Closing questions
What does a seller do to prepare a co-op for sale?
Before listing a NYC co-op: locate the stock certificate and lease, confirm the payoff and lender custody, clear arrears and settle the flip tax in writing.
What does a seller do to prepare a co-op for sale?
Quick Answer
The original stock certificate and proprietary lease are the two documents the closing cannot happen without, and on a financed apartment the lender or its custodian is holding them. Confirming who has them, and how long that party takes to release them, is the single most useful thing a seller can do months ahead.
Payoff figures come next. The seller’s lender issues a payoff letter with a good-through date, and the termination of its UCC filing has to be arranged for the closing. Servicers vary widely in responsiveness, and a slow one is a common reason a co-op closing is adjourned after everything else is ready.
The building side is its own project. Ask the managing agent for the transfer requirements, the fee schedule, the flip tax calculation and a current statement of the account, and clear anything outstanding. A seller who learns the flip tax method at the closing table has lost the chance to price it into the deal.
Finally, get the paper in order for the purchaser’s package and the purchaser’s lender: recent financial statements for the building, the lease and its amendments, the house rules, and documentation for any alteration done during ownership. Unpermitted work discovered late is the item most likely to cost a seller money.
What if the stock certificate cannot be found?
It can be replaced, but not quickly. The corporation will want a lost instrument affidavit and often an indemnity, and some buildings require a surety bond before reissuing. Because the reissue runs on the managing agent’s timetable, discovering the loss during the listing period rather than the closing week is what keeps the date.
Should a seller run a lien search on their own apartment?
On a file with any complication, yes. A judgment, a tax warrant or an old UCC filing found early can be cleared without pressure, while the same item found on the purchaser’s continuation search two days before closing becomes a holdback and an adjournment. The cost of looking is small.
What else should you read before closing?
In the glossary
- 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...
- Payoff letterA lender's statement of the amount required to satisfy and release a mortgage on a specific date, with a daily interest figure for any later date.
- 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, ...
- 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...
- Closing statementThe itemized accounting of every credit, debit and disbursement at a closing. Commercial deals use a HUD-1 or ALTA settlement statement; consumer m...
Questions this raises
- What should a lender check in a co-op loan file?A co-op lender underwrites the building as well as the borrower: financials, underlying mortgage, arrears, land lease, financing cap and recognitio...
- How long does co-op board approval take in NYC?Most NYC co-op boards decide three to eight weeks after a complete package arrives. What starts the clock, what stalls it, and where the interview ...
- What is in a co-op board package?A NYC co-op board package carries the application, contract, tax returns, financial statement, lender commitment and reference letters. What each i...
- Who pays the flip tax in a New York co-op sale?A flip tax usually comes off the seller’s proceeds, but plenty of New York buildings shift it to the purchaser. Why the rider has to name the payin...
- What happens if a co-op sale falls through after board approval?Board approval does not close a deal. What happens to escrow, the approval and the timeline when a NYC co-op deal collapses after the board has sig...
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 an income cap on purchasers and a flip tax that runs to ...
- 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.
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