the
numbers in your supporting documents (#1 above) and the figures you submit on the financial
statement. Everything must add up and track, including cash in bank, money owed or monthly
payments for rent, mortgage loans and utilities.
8. Choose references wisely
Make sure references are well written and typo-free. Pretty much every co-op will ask for some
amount of reference letters, they fall into several categories: An employee letter, which comes
on company letterhead and says you have the job you say you do, verifies your base salary,
and references your bonus (though some companies don’t like doing that); a business
reference letter from a superior or colleague, which offers substantive feedback about you in a
work environment, including details on how responsible you are; a personal reference letter,
and a letter from your current management company confirming that you pay rent or
monthlies on time.
Specificity is key when it comes to references, you want your references to include personal
details like, ‘she helped me when my kids were sick,’. What separates one applicant from the next is the personal aspect—specifically, the recommendation letters. Because when it comes down to it, once we are all in agreement that the applicants have the financial capacity to purchase, we really just want to see if they will make nice neighbors. Who are they asking to recommend them? Do they read like boilerplate
or do they really tell me that these are good, nice people?
So who should write your personal reference letter anyway? The best person is a NYC co-op
board member, the second best is a co-op owner and the third best is any kind of apartment
owner in New York City. The idea is to use someone who gets how important it is to have
good neighbors and can vouch for that fact that you would make one. If you know someone
who already lives in the building—even better.
But references should be from the best people who can speak honestly about you in the case
of a younger couple, possibly a parent’s friend would be a better choice than a colleague. If
the purchase is a large one or is in a distinct building then you need to pull out all the stops.
9. Make the package, and check it twice (or thrice, or more)
And make sure your editor knows what to look out for. Multiple qualified eyeballs are always a
good thing. The buyer’s broker prepares the package, but the seller’s broker, the managing
agent, and even the lawyer should review it. Check for typos and see if anything stands out (in
a bad way) to anyone.
10. Don’t expect condo board packages to be that much easier
You’re not home free just because you’re buying a condo, which also sometimes ask for board
packages. These days condos are more cautious than ever because of higher rates of foreclosures. Condos are acting like co-ops now, they’re starting to ask for money in escrow, guarantors, etc. Be as prepared as possible by working closely with your broker.