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Co-ops Chill, Condos Dont

By CONSTANCE ROSENBLUM January 24, 2014 The phrase white-glove Manhattan co-op has invariably conjured the image of a fortresslike residence whose precincts could be stormed only via a gantlet distinguished by mountains of paperwork and a daunting personal interview. The New York condominium, the relatively new kid on the block, has seemed the opposite: laissez-faire in everything, from rules governing pets and smoking to regulations determining who could rent an apartment. Co-ops and condominiums are still two different animals. But in subtle yet tangible ways, each is taking on characteristics of the other as they compete for well-heeled buyers in an ever-morechallenging residential marketplace. Although no co-op will admit to lowered admission standards, board members and applicants report brisker responses to applications and more welcoming personal interviews, traditionally so formidable that they were recently satirized on Saturday Night Live. And concurrently, in a shift that began a few years ago and is becoming more marked, many condominiums are imposing heftier and more numerous fees, tightening house rules and discouraging the shortterm rentals that can give a building the hectic ambience of a hotel. In both cases, financial considerations are the driving force.


The issue is value, said Eva Talel, a partner in Stroock & Stroock & Lavan, a law firm that represents the boards of more than 200 co-ops and condominiums in Manhattan. The goal is to attract financially strong buyers, because everyone wants the best people. And because co-ops and condominiums compete in the same marketplace, what makes one more desirable has an impact on the other. Many of the high-end condominiums coming on the market, like 15 Central Park West, are socially desirable and can compete with any high-end co-op, Ms. Talel said. So to enhance value, co-ops want to make the admissions process more user-friendly, without sacrificing the buildings financial and neighborliness requirements, because if a seller gets a good price for an apartment, that benefits the entire building. And at some condominiums, she added, lax rules have led to many residents being unhappy with who their neighbors are. So these residents are pushing for more stringent admission criteria, especially when it comes to foreign buyers and increasingly to renters. CO-OPS

Dennis Sughrue, the board president of One Grand Army Plaza, a condominium in Brooklyn, says it is likely to adopt more co-op-like rules.

At Southgate, a co-op whose Deco-detailed buildings cluster in the far East 50s, the onceintimidating interview has experienced a makeover. We wanted to be more user-friendly, said Ellise Delphin Rose, a member of the boards admissions committee. An application requires an enormous amount of paperwork and invades most of a persons privacy. So we dont have to rehash everything at the interview. The main goal is to see if a person seems neighborly. She describes the interview as the emotional intelligence screening. If a person has led a responsible life and has good letters of recommendation, Dr. Rose said, whats the point of torturing or interrogating them or making them feel as if youre doing them a huge favor by admitting them to your little club?

Southgates final verdict also comes more promptly. In the past, there was no particular hurry getting back to applicants after the board interview. Now they generally learn the answer in one day, Dr. Rose said. And the answer is usually positive.

Emily Weinstein, 23, and Russell Gilbert, 24, might have been frowned upon as too young in the past, but their application to rent a large one-bedroom in a Carnegie Hill co-op proceeded apace.

Brooke Bratton, a lawyer who moved to a two-bedroom in Southgate in May with her husband, Paul, an executive director of JPMorgan, and their daughter, Sydney, 6, was a grateful beneficiary of the new policies. When it came to the board interview, Ms. Bratton said, I had no idea what to expect. Previously wed purchased homes in Vermont and in Bronxville, and we just bought the property. It was as simple as that. But we were pleasantly surprised. The interview was very friendly, very conversational and relaxed. No one was shooting questions at us. And the icing on the cake? The next morning the couple received an email welcoming them to the building. Shifts have also taken place at River House, the storied co-op on East 52nd Street overlooking the East River.

