Co-op Transparency: What Do You Think?
We’re going to be on the Brian Lehrer show on WNYC tomorrow at 10:20 a.m. to discuss the recent proposal by City Council to require co-op boards to give a written explanation within five days to people they reject. We thought it would be interesting to see what readers think of the proposal, so please…
We’re going to be on the Brian Lehrer show on WNYC tomorrow at 10:20 a.m. to discuss the recent proposal by City Council to require co-op boards to give a written explanation within five days to people they reject. We thought it would be interesting to see what readers think of the proposal, so please take a minute to answer the three-question co-op survey and then listen in tomorrow. There’s a field on the survey for your comments. Thanks!
Check out the results here
When Co-Ops Say “No”, They May Have to Say Why [Gothamist]
Pushing Co-ops to Explain Why You Can’t Buy [NY Times]
So if gays, muslims, parents of small children and the like are already protected under state law, does the council bill do anything more than give real estate agents a chance to make even more money?
Hey, Brwnstnr,
Just listened to your podcast from the show. Great work, but one thing you and Brian were definitly clueless on was the $300 application fee.
You’re right that the money isn’t split between the board members. They work for free.
The money covers the cost of the company that checks to make sure all the paperwork is included, to make copies of everything for all the board members (thats like 100+ pages x each board member + the property manager), and messengering the copies to everyone’s home/office (our building has 1 board member who represents the old landlord, she doesn’t live in the bldg, so it’s a different address).
Unlike board members, office workers get paid. The buyers write a check for their work.
Anon of 5/12:
Unless your co-op has a flip tax, how does the rapid turnover generate revenue for the co-op?
And even if there is a flip tax, the amount collected is probably smaller than it would be if the building were well-run. After all, most buyers would rather live in a well-run building than in one poorly run.
Of course, that means the buyers have to do some research before signing the contract (see “co-op owner,” above).
It’s certainly true that not all co=ops are created equal. I’ve lived in two, and know first-hand that there are good board and bad boards, presidents who are honest & selfless and presidents who ignore their own rules and their shareholders’ best interests.
Same can be said of the managing agents.
If you’re thinking of buying a co-op, ASK other building residents what they think about living there.
If you live in one with a dysfunctional board, RUN for office or at least shake things up by encouraging others to do so.
Co-ops are only as livable as the people who live in them want them to be.
Anyone who is thinking of buying a co op should reconsider. What is needd is a blog section about BAD coop management and boards. I live under the tyranny of a meglomaniacal Board President, an ignorant and idiocy prone managing agent and a three monkey board who will comply with the will of the loudest voice.
It is horrid. We are selling after only two years. The turnover here is incredible. People sell after being here only 4 months – a real revenue generator for the co op shareholders, eh? I was Treasurer and admit to considering communicating the positive aspects of an incompetent Board and managing agent. I finally resigned when they – without my knowledge or participation, hired my life partner for a job which meant I had to resign.
Managing agents should be regulated.
coops should just go condo and get it overwith!
Does anyone know how many bias complaints have been filed with the state a.g. over this?
I think a couple of anonymous comments have the lawsuit thing wrong. The bill says “any proper party may commence an action in any court of competent jurisdiction.” Proper party means a buyer who got turned down and their real estate agent.
Doesn’t action mean lawsuit? Any lawyers on this board?
If anybody’s still looking at this page, let me answer a couple of earlier questions.
From Anon7:55 on the 26th:
“… why is a board of a approval relevant?”
Required is probably the word A. was looking for. The reason is simple. A co-op is a corporation with shares. If you want to invest in it, you have to buy shares, as you would with PepsiCo, IBM or Microsoft.
Those companies’ shares are traded publicly. Anyone with cash can by a share.
Co-ops’ shares trade privately. Just because someone wants to invest (i.e. buy an apartment) doesn’t mean the corporation has to sell the shares. Same thing in a professional corporation such as a law firm or medical practice. (That’s what “P.C.” stands for in “Boy, Dewy, Cheatham & Howe, P.C.”)
Their investors (“partners” in a law firm, “doctors” in a medical practice, to oversimplify) sell shares only to those people they wish. In part, this keeps them from being bought out against their will (which happens often in publicly traded companies).
It’s the same in a co-op. Why are co-ops set up this way? It’s New York State law, so if you want to change it, you’ll have to write your legislator.
Next question, from EJ on the 26th:
“… why have shareholders in a corporate body at all? Why not have it be a condo in the first place?”
Actually, that’s two questions.
First one is easy. If you get your buddies to chip in to your lawn mowing business, you don’t have to incorporate. But if you need lots of cash — say, to buy a $10 million building — you probably do need investors. (Unless you have really rich friends who trust you with their millions of dollars.)
So you form a corporation to sell shares. That’s to keep it legal and above-board. When you sell shares, you have investors. If you don’t need shareholders, you don’t need a corporate body.
Second question is a bit more complicated at first, but actually pretty simple.
So there’s an apartment building with a landlord who rents all the apartments. One day he decides to stop being a landlord and sell the building to the renters.
The renters buy their apartments, for which they get a mortgage. They also pay monthly maintenance, a healthy chunk of which goes to paying off the mortgage on the building.
That’s right, co-op owners pay two mortgages, one on their apartment and one on the building.
Who owns the building’s mortgage? A housing corporation (a.k.a. a co-op), which needs investors to pay that mortgage.
If buyers have enough money to buy out their share of the building’s mortgage at the same time they’re paying for their apartment, they buy a condo.
That’s why condo apartments are worth more — they include the paid-off building mortgage.