How to Sell an Inherited Co-op in New York City

How to Sell an Inherited Co-op in New York City

In New York City, cooperative housing (also known as a co-op) is a notoriously tricky beast. Many people think of co-ops as condos, but they’re actually quite different and come with a unique, complex set of challenges.

If you’ve inherited an NYC co-op and you don’t live in the area (or, if you’re a New Yorker and you already know what a headache co-ops can be), you may want to consider hiring a local professional executor like me. Someone who knows the ins and outs of selling a probate co-op and can save you a lot of time and hassle.

What even is a co-op?

A co-op is a shared housing model where a group of people own a building together and live in individual apartments or units within the building. As a co-op member, you own shares of the corporation that owns the building—you don’t own your actual unit. This is a key difference from a condo, where you actually hold the deed to your piece of the property.

Co-ops can be appealing because they’re typically more affordable than a condo or single-family home. However, they can also be much more troublesome to manage, as we’ll see.

Why co-ops are so challenging

Co-ops are run by a board of elected residents. If you’re familiar with condo or homeowners associations, you might not think this is such a big deal. But by comparison, co-op boards are typically much harder to work with.

As you might expect, the co-op board plays a big role managing the common areas of the building. You might be surprised, though, by how much authority it also has over individual units.

When it comes to selling a unit, the co-op board gets to approve pretty much everything—including the buyer and the selling price! And any time you want to make an update or renovation, you have to run it by the co-op board first. Legally, co-op boards have a ton of latitude to turn down potential buyers, reject purchase prices, prevent unit renovations and much more.

In New York City, co-op boards are famously picky and bureaucratic—and they also tend to be more aggressive. For example, an NYC board could be much quicker to pull the trigger on initiating a lawsuit (or even a foreclosure) when a tenant has unpaid fees, even if the person is deceased. By comparison, condos and most creditors are usually much more understanding and patient when dealing with these types of situations and working with heirs.

What are potential roadblocks for an inherited co-op sale?

What are potential roadblocks for an inherited co-op sale?

Hopefully by now you’ve got an initial sense of how challenging co-ops can be. And that’s before we add on the bonus element of probate.

Here just a few ways that selling an inherited co-op in New York City can make your life difficult.

  1. Getting your foot in the door.

 From the very beginning, co-op red tape can create bottlenecks. For example, the board could be slow to acknowledge your letters testamentary and recognize you as executor. Not only is this annoying, but it also keeps you from gaining access to the unit in a timely manner.

When you’re trying to offload an inherited asset, you don’t need any unnecessary delays. A professional executor can save you a lot of hassle by efficiently handling every step for you, right from the start.

  1. Preparing for sale.

Cleaning out a property and getting it ready to impress prospective buyers takes a boatload of effort. Now imagine that with every arduous task, you’re also having to simultaneously learn and deal with co-op bureaucracy. There are strict move-out rules and complicated procedures for everything, even reserving the elevator. You have to speak with the building superintendent so often, she’s on your speed dial. Meanwhile, your listing date keeps getting pushed back further and further…

On top of normal cleanout, what if you need to tackle a few renovations to make the home more marketable? Get ready for more red tape. The co-op board has to approve all of your plans and may make extra work for you, like requiring you to get special insurance to protect the building from liability.

  1. Approving the price.

With a co-op sale, the board gets to say whether the price is right. Hopefully, it’s a straightforward matter and all parties can come to agreement relatively quickly. But there can always be complicating factors, especially with a probate property.

Let’s say you’ve inherited in a building where a comparable unit that’s reasonably up to date should sell for a million dollars. But your deceased uncle had fallen way behind on maintenance, bringing your unit’s realistic selling price closer to $750,000. The board wants to keep the price tag at one million to show that the building is strong and the units are trading at the appropriate level. So they reject the price proposal, leaving you with a couple of alternatives (neither of which is very desirable).

One is the aforementioned unit renovations. Those come with their own headache and hassle, especially when a co-op board is involved.

The other is a seller credit. I won’t get into it here, but trust me, it’s more trouble than it’s worth. If you really want to dig deeper, you can check out my longer post on seller credits.

  1. Approving the buyer.

In New York City, co-op boards have the authority to reject a buyer on just about any grounds (so long as it’s not based any type of legally prohibited discrimination). As a result, the hoops that buyers have to jump through to win the board’s approval are the stuff of legends.

There are stories of co-op boards asking buyers to bring in their pet for an interview to make sure Fluffy won’t be an overly rowdy or disruptive tenant. In popular culture, you might recall the hilarious episode of Seinfeld where, despite his incredible interview performance, George loses an apartment to a survivor of the Andrea Doria shipwreck.

  1. Managing closing bureaucracy.

If there’s one thing to be said for co-ops, it’s consistency. Even closing can be a pain!

Co-ops are way more likely to require the seller to attend the closing in person, which can be problematic and expensive if you don’t live in town.

And more so than condos, co-ops can be very strict (surprise!) about requiring tax releases and other  documents that can be very time-consuming to obtain.

Skip the co-op chaos. Hire a pro.

If you’re tasked with a co-op probate sale in New York City, consider hiring a local professional like me. As an experienced probate attorney, I can completely manage the sale from start to finish—ultimately saving you (and any fellow heirs) time, money and energy.

If you’d like to chat, please use the form below to get in touch.

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