Sit. Stay. Good Dog.

Co-op boards interviewing pets


 Cori Lamont  |    January 13, 2020
Sit Stay Good Dog

I recently read an article in the Wall Street Journal about cooperative (co-op) boards interviewing pets of potential purchasers and the high-stress situation such interviews place on the purchasers and their pets. And not only was I somewhat fascinated by the concept of a dog being interviewed, I also understood the mindset of the co-op board wanting to know what kind of pet was going to join the building. The article provided instances and examples of how pet owners would dress their dogs for the interview, take them on extra-long walks to wear them out, take them to a therapist beforehand to help find their chill, or even figure out in coordination with their veterinarian just how much medication is the right amount of medication for their dog to be mellow but not heavily sedated. And the article further explores the fact that birds also have been obligated to meet the co-op interview requirements as well.

The article also reminds me how different co-op ownership is compared to others forms of ownership. In a co-op, all the owners are shareholders of a corporation. A share in a corporation is personal property, thus making co-op ownership unique.

In a co-op, the corporation owns the property and leases individual units back to the shareholders. Each unit owner has the exclusive right to live in his or her respective apartment, and each shareholder enters into an occupancy agreement relating to that unit. It’s also an unlikely surprise that the financing of co-ops can be difficult because the unique nature of the ownership.

Co-ops do exist in Wisconsin from the more traditional multistory building to farms. There are no state-approved (WB) forms to handle co-op transactions. Real estate licensees would be best served to reach out to legal counsel familiar with co-op ownership to assist. And due to how unique the form of co-op ownership is, real estate licensees should be careful they are practicing competently.

Because the purchaser is purchasing stock in a corporation, the co-op board has a greater amount of discretion when it comes to who gets to purchase the stock. Often co-ops are more restrictive than condominiums because all the owners of the corporation share in the cost of operating the building. Therefore, if one of the shareholders doesn’t pay his or her share, the rest of the shareholders must cover the costs.

While co-ops must follow fair housing laws and thus cannot ask any questions relating to a protected class, a co-op may be more restrictive because the nature of ownership is personal property in stock, not real estate. Therefore, a co-op’s board of directors may be more judicious in who is going to become a shareholder because, again, all shareholders collectively hold the bag as it relates to the financial responsibility for the corporation. For instance, a co-op board may ask the potential purchaser for references, review social media accounts of the prospective purchasers, or require a certain amount of net worth or a specific debt-to-income ratio of a potential purchaser.

In addition, there is often an interview of the potential purchasers where unusual questions may be asked, such as ‚Äúwhat are your political beliefs,‚ÄĚ ‚Äúhow do you like your job,‚ÄĚ ‚Äúdo you work from home,‚ÄĚ ‚Äúdo you have parties or entertain often,‚ÄĚ ‚Äúwhat was your last interaction with an attorney,‚ÄĚ or ‚Äúdo you plan on making renovations anytime in the near future?‚ÄĚ The nature of these questions is generally to see if prospective owners are going to keep quiet and keep a relatively low profile.

Therefore, it was no surprise to me that co-op boards in New York were beginning to interview the pets of future occupants. And like many things that trend in the coastal states in life and real estate, it eventually ripples from coast to coast; I anticipate someday soon ‚ÄĒ if not already ‚ÄĒ a co-op prospective buyer will be asked to bring his or her dog in for an interview.

The Wall Street Journal article can be found at www.wsj.com/articles/so-your-dog-can-roll-over-can-it-pass-a-co-op-board-interview-11575559131. A WSJ subscription is required.

Cori Lamont is Senior Director of Legal and Public Affairs for the WRA.

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