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Can I refinance my co-op without getting board approval? Would they even know?

 Your co-op always knows when you refinance, here’s why:
When you buy into a co-op, you buy shares of stock in the corporation that controls the building. The corporation has a right to know who’s holding their stock, so if you pledge it to a bank for a mortgage, the bank makes the co-op sign a piece of paper that we call a “recognition agreement” — or more informally, an “Aztech” since that’s who makes the standard form — saying, “yes, we know buyer XX has pledged their shares over to lender ZZ, and we understand that if buyer XX doesn’t pay his/her mortgage, lender ZZ is going to take possession of those shares of stock, and we’re okay with that.”

If you’ve pledged 50 shares of stock in return for a $100K loan, the board of the co-op (or possibly the managing agent of the co-op, acting for the board) signed a recognition agreement before you closed. If you want to refi and instead pledge your 50 shares of stock for a $120K loan, there’s going to have to be a new recognition agreement that the co-op will have to sign. So they’ll know.

Some (looser) co-op will just sort of blithely sign, but most will make you file an application that they’ll want to approve — and they’ll have fees attached to the process. Sorry.

Posted in For Renovators 10 years, 4 months ago at 8:41 am.

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