What happens if a co-op sale falls through after board approval?

The most common late failure is financing. A commitment is issued subject to conditions, and a change in employment, a new debt, an appraisal problem or a building-level issue can undo it. Where the mortgage contingency is still alive, the purchaser cancels and escrow returns the down payment. Where the contingency has expired, the exposure is real.

Late-surfacing money problems account for most of the rest. The continuation of the co-op lien search turns up a judgment docketed after the original search, an old UCC filing nobody terminated, or maintenance arrears larger than reported. These are usually curable at the table with a payoff and a holdback, but they move the date.

Approval itself is not indefinite. Boards commonly treat an approval as tied to the purchaser and the terms submitted, so a material change, a new lender or a long delay can require resubmission. A different purchaser always starts fresh: there is no transferring an approval from one buyer to the next.

The seller’s protection is drafting done at contract. Clear default provisions, an outside date, a defined escrow release procedure and an obligation on the purchaser to keep the lender file current cost nothing to include and decide who bears the loss when a deal fails in its final week.