New York's Cooperative and Condominium Community

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LEGAL/FINANCIAL

HOW LEGAL/FINANCIAL PROBLEMS ARE SOLVED BY NYC CO-OPS AND CONDOS

Planning to Refinance? 20 Ways Your Board Can Prepare

Patrick Niland in Legal/Financial on December 31, 2014

New York City

Dec. 31, 2014

The first step is to convene a meeting of your co-op's attorney, accountant, and managing agent to discuss your plan and enlist their aid in collecting all the information you will need.

The information you need to gather falls into three categories: building profile, financial status, and physical condition.

Your building profile should contain the following items:

  1. A complete offering plan with all amendments, plus the date of conversion.
  2. A breakdown of apartments by type (studio, one-bedroom, two-bedroom, etc.).
  3. A breakdown of apartments by ownership (owner-occupied, sublet, investor, sponsor).
  4. A description of the building (year built, number of floors, number of elevators, etc.).
  5. A list of building amenities (garage spaces, laundry room, storage, pool, etc.).
  6. A description of any commercial space.
  7. Photographs of the building, the inside of several apartments, and any amenities.
  8. Contact information for your attorney, accountant, and managing agent.

Your financial file should contain:

  1. Financial statements for the three most recent years (audited statements are preferred, but any formal statements prepared by a certified public accountant are acceptable).
  2. An operating report through the last calendar month preceding the start of your lender search.
  3. A budget for the current year (plus a budget for the coming year, should you begin your lender search in November or December).
  4. Recent bank statements showing the balance in the co-op's reserve fund.
  5. A current maintenance roll by apartment.
  6. A current arrears report by apartment (along with an explanation of any significant delinquencies: reason, notices given, legal action taken, etc.).
  7. If available, a list of rents for any sublet, investor, or sponsor apartments.
  8. If applicable, a commercial rent roll with lease expiration dates.
  9. A list of apartment resales over the three previous years (unit number, number of shares, closing date, sales price).
  10. A list of capital improvements made to the building over the previous three years with approximate cost.
  11. If borrowing extra money for repairs or capital improvements, a list of those repairs or improvements with their approximate cost.
  12. The building's current assessed valuation and the status of any tax abatements.

To accurately describe your building's physical condition, you need input from your managing agent. You may also want to hire an engineer to assess the condition of major building systems and expected repairs or upgrades in the coming years.

Together you can develop a projection of expenditures that will help you determine the best structure for your new financing and the total amount of new financing required to keep your building in optimum condition.

You also could ask your attorney to order a preliminary title report and public records search to uncover any liens, violations, or other issues that could delay a loan closing. Your attorney also should prepare a summary report of any outstanding litigation.

Finally, you might want to check with your insurance agent to ensure all of your coverage is appropriate and current.

 

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