In the 1999 romantic comedy Runaway Bride, Julia Roberts plays a woman who keeps leaving grooms alone at the altar. Then a newspaper columnist played by Richard Gere comes to interview her as her fourth wedding date approaches and... No spoilers here. Just a lesson for people who are hoping to buy a co-op apartment, only to get cold feet, a la Julia Roberts, at the last minute.
After getting through the arduous admissions process and finally reaching the oft-dreaded interview with the co-op board, a potential apartment buyer tells Brick Underground she was so turned off by the board that she hopes they vote not to approve the sale. If the board does approve the sale, the buyer asks, how can she get out of the deal and get her deposit back?
Julia Roberts’ leave-them-at-the-altar strategy, it turns out, is not an option. “There is an implied covenant of good faith and fair dealing required of contracting parties, and the standard form of cooperative contract of sale requires a purchaser to submit a completed application and to participate in the interview process in good faith," says attorney Jeffrey Reich, a partner at Schwartz Sladkus Reich Greenberg Atlas.
Theoretically, if a financial crisis suddenly arose that prevented a buyer from getting a mortgage, that potential buyer could get the deposit back.
"It’s rare that this happens, so if it were to happen in a deal like this, there would be a suspicion of the buyer trying to get out of the deal and get their down payment back," says Deanna Kory, a broker with Corcoran. "The seller would have a right to sue you for acting in bad faith in that case. Legally and ethically, there is no way I can see you backing out and getting your down payment back if you’re approved by the board."
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?