Reasons you might be rejected by a co-op before you ever reach the interview
Nov 13, 2023
The vast majority of rejections occur before the co-op board interview, based solely on your
application. As one Manhattan property manager shared with the NY Times, out of 350
transactions in buildings managed by his company, 20 buyers were turned down before the
interview, and only 1 afterward.
Co-op boards do not have to explain why they rejected you. So although, legally, they must
abide by Fair Housing Laws and not discriminate on the basis of race, religion, family status,
etc., the fact is that anything can and probably does happen behind closed doors and sealed
lips.
Here’s a brief tour of the possible, not always obvious reasons (most legal, some not) for
rejection based on your application:
● The size, breed, temperament, etc., of your dog.
● The board suspects you plan to use the apartment as a pied a terre rather than your
primary residence.
● You are buying the place for your grown kids.
● You need a guarantor to afford the apartment.
● You won’t have enough cash left over after buying the apartment to meet “liquid
reserve” requirements, which can range from $25,000 all the way up to 1x to 3x the
purchase price of the apartment.
● You don’t have a strong enough presence in the United States (where will they sue and
collect money if you default on the maintenance).
● You are a musician (noisy), record producer (like to party), or attorney (litigious). ● You
are an at-home music teacher (noise + lots of visitors) or operate some other objectionable
home-based business.
● You have a history of being litigious and/or suing a former neighbor, board or landlord.
● You posted stupid pictures of yourself on Facebook that suggest your lifestyle is not an
ideal fit.
● You are paying too little for the apartment (it will drag down property values for the
whole building).
● There are discrepancies in your financial package that have not been adequately
explained.
● Your income relies too much on discretionary bonuses or on commissions.
● You haven’t been at your current job long enough.
Boards are omnipotent—almost. They can turn you down for just about any reason as long as
it doesn’t violate the city’s Human Rights Law, which prohibits rejections for reason of race,
creed, color, national origin, sex, age, disability, sexual orientation, marital status, citizenship,
occupation or on the basis of how many children you have. Anything else is fair game, from
how you part your hair to whether you have any at all. And—for now, anyway—they have
absolutely no obligation to tell you why they’ve rejected you.
That’s where we come in. Below, the seven most likely reasons a co-op board may hit the
reject button.
1. You don’t have as much money as they think you should have (or you’re not being upfront
about how much you do have).
Finances are far and away the number one reason buyers are rejected by co-ops. Co-ops have
rules about what they consider “sufficient reserve” once you’ve made you purchase; at the
extreme, this could be as much as one to three times the purchase price leftover in liquid
assets.
Banks are still perhaps a little less demanding when it comes to requiring assets left over after
purchase than are co-op boards. Prospective buyers should be prepared to put a year’s
maintenance in escrow.
A good broker (US!) can help you avoid a turn-down for financial reasons by helping you
present your financial picture in the most strategic light. We ask that buyers do not
misrepresent their net worth or personal situation, because if the application is submitted, a
disconnect shows up, it will be quickly followed by a rejection.
Other financial red flags for boards would be any indications that your income fluctuates wildly
or that you’ve had some recent and unexplained influxes of cash, which could signal that
money from a parent or other friendly source is being used to prop up your balance sheet for
appearance’s sake.
In addition, cautions co-op and condo: Bad credit, heavy debt loads or other financial
blemishes are the kiss of death for most co-ops.
1. The board isn’t sure that the apartment will be your primary residence. Many co-ops require
that you use your apartment as your primary residence. Even if that’s what you intend, your
circumstances may paint a different picture and raise suspicions.
Primary occupancy is also a primary concern when buying an apartment in the form of a trust
(if the co-op allows that in the first place, that is). Care must be taken to ensure who the
occupants of the apartment will be. Many co-op boards will not even consider this type of
sale.
2. Your landlord-tenant history scares them
Prior housing problems can haunt you. Being involved in landlord-tenant proceedings in the
past or having a spotty residency history, in other words, showing a large number of
addresses in a relatively short period of time, can deal a death blow to your application.
3. The board package was “sloppy”
A sloppy, careless board package is actually the number one reason for rejection. Boards
sometimes are reluctant to get involved in a back-and-forth once they’ve received the
package. If there’s something seriously problematic, they’ve very likely to just turn down the
applicant.
Every question has to be answered ….and the answers have to be easy to find and clear
before a package is submitted. The easier it is for the board to understand the numbers, the
better for the applicant. Boards are made up of volunteers and going over a package takes
time. Not having things in good order shows no respect for their work,” she says. A good
broker will help you accentuate your strengths and put together a neat-looking, truthful and
thorough package.
4. You will be an annoying neighbor
You are deemed too potentially loud (you’re a rock music promoter, you play the drums, sing
opera, own a notoriously yappy breed of dog), too litigious (you’re an attorney or you have a
record of litigious behavior), too famous (raising the possibility of wild parties, paparazzi,
entitlement issues, and crowds of fans), or raise any number of other lifestyle concerns that
could potentially impede on the finances of your neighbors or quiet enjoyment of their
apartments.
5. The internal politics the board—or personal interest of a board member—might work
against you
Unfortunately, there’s nothing you can do about this last one.