One Grand Army Plaza, the Brooklyn condominium, has already banned smoking.
Our standards have not changed, said John Allison, the board president. Actually, theyve gotten tighter in terms of examining peoples financials and determining whether theyll be good neighbors. At the same time, the process has become easier than ever. The time spent evaluating a persons application was longer than wed wish, sometimes as much as three to six months, Mr. Allison added. But starting about a year ago, we began getting back to people in less than 30 days. Because of the more user-friendly and timely procedures, he said, brokers are now eager to refer clients to the building. As at Southgate, the board interview has undergone a makeover. We want to make it very human, not a test, Mr. Allison said. Its more open-ended, more conversational. Or as Philip Bobbitt, a Columbia Law School professor who with his wife, Maya Ondalikoglu Bobbitt, bought a three-bedroom penthouse at River House a year ago, summed up the experience, It was a nice afternoon. Like many prospective co-op buyers, Ms. Bobbitt, a lawyer, had expected the worst when it came to the application process. Most of our friends live on the Upper East Side, and wed heard the horror stories, she said. That wasnt our experience. Her husband agreed. Fairly or not, he said, theres a sense that co-ops can be a little capricious, a little arbitrary. But at River House, we didnt feel that the board was playing games. Still other changes have been put in place at River House. Brokers may now mention the buildings name and address in listings and show images of apartments on the market all of which had been forbidden. The period during the summer in which residents may make alterations to their apartments has been extended past Labor Day. Mr. Allison said the shifts were not prompted by what was going on in the condominium market It never crossed our minds but described them as motivated by economic realities.

Were an iconic building with a rich cultural history, he said, but having a great history doesnt mean having a great future. The world is changing, and we need to change, too. The shifts in the condo market have just confirmed our view. Steven Sladkus, a partner at Wolf Haldenstein Adler Freeman & Herz who represents co-op and condominium boards, has noticed other changes at co-ops. Co-ops want to seem less nose-inthe-air, and they dont want to make the buyer sweat so much, Mr. Sladkus said. When it comes to board interviews, for example, he has seen instances of prospective buyers being offered drinks and snacks to warm up the proceedings. Some people are also finding it less onerous to rent co-op apartments, as was the case for Emily Weinstein, 23, and her boyfriend, Russell Gilbert, 24. The pair, who moved from Atlanta last summer to take jobs at Big Four accounting firms, had their eye on a large one-bedroom in a Carnegie Hill co-op with a monthly rent in the mid-$2,000s. We had a strong financial statement, with savings and no liabilities, said Ms. Weinstein, who was delighted by how speedily the process moved forward. In April, while still in Atlanta, the couple checked out the space via Skype, then sent in the required documents by overnight mail. We found out that we had our board interview approximately one month later, and our interview took roughly 20 minutes, Ms. Weinstein said. The broker, Aash Jethra of Citi Habitats, got the good news a few days later. Mr. Jethra, too, was impressed with the speed and ease of the process. This is a co-op with a typically stringent board, a triumphant lobby, a rooftop pool, he said. Boards in this sort of building are usually looking for couples who are older, married, more advanced in their careers. These were new grads in their early 20s. CONDOMINIUMS At the citys growing number of condominiums, things are changing in a different way. House rules are tightening dogs are increasingly persona non grata and fees are climbing and multiplying. Short-term renters the airbnb crowd are being discouraged, and even longerterm renters are finding the path more arduous. Last year, smoking was banned at One Grand Army Plaza in Brooklyn, Richard Meiers shimmering glass tower overlooking Prospect Park, at the urging of Dennis Sughrue, the president of the condominium board. Secondhand smoke, firsthand smoke it was really wrecking some peoples lives, Mr. Sughrue said, especially because its impossible to seal off individual units. As a result of the change, he said, many residents have stopped smoking indoors, in part because we will impose significant fines upon them if they do. Mr. Sughrue attributed the shift to a broader evolution at condominiums, which have already sharpened scrutiny of prospective buyers to make sure that they have enough money to foot the bills. People like the flexibility of condominiums, Mr. Sughrue said. But they expect the same quality of life and financial security as co-op owners. So were likely to see the adoption of more

co-op-like rules. His board, for example, has explored imposing new restrictions on residents who fall behind on their common-charge payments. We cant deny access to basic services, Mr. Sughrue said. But we can, and will, deny access to our fabulous roof deck. Mr. Sladkus, the lawyer who represents co-op and condominium boards, has noticed other tactics used to cope with tardy payers. For example, he said, the doorman wont accept UPS packages or let in the guy delivering the Chinese food. Short-term rentals fueled by Internet listings are another hot-button issue. Many people who bought apartments for investment purposes seek to amortize that investment by playing host to a steady stream of renters. In response, buildings are cracking down, toughening the rules for owners and renters alike. Doormen are being asked to report visitors arriving with piles of luggage. Even longer-term potential renters are finding an altered landscape. A.K. LaMonica, the owner of Lash Out, a boutique spa in Red Bank, N.J., and until recently the vice president of a childrens wear company, was seeking to rent a $2,500-a-month studio in the Leonori, a condominium on East 63rd Street steps from Central Park. She loved the petite highceilinged space, but was dismayed by the $9,000 in required extra payments, a figure that included two months rent, $1,000 to the condominium association and $500 to the management company. Unless you have a nice chunk of change put away, thats a lot of money, said Ms. LaMonica, a self-described Jersey girl who always dreamed of living in the city but never expected the process to be so stressful. Nor did she understand why she waited a month for the management companys approval, even though her checks were cashed within a week or two. No one said anything, and there was no explanation for the delay, Ms. LaMonica said. I couldnt move forward. I couldnt buy a bed or even sheets. As the weeks passed, I became so anxious. You start to wonder, did I do something wrong? The lease was signed on May 14, but the official approval didnt arrive until June 11, and Ms. LaMonica did not move in until July 1. Her broker, Loretta Bricchi Lee of Citi Habitats, was also mystified by the length of the process. Generally it takes one or two weeks for approval of a renter in a condominium, and Ive seen it take two or three days, Ms. Lee said. The law allows four weeks, but they really pushed the envelope. Also, this was a very straightforward situation. The client was a professional with a good income, very good financials, a great credit check. There was nothing negative about her application. Steven Furman, the director of management for Rudd Realty Management Corporation and the manager of the Leonori, did not dispute Ms. LaMonicas account. We process packages as expeditiously as possible, Mr. Furman said, typically with a two-week turnaround. More and higher fees are becoming commonplace. At 552 West 43rd Street, a small condominium where James Gricar, the president of Halstead, is board president, application fees that used to run $250 have reached the $500-to-$700 range. You dont want to turn condominiums into co-ops, Mr. Gricar said. But the issue is, how do you accommodate the

owner and capture fees? Most condominiums have less of a reserve than co-ops, and they have to tighten their belts. Dylan Pichulik, the chief executive of XL Real Property Management, was taken aback when the owner of a two-bedroom condominium was ordered to put down a $7,000 deposit to cover any damage to communal areas that might be inflicted by the tenant renting her $5,800-a-month apartment. Thats a ridiculous amount, Mr. Pichulik said. And it certainly makes the environment less friendly for investors. Judith Woodfin, a broker with Fox Residential Group, has witnessed the imposition of many new rules affecting renters, among them: forbidding pets and smoking on the part of new renters; the doubling of move in/move out fees, to $1,000 from $500; and the charging of a monthly $100 amenities fee, payable upfront for the term of the lease. She is also aware of instances in which renters are charged a monthly fee to offset wear and tear on the amenities and the cost of increased security with the high renter turnover in a building. Hall Willkie, the president of Brown Harris Stevens Residential Sales, attributes many of these changes simply to the nature of urban apartment life. With vertical living, he said, youre really sharing a space. Its not like a home in the country. People need to understand that theyre part of a group. And Aaron Shmulewitz, a partner of Belkin Burden Wenig & Goldman whose specialty is co-ops and condominiums, cites what he describes as a new breed of renter. These younger, aggressive 20-somethings in finance, the young attorneys who are minimasters of the universe, they could care less about the condition of the hallways, Mr. Shmulewitz said. Their attitude is, No one tells me what to do in my castle, whether its smoking or pot or parties or playing the guitar. And once a tenant is in, its very hard to get them out.