10 Guaranteed Ways to Get Rejected by a Co-op Board

You can easily think of a variety of ways to get rejected by a co-op board, but hopefully, these aren't things you'd actually do — like boasting about your dream bachelor pad or showing up for a morning interview with whiskey on your breath. However, there are numerous other sneaky traps that can harm your chances of getting accepted to a co-op.

This is mainly because co-op boards hold the legal right to make somewhat arbitrary decisions. The 1990 Court of Appeals ruling in Levandusky v. One Fifth Ave. Apt. Corp. permits co-op boards to exercise "business judgment" when accepting or rejecting applicants [source: Kaye]. As long as their decisions are non-discriminatory, the board can deny you for nearly any reason it chooses — in New York City and most other locations — without being required to disclose the rationale behind its decision.

Purchasing into a co-op is more akin to becoming a member of a club than buying property. Rather than owning the walls and doors of your apartment, the club holds the ownership, with share prices fluctuating based on your residency. By living in the building, will you enhance the communal atmosphere and bring prosperity to all, or will you harm the collective spirit, sinking the building like a ship lost at sea? It's the responsibility of the co-op board to make this judgment.

Here are some typical factors that influence the "business judgment" against co-op applicants.

10: Financials

Let’s address the issue up front. While we might imagine that shady co-op boards reject applicants for trivial reasons like mismatched socks or not belonging to the right social clubs, the reality is that most rejections stem from an applicant's financial standing [source: Levy].

First things first, work on improving your credit score. No co-op wants applicants who are unable or unwilling to pay, and your credit score is the most objective indicator of this. Start by reducing those credit card balances.

Don't forget, cash is king. Be realistic in your co-op search – a bank’s preapproval might be stricter than you expect, and the co-op board will likely have even higher standards.

That said, more exclusive co-ops may not only consider the amount of money but also its source. Although it's illegal to reject applicants based on their job, the fact that many co-op boards don’t have to disclose their reasons for rejection makes it hard to prove that being a pop star or personal injury lawyer, rather than having a more socially accepted job, was the real cause of the rejection.

9: Lying

If it were that simple, every co-op applicant would have $20 million in liquid assets, a credit score of 810, and a closet free from any embarrassing secrets. Unfortunately, it's not that easy.

Co-op boards have both financial and social reasons to keep dishonest applicants out of their communities, so expect them to double-check every detail in your application. Sure, having an outsider comb through your history might feel invasive, but the choice is yours—if you don't want to be examined, apply somewhere else.

It’s tempting to hide credit issues, but that’s one of the easiest things to uncover. It’s better to be upfront about any credit problems, and if possible, explain them right away, because you're almost guaranteed to be caught later [source: Romano].

8: Disorganization

Serving on a co-op board is rarely a paid position. As committed as these individuals may seem, they usually have busy lives with other obligations. The last thing they want is to sift through a jumbled mess of your application documents. Keep things neat and organized.

If you're working with a broker who has successfully helped clients land apartments in your desired building, be sure to ask them how the board prefers information to be presented. Follow their guidelines closely. When uncertain, a neatly bound document with color-coded tabs always presents a polished, professional look.

In addition to making your application easy to read, organizing your information shows that you’re committed to the process and that you’re someone who attends to details—qualities that will be appreciated by any co-op board.

7: Building Requirements

If you’ve ever browsed real estate websites, you know how to narrow down your options—whether it's dog-friendly, smoking or nonsmoking, etc. The same approach should be used when considering co-ops. It's simply not worth applying with the hope of convincing the board to make a one-time exception for your 120-pound pit bull in a building that doesn’t even allow cats.

Review all the building’s rules thoroughly, starting with financing requirements. Can you obtain a mortgage for 25%, 50%, or none of the purchase price? How much in liquid assets must you prove, and if you're on the borderline, are you required to deposit a certain number of years of maintenance fees into escrow to guarantee your ability to pay? Does the building allow subletting? If relevant, check pet restrictions like species, breed, and size limits. Are guarantors permitted? Is the unit required to be used as a primary residence, or can it be a pied-à-terre? Can you work remotely from there?

The co-op board interview is not the time to find out that you don’t meet the building's rules.

6: Low Sale Price

Remember when your lowball offer was accepted? You were so excited, jumping up and down in your rental’s tiny, worn-out kitchen, right? But landing a deal like that creates another hurdle in actually completing the transaction.

