May 28, 2010 — Those of you who read about being on a board, and all the technical, legal, financial and other issues facing you, are certainly among the better co-op board and condo board members — even when we try and fail, at least we're actively learning and trying.
But human nature being what it is, not everyone can be so sterling. You've all heard horror stories of co-op / condo boards behaving badly — and if you haven't, well, you're about to now. Culled, with full credit, from around the Web, and looking solely at buyer rejections simply for focus and to demonstrate variations on a theme, we present to you some oddly entertaining lessons in how not to be.
Pregnant Women Need Not Apply
Veteran real-estate broker Douglas Heddings, at his site True Gotham, recalls a co-op in 2006 that was set to be sold for $1,080,000 to "a sophisticated, financially qualified couple who were Russian immigrants. Absolutely lovely people." The board rejected them for the typical and, of course, legally prudent unspecified reason. Heddings heard that the board had an issue with the applicants' ages, but with no proof, had to move on.
With the price lowered to $975,000, Heddings — who said he'd sold about 20 apartments in the building and had a handle on the co-op's requirements for financing and the like — found a thirtysomething couple, "she in the medical field, and he an accomplished musician." While not as wealthy as the first couple, "they were mature, responsible individuals who were definitely not over-extending themselves and could easily afford the apartment."
But it was not to be — in fact, the board wouldn't even interview them. Why? According to the managing agent, he says, "[T]he Board probably didn’t consider the wife's income 'because she is pregnant and won't go back to work.' Can you say presumptuous?"
It gets worse. The buyers got a letter from the wife and her employer stating she planned return to work after her maternity leave, and "her projected income would likely be double her current income." But still no go. The seller, facing a significant financial loss after these two rejections, filed a lawsuit against the board.
A highly successful fellow agent, says Heddings, "shared with me that she advises all of her clients to stay away from the building because 'the board is insane and unpredictable' " — a reputation that doesn't help sales. Whether the buyer-wife's income would have doubled, who knows? But to automatically assume in this day and age that a pregnant woman wouldn't be a working mother? Bad board, bad board.
When a Board Member Wants Your Apartment
This one's from The New York Times in 2005. Jeff Plaks was helping his grandmother, who was moving to assisted-living facility, sell her co-op at 20 East 74th Street. Board member Ann H. Cook arranged for her friend, attorney Jack T. Litman, to buy it. Cook said she recused herself on the issue, and claimed Plaks had promised her right of first refusal to buy the apartment. Plaks said his grandma said he could offer it to Cook, her next-door neighbor, first, and if she wanted it, to give her a slight discount.
Plaks determined a market price and took 10 percent off to reach a discounted price of $630,000. Cook countered with a $590,000 bid, and said the price should be reduced further by 6 percent, the amount that would otherwise be typically paid to a real estate broker. Plaks said $630,000 was as low as he'd go.
And indeed, Plaks four months later accepted a cash offer of $670,000 from a Connecticut couple — a finance-company executive and his wife, with a seven-figure income and plentiful cash-flow. But weeks went by and this board wouldn't even scheduled an interview with the buyers.
Then he got a call from Cook. She told him, he says, that if the deal were to fall through, would he sell the place to her for that price? Plaks said he saw no reason the deal wouldn't close. "And she just laughed and said, 'I'll be calling you real soon.'''
Thinking of buying a co-op or condo? Already bought, and not sure how co-op/condo life and rules work? Learn all about purchasing a place and living in your new community. It's not like renting, and its not like owning a house. What's it like?