International buyers can purchase a co-op property but it involves a more challenging process than buying a townhouse or condominium. Keep in mind that purchasing a co-op presents certain challenges for even a US buyer. Co-op Boards govern co-op buildings and every purchaser must pass their approval. Focusing on the best interests of the co-op members (shareholders), these boards set the policies and guidelines and make all vital decisions about each building.
It is beneficial to the members if purchasers are good neighbors and able to financially contribute to the upkeep of the building. To gain approval from most Co-op Boards, one must be employed in New York, have an exemplary US credit rating , and be able to present a US tax return. Co-op Boards are not legally required to explain their reasons for rejecting a potential buyer. Even if a foreign buyer gets approval, there are pros and cons to co-op ownership.
There are several things to consider if you purchase a co-op:
1. Waiting period. You have to fill out an extensive, often invasive board package detailing all your financial details and including recommendations. This package goes to the board and it can take anywhere from four weeks to three months to act on it.
2. Bank accounts. Almost all co-ops require that a foreign purchaser have assets in the United States. This is, of course, in case a buyer defaults on a mortgage or on maintenance fees, there is some recourse for both bank and building.
3. Rental restrictions. Most co-ops have clear rules about the amount of time one can rent out a property, so a co-op may not always be the best choice for an investor. These restrictions also vary building to building but the most common one is that an owner has to be in residence for two years prior to renting and then can usually only rent for a year or two thereafter before once again taking up residence. AND ALL RENTALS IN A CO-OP REQUIRE BOARD APPROVAL.
If you have any other questions, please send them via this blog.
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