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TURF; Sorry, Mom and Dad
By Tracie Rozhon
AS getting into a co-op becomes more and more like an obstacle
course, with less and less chance of success, many co-op boards
in Manhattan and parts of Brooklyn have raised the hurdle even
higher: they have stopped letting parents guarantee their children's
apartment purchases.
After years of accepting such guarantees -- letting parents co-sign
for a son's or daughter's mortgage or placing a year's maintenance
payments in escrow -- within the last few months, a number of
buildings have informed real estate brokers and sellers that those
days are over.
''We just ran into it the other day, when all of a sudden a
Fifth Avenue board said, 'We don't take guarantors,' '' said Frederick
W. Peters, president of Ashforth Warburg Associates, a Manhattan
real estate company.
They may not have to. The market is hot enough to let boards pick
and choose. They now have the luxury of regarding any applicant
who is out of the ordinary -- like a grown child who needs, or
wants, a parent to help him buy an apartment -- as an eyebrow
raiser.
Barbara Fox, who owns the Manhattan real estate company that bears
her name, said she had also seen a significant increase in problems
when parents try to help buy apartments. While there were always
a few posh Fifth and Park Avenue buildings that didn't allow guarantors,
the prohibition has now become widespread, she said. Most recently,
41 Central Park West and 720 Greenwich Street -- to name only
two -- killed the hopes of two applicants.
About 80 percent of co-op buildings across Manhattan used to accept
guarantors, said Barbara Corcoran, chairwoman of the Corcoran
Group. ''Now you have a 50-50 chance of running into a board that
won't allow someone to co-sign,'' she said.
Christopher Thomas, the sales director of William B. May Real
Estate's Brooklyn offices, is encountering similar restrictions
in this hot, hot market. He said, ''The boards' attitude is: 'So,
who cares? If I don't like the color of this guy's tie, there'll
be another one in a week who'll pay $10,000 more.' '' Mr. Thomas
said that co-op boards in Brooklyn Heights and Park Slope were
''absolutely'' cracking down on parents' guaranteeing apartments
for their offspring or even purchasing them outright.
Until a year ago, Mr. Thomas said, it was common practice for
students at Brooklyn Law School, for example, to live in apartments
either bought or guaranteed by their parents. But now, he said,
if it doesn't reject an applicant outright, