A cooperative board in New York City is reviewing a potential buyer's financing application. The buyer is obtaining a share loan with 80% loan-to-value ratio. What additional approval power does the cooperative board have that condominium boards do not possess?
Correct Answer
A) The right to approve or reject the buyer entirely, regardless of financial qualification
Cooperative boards in New York have the legal right to approve or reject potential buyers entirely, even if they are financially qualified and have appropriate financing. This is because co-op ownership involves purchasing shares in a corporation, and the board acts as directors with fiduciary duties to existing shareholders. This power does not exist with condominiums.
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Related Topics & Key Terms
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Related Concepts
The loan-to-value ratio (LTV) is the percentage of a property's appraised value or purchase price (whichever is lower) that is being financed through a mortgage. LTV = Loan Amount / Property Value.
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Predatory lending refers to unfair, deceptive, or abusive lending practices that impose unjustified terms on borrowers, often targeting vulnerable populations. It includes practices like excessive fees, inflated appraisals, and unnecessary refinancing.
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