How to Handle Big Coop Assessments

Yes, maintenance is a key part of your affordability calculations. You should always expect around 5% increase, but if you just learned of a huge assessment or increase, then you should factor that in to overall cost, and bid accordingly. As others have said, when you sell you’ll have to account for it.

DeLepp, I suppose there is some small joy though in weeding out the dickheads and righting the ship?

I think keeping maintenance low to sell apartments is horrible for the long term stability of the building. I suppose that was a building dominated by the sponsor or with a high number of renters because otherwise it doesn’t make much sense to me to sacrifice sound management in order that a few shareholders can make a huge profit at the expense of other current and future shareholders. Coops really are a nightmare, but, realistically it is the most “affordable” way to own an apartment in New York, I mean to own shares in a corporation that owns apartments in New York.

Of course property taxes are also included in maintenance but you have to pay that no matter what, right, and it should always be budgeted for. I think that increases in essentials like fuel and water have been a major factor in maintenance increases over the past few years, but Board incompetence is certainly also a factor. In my building maintenance was relatively low for years and I think had not been raised for a dog’s life, but then we discovered that keeping maintenance low at the cost of not properly managing the building wasn’t such a good move. I humbly suggest that small, realistic maintenance increases every couple of years is much better than having to nail shareholders with a 15% or 20% increase all at once so as to play catchup. That’s just bad strategy in my opinion, but is one that I believe many buildings deploy.

In my opinion this depends on the purpose and amount of the assessment. In a larger building for example, where there may be an impending special assessment over time for a major repair, I would certainly consider asking the current sellers to deduct that amount or part of that amount from the asking price. If it is an assessment, it will be a discrete amount so is easy to negotiate. If it is a maintenance increase, then I suppose some small price adjustment may be in order, but somebody buying a coop should appreciate that maintenance is always subject to go up (and rarely if ever goes down), so while it should be a factor in considering a particular purchaes, it always must be part of the equation to keep in mind. I personally would not be too interested in an apartment with high maintenance but some people enjoy having a doorman and other luxuries. It is also true that in some buildings when somebody with a brain finally gets onto a Board, they figure out quickly that the low maintenance is due to not paying bills, having shoddy work done, etc. and must raise the maintenance accordingly. Many buildings have also recently faced the reality of higher heating fuel prices and the highway robbery going on with the water rates.