1. Transferability
Most unit owners are permitted to sell their unit to anyone they choose. However, the owner should be aware of any special rules relating to the sale of the unit to others such as restrictions on shares or rights of first refusal.
2. Pay-off of mortgage
If the unit owner has borrowed money, using the co-op unit as collateral, then a "pay-off" statement should be ordered from the lender. Also, unlike a mortgage upon real estate, the lender or its representative must be present at the closing (because the lender has typically taken the actual shares of stock and proprietary lease into its possession at the time of the loan).
3. Liens/judgments
If there are any liens against the unit owner, ranging from tax liens to judgments to home equity lines, those liens must be paid at or before the closing. The buyer's attorney will send a judgment/lien search to the seller to identify any such liens to be cleared.
4. Flip taxes
Some co-ops impose a "flip tax" or transfer charge upon the seller of a unit. These flip taxes can be based upon a percentage of the sale price, flat amount, percentage based upon the difference between the original purchase price and the sale price, or some other computation. The unit owner should find out what those flip taxes will be before selling the unit in order to ensure that the sale price will cover the flip tax, along with any other charges or liens to be paid at the closing.
5. Original documents
Unless the unit owner has a lender, who is holding the shares of stock and proprietary lease in escrow, then the owner must locate and produce the originals. If they have been lost, duplicate originals can be drawn.
— by Richard A. Klass, Esq.
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copyr. 2014 Richard A. Klass, Esq.
The firm's website: www.CourtStreetLaw.com
Richard A. Klass, Esq., maintains a law firm engaged in civil litigation in Brooklyn Heights, New York.
He may be reached at (718) COURT-ST or e-ml to RichKlass@courtstreetlaw.com with any questions.
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