A fellow real estate agent told me a real story today. Thought it's a good one to share.
Buyers are an unmarried couple who makes nice income. In order to enroll their 10th-grader son to a well-know public high school district on Long Island, they signed a purchase contract for a $200K co-op apartment and put 10% down upon signing.
Seller is a respectable attorney and has his own law firm. He asked another attorney who works for him to act as his representative. He's happy with the sale because his apartment had been on the market for months. All the time the apartment was vacated. He was paying the monthly management fee for nothing.
After tons of bank statements, tax returns, recommendation letters and phone interviews from background check investigators, here comes the big day - the co-op board interview. Neither the application, nor the interview notification, mentioned anything about the 10th-grader. The couple went to the interview without even thinking the need to bring the kid along.
Dressed up and putting on a pleasant smile on their faces, buyers now sitting in front of a 8-member committee. Co-op board members were cold and asked very inquisitive questions such as:
- When do you guys plan to get married? (Familial status question)
- Why did you take out a 401(k) loan two years ago?
- Why you reported so little tax with so much income (for one of the buyer is in the mortgage business)?
Buyers went through the 90-minute interview with great patience and maintained their co-operative gesture. The next day Seller's agent sent an email to buyers saying that the board had denied the application.
No big deal. There are plenty of inventories on the market, right? Not so fast.....
Four months later, buyers' $20K deposit is still in the escrow. Seller refused to release the deposit, claiming that buyers breached the contract, which stated that "all intended tenants" must co-operate and attend the board interview.
We all know that co-op boards are not required to give explanation of denying applications. How can the seller claimed that the failed transaction was the fault of the buyers, just because they didn't know their son had to attend the interview?
To cut the story short, buyers are now stuck. The only chance they can claim the deposit back is to go to court, which means one of two things: 1) force an out-of-court settlement and lose some of their money; or 2) go all the way to court and pay thousands of attorney and court fees.
This is a sad story. What's your take?
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