This contract was prepared by the Committee of Condominiums and Cooperatives of the Real Property Section of the New York  State Bar Association.  Multiple subheadings of ¶ 1 describe the unique characteristics of a cooperative.  Unlike a real estate transaction, purchasers  do not obtain a deed to the unit, nor are they directly assessed for individual unit real estate taxes .  Instead, the purchasers are buying shares in the cooperative corporation and a long term proprietary lease which are allocated to the unit. Owner is  technically  a “tenant/shareholder”.  Owner pays  the Corporation  monthly maintenance fees  and assessments, when imposed, based on percentage of share ownership. The Corporation’s underlying real estate taxes are passed along to unit owner as a percentage of the maintenance fees. This arrangement,  in which the Corporation’s  Board must be accounted to,  leaves the new owner with less independence and control. For example, intended alteration and additions to the unit (¶4.1.9) may not be done without required consent of the Corporation. Proposed occupants, even pets must be disclosed since house rules of some coops prohibit pets.

               Maintenance charges and assessments referred to in ¶ 1 and “flip tax” if any, should be verified by a call to the building’s managing agent.  A “flip tax” payable to the Corporation upon sale is  generally unique to a  co-op and provides still another layer of transfer tax over that of City and State.

              ¶5 Corporate Documents and their due diligence review. Under no circumstances should client waive examination of corporate documents listed. In some cases attorney might suggest client consult an accountant for financial statement review.  Seller is expected to provide offering plan.  A visit to Managing Agent’s office  (listed in ¶ 1) should provide access to materials not provided by Seller. House rules and by-laws must be examined.

               ¶6 Required approval and references goes to the crux of the co-op’s uniqueness, showing the unfettered powers of the co-op board. Buyers are required to complete application for purchase, pay application fees and  provide references  within stringent time limits after signing contract having no financing or after loan commitment received.  One or more Board interviews may then be required.Note Notice and cancellation provisions if approval is not timely obtained.

               ¶7 and 21 condition of unit and personalty and inspections and possession are comparable to standard residential contract. Note however that co-op sellers are exempt from providing  a property condition  disclosure statement.

 ¶8 Risk of Loss. Pay careful attention to terms and percentage of units damaged as thresh holds for rendering unit uninhabitable or inaccessible enabling Buyer to cancel and to limits of time for notification and abatement of purchase price.

 Paragraphs on documents to be executed, closing fees, apportionments, broker, escrow  are self explanatory. Default remedies ¶13 are comparable to principles of real estate law.

               ¶15 directs that within 10 days of closing, Buyers will provide a “co-op search” disclosing liens pertaining to Sellers’ shares of stock and judgments against them. Seller has right to adjourn for a period not extending beyond expiration of loan commitment to remove encumbrances. Seller’s UCC financing lien and other judgments may be satisfied from proceeds at closing.

 ¶18 Financing provisions should be read in conjunction with paragraphs 1.20.1, 1.20.2 and 1.21. If contract is subject to loan contingency options and it has been determined that Board will recognize such financing, every detail of ¶18 must be meticulously followed and in some cases negotiated.

 ¶ 26  requirements of underlying Corporation which are unique to a co-op transaction.

Author:

CLAIRE SAMUELSON MEADOW, Esq. is in the private practice of law, concentrating in real property transactions. In addition, she works on title matters as a consultant, attorney and representative for a New York based title agency. She is the author of numerous real estate articles distributed to lawyers, and she has appeared on the General Practice “Hot Tips” panel at the New York State Bar Association’s Annual Meeting. Recently, she has been presenting Continuing Legal Education-credit programs on real estate and title matters to the Westchester County Bar Association, the New York County Bar Association and the National Law Foundation. Mrs. Meadow authored the residential real property chapters of the New York Lawyer’s Deskbook and Formbook for more than 12 years.

Before entering private practice, Mrs. Meadow was a staff attorney in the Enforcement Division of the Securities and Exchange Commission’s New York regional office. She is a Phi Beta Kappa, cum laude graduate of Hunter College, Class of 1959, and a graduate of Columbia Law School, Class of 1962, where she was a recipient of a Moot Court Scholarship.

Mrs. Meadow is listed in Who’s Who in American Women and Who’s Who in American Law. She is a recipient of a Westchester County Woman of Achievement Award and a Certificate of Special Congressional Recognition from Congresswoman Nita M. Lowey for “outstanding and invaluable service to the community.”

Mrs. Meadow was a founding member of the New York State Women’s Bar Association, Westchester County, and its first recording secretary. She is also a member of the New York State Bar Association, Real Property Committee; the Westchester County Bar Association; and the New Rochelle Bar Association.

Don’t think this attorney has a narrow horizon. She chaired the Westchester Women’s Bar Association Annual Golf Outing for six years causing it to become such a popular community event that, in some years players had to be turned away.

Mrs. Meadow welcomes inquiries by new lawyers and general practitioners concerning basic real estate or title matters. She may be contacted at 914-834-6472.