Closing checklists
Co-op purchase closing checklist
A NYC co-op closing transfers shares and a lease, not a deed. The lien search, UCC search, recognition agreement and board package replace title work.
What is on the closing checklist for buying a NYC co-op?
Quick Answer
A co-op purchase transfers a stock certificate and a proprietary lease rather than a deed, so there is no owner’s policy and nothing records in ACRIS. The checklist runs on a co-op lien search, a UCC search, the recognition agreement, the managing agent’s closing figures, and board approval.
What are the steps, in order?
- Read the building before you read the apartment. Get the offering plan, the last two years of financial statements, the board minutes and the house rules. Underlying mortgage maturity, reserve level, sublet policy and any assessment history tell you more about the risk than the unit does.Before contract
- Confirm the building is financeable on your terms. Co-op lenders underwrite the corporation as well as the borrower. Confirm the building’s commercial income share, its land status and its minimum down payment before you sign, because a building rule can be stricter than anything your lender would impose.Before contract
- Sign the contract and assemble the board package. The contract of sale for shares is not a real property contract. Once it is signed, get the package requirements from the managing agent and assemble the application, financial statement, tax returns, reference letters and the loan commitment.At contract
- Order the co-op lien search and the UCC search. The co-op lien search checks judgments, federal and state tax liens and bankruptcies against the seller and the corporation. The UCC search against the New York Department of State and the county shows financing statements filed against the shares. Together they are what a title search is on a house.Weeks 1 to 3
- Get the recognition agreement into the file. The recognition agreement, commonly the Aztech form, is the three-way agreement among the lender, the corporation and the borrower that lets the lender take the shares on a default. No recognition agreement, no co-op loan, and it is routinely the last document to arrive.2 weeks before closing
- Get through the board interview. The managing agent reviews the package for completeness, the board reviews it, then the interview is scheduled. A New York board may decline without stating a reason, subject to fair housing law, so a complete and consistent package is the whole of your leverage.Weeks 3 to 8
- Confirm the seller’s payoff and the release of the old UCC. The seller’s co-op lender must deliver the original stock certificate and proprietary lease, an executed UCC-3 termination, and the payoff figure. Without the terminated UCC-3 the new lender’s filing does not take first position.1 to 2 weeks before closing
- Reconcile the managing agent’s closing figures. Ask the managing agent in writing for maintenance adjustments, any open assessment, the flip tax calculation under the building’s own documents, and the transfer agent and move-in fees. The flip tax is set by the building, and the contract says which side pays it.1 week before closing
- Verify wire instructions by telephone before funding. Call the managing agent’s office and the seller’s attorney at numbers you already had and confirm the account details out loud. A share transfer moves the same funds a house purchase does, with the same exposure to a redirected wire.Day before closing
- Take delivery of the certificate and file the new UCC-1. At the table you receive the stock certificate issued in your name, the assigned proprietary lease and the recognition agreement. Your lender files a UCC-1 against the shares. Confirm the transfer agent actually reissued the certificate, because the closing table copy is not always the final one.Closing and after
Which documents do you need?
- Contract of sale for shares, with the offering plan and financial statements
- Stock certificate, surrendered by the seller and reissued in the purchaser’s name
- Proprietary lease with a signed assignment and assumption
- Recognition agreement executed by lender, corporation and borrower
- UCC-1 financing statement filed by the purchaser’s lender
- UCC-3 termination discharging the seller lender’s filing
- Board approval letter from the managing agent
- Managing agent’s closing figures: maintenance adjustment, assessments, flip tax, transfer and move-in fees
- TP-584 and the NYC transfer tax return, which apply to a share transfer as they do to a deed
- Loan commitment and the co-op loan note and security agreement
- Photo identification for every purchaser
Which searches does this transaction call for?
- Co-op lien search against the seller, the purchaser and the cooperative corporation
- UCC search at the New York Department of State and at the county level against the shares
- Judgment, federal tax lien and state warrant search against every name and variant
- Bankruptcy search against the seller
- Patriot search against all parties
- Search of the corporation itself: underlying mortgage, land lease status and any lien against the building
- Departing lender payoff and confirmation the original certificate and lease are in hand
Why is there no title insurance on a co-op unit?
