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Wednesday, October 9, 2013

What Can Go Wrong at a Real Estate Closing on a Co-op

We're closed!

But we almost weren't. New York real estate closings are highly charged events. Just getting all the lawyers in one room is a challenge. You've got the lawyer for the seller (me) and the lawyer for the buyer and the lawyer for the buyer's lender and a closer for the seller's lender as well as the co-op board's managing agent.

Each person sitting at the table has a checklist. So, there's always a chance that something will turn up missing from someone's checklist. Guess what was missing from mine?

Last Friday I had to race out of work at 4:00pm and rush from Manhattan to Brooklyn to pick up the stock certificate for my apartment.  Over the weekend I had to make the rounds and collect the signatures of two of my co-op board members - the board president and the board secretary.  Luckily I have served on my board and I am friendly with these two people, so I was able to catch them over the weekend and complete my mission.

Is this the job of the seller? No.

Is this the responsibility of the seller? No.

But is there anyone who cares more than the seller that the closing happen forthwith? No.

So I stepped up. Sometimes you just have to break through to get things moving.

At today's closing, the stock certificate was all in order. However, the show stopper became the Aztec Agreement, also referred to as the Recognition Agreement. It is the document that the bank draws up to give its lien the first priority over the co-op's lien in case the shareholder defaults and it must be signed by the buyer, the buyer's lender, and members of the co-op board. It's a document that the mortgage bank sends to the buyer very early in the process, and it is subsequently one that often gets lost.

Note to self: Hang on to the recognition agreements for your purchase. When you have to turn them over to the board, know who has them, and track them.