Co-op boards despise anything that might decrease their property values. A low selling price, much like a court ruling, sets a dangerous precedent. The value of real estate is ultimately determined by what someone is willing to pay, and once a low price is established, the worth of all the units in the building can drop.

What’s in it for a board member to block lowball sales during tough economic times? Well, the poor seller could be left with a unit they can't sell in the current market, while buyers may be pressured into overpaying or forced to look elsewhere. But for the board members, there’s no real risk. If they’re not trying to sell, why not restrict sales until conditions improve, allowing units to be sold at the prices the shareholders deem fair?

Watch out for those lowball offers. Even if one is accepted, that doesn’t mean you’re guaranteed to get the deal.

5: Stability

Buying into a co-op is a long-term commitment. Co-op boards aren’t just concerned about you being a good fit this year or next, but for the next 20 years or more that they hope a buyer will remain in the building. The best way for these boards to predict the future is by examining your past. How consistent have you been?

This might make things a little trickier for the screenwriter who hit it big once, the person on their fourth marriage, or someone who’s had six jobs in eight years.

That being said, most concerns about stability will be reflected in the details of your application. Making it to the interview stage suggests that the board is willing to overlook your past wanderings – and you can and should provide clear explanations for why your salary has fluctuated between $20,000 and $400,000 over the last decade, and why, despite this, you are now on stable footing for the foreseeable future.

4: Paperwork

Did you think that the complex, personalized, and painstaking application package was the final step? Think again. As frustrating as that may be, it could very well be only the first of many hoops to jump through. That said, a well-prepared and thorough application package can help you avoid these additional steps—answering all questions upfront will make it less likely that you'll need to file more paperwork later to address them.

For instance, you should back up every listed asset with proper verification—not just a photo of your family in snorkeling gear outside your vacation home in the Cayman Islands, but an official copy of the title. Similarly, any income you claim as 'other business income' will almost certainly trigger a request from the board for clarification. It's better to provide these answers upfront, but be prepared that, despite your thoroughness, you’ll likely face additional paperwork requests throughout the process.

And if you let one opportunity slip by, you might not get another chance. In any case, failing to act when the board gives you instructions is a surefire way to seal the fate of your application.

3: A Poor Interview

The board interview is your final and possibly most important challenge. To improve your chances, make sure to arrive on time. It should go without saying, but: dress conservatively, avoid arguing with your co-applicant, and be honest and straightforward.

Aside from the general advice to keep it low-key, the most important thing is to adapt to the profile of the building. Is it a renowned artists' community, or does it cater to a more traditional, wealthy crowd? Do your research! Or, even better, have your broker do it for you.

Here are some additional tips for the interview:

2: Lifestyle

Are you a drummer? Planning to throw loud parties? Have you mentioned that you expect a rotating group of couch-surfing friends and family to visit? Are you the type to attract attention to the building, and if so, would the kind of attention you draw raise or decrease the value of the property?

As it's essential to know the building’s rules before applying, it’s equally important to discuss the ‘vibe’ of the building with your broker. When submitting your application and in the interview, highlight the aspects of your lifestyle that align with the building’s atmosphere, while downplaying those that don't.

Consider this: If your lifestyle doesn't mesh with the neighbors', would you really want to live in that building in the first place?

1: Facebook Rejection

We've all heard the stories of job candidates who were rejected because of photos posted to Facebook, Flickr, or (heaven forbid!) MySpace from a college spring-break trip years ago. The key difference between a job interview and a co-op interview is that the co-op interview is more personal. No topic is off-limits -- not even those embarrassing photos.

Do yourself a favor: Before submitting your co-op application, Google yourself. You can bet they will. If what you find isn't flattering, take steps to clean it up. Delete or retag photos, remove outdated social media profiles, and update the current ones.

But as anyone under 35 knows, the best way to protect yourself from the lingering shadow of unwanted social media is to make sure that before you do something foolish, like dancing on a bar or embarrassing yourself, you seize all surrounding smartphones. Or better yet, just don’t do it (but where’s the fun in that?).

Unfortunately, what happens in Vegas isn't as easy to forget anymore, and when you're applying for a co-op, those Vegas moments have a way of coming back to haunt you.