Because shares in a corporation are personal property, not real property. There is no deed to record and no estate in land to insure. The protection substitutes the co-op lien search, the UCC search, and physical delivery of the original stock certificate and proprietary lease.
Why is there no mortgage recording tax on a co-op loan?
Mortgage recording tax under Tax Law section 253 reaches recorded mortgages on real property. A co-op loan is secured by a UCC filing against personal property and an assignment of the lease, so nothing is recorded and no mortgage recording tax is due. That is also why a co-op cannot use a CEMA.
What can delay a co-op closing that would not delay a condo closing?
Board approval and the recognition agreement. The board sets its own review calendar, the interview has to be scheduled around it, and the recognition agreement needs signatures from three parties who are not in a hurry. Neither has an equivalent on the condo side.
What else should you read before closing?
In the glossary
- Co-op lien searchThe search performed on a co-op purchase covering UCC filings, judgments, liens and unpaid building charges tied to the shares and to the selling s...
- UCC searchA search of UCC filings for security interests in personal property, run against the seller and, on entity deals, against the entity itself.
- Stock certificate (co-op)The certificate evidencing the shares allocated to a co-op apartment. Shares and the proprietary lease travel together and cannot be sold separatel...
- Proprietary leaseThe occupancy lease a co-op corporation grants a shareholder for a specific unit. It is assigned at closing together with the stock certificate for...
- Aztech recognition agreementThe agreement in which a co-op corporation acknowledges a lender's security interest in a shareholder's shares and proprietary lease. The Aztech fo...
- Flip taxA transfer fee charged by a co-op or, less often, a condominium when a unit changes hands. It is a creature of the building's governing documents, ...
- Maintenance (co-op)The monthly charge a co-op levies on each shareholder, covering building operations plus that shareholder's share of real estate taxes and the unde...
- Offering planThe sponsor's filed disclosure document for a co-op or condominium, carrying its budget, share or common interest allocation, building rules and sp...
Questions this raises
- What is title insurance?Title insurance covers defects in a property's past: old liens, recording errors, forged deeds, undisclosed heirs. How the coverage works in New York.
- What documents do I sign at closing?Note, mortgage, title affidavit, settlement statement and transfer tax returns for buyers; deed and releases for sellers. What each document actual...
- Who is in the room at a NYC closing?Buyer, seller, both attorneys, the title closer and a lender representative. Who attends a New York City closing, what each one does, and who can s...
- What do I need to bring to a closing in NYC?Photo ID, funds in the form the agent instructed, a checkbook for adjustments, and every signer. The New York City closing checklist for buyers and...
Closing checklists
- Condo purchase closing checklistA NYC condo closing has a deed, an owner’s policy and a recorded mortgage, plus a right of first refusal waiver and a common charge arrears letter.
- Residential purchase closing checklistEvery step in a financed NYC house purchase, from the contract rider through title clearance, lender conditions, closing day and recording in ACRIS.
Building types
- Standard co-opThe ordinary New York City cooperative: you buy shares in a corporation and receive a proprietary lease to occupy a specific apartment.
- HDFC co-opAn affordable cooperative formed under Article XI of the Private Housing Finance Law, with income caps on purchasers and usually a restricted resal...
- Land-lease co-opA cooperative that owns its building but leases the ground beneath it from a separate landowner, on a lease with a reset schedule and an expiry date.
- Mitchell-Lama co-opA limited-equity cooperative in the State and City Mitchell-Lama program, sold from a waiting list at a formula price rather than on the open market.
- Sponsor co-op unitAn unsold share allocation still held by the building’s original sponsor, sold under the offering plan rather than through the ordinary board process.
- CondopA building split into two condominium units, one commercial and one residential, where the residential unit is owned by a cooperative corporation.
The statute itself
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Legal Disclaimer: This page is general information about New York practice. It is not legal advice, it does not account for the terms of any particular contract, building or transaction, and reading it does not create an attorney-client relationship. This is attorney advertising. Prior results do not guarantee similar outcomes.