Manhattan Q&A: Coop vs Condo Approval Process

Manhattan Real Estate Question and Answer

Q.     What is the difference between the approval process in co-op versus condo building?

A. The difference between the approval processes in a coop versus condo buildings is based on the two different forms of ownership. Coop ownership differs from that of Condos in that you own shares in a corporation accompanied by a proprietary lease instead of holding title to a piece of property. A board of directors governs the coop. The coop board establishes what the requirements are in order to purchase an apartment in their building. 

Unlike condominiums the coop board can reject a purchaser for any or no reason other than discrimination. In a condominium the board only has the “right of first refusal” and must buy the apartment for the same price and terms being offered. The only way a condo can reject a buyer or pending sale is to exercise their right of first refusal and buy the apartment for the same price and terms being offered. 

All coop purchasers (except sponsor sales) are required to submit a board package. The board will review the package, if it looks in order they will schedule an interview with purchaser. A Co-op board will require complete financial disclosure. They will look into the purchaser’s financial history, current and past income, assets, liabilities and references when evaluating a purchaser’s board package. 

Some condominiums ask for very little or no financial documentation from purchasers but many now have similar applications to coops. They can ask for the documentation but legally they can’t reject the sale.

A coop purchase usually takes longer than a condo purchase because of the board application process and the scheduling an interview. A coop purchase typically takes 90 days or more and a typical condo purchase is 45-60 days. An all cash condo sale can sometimes close in 30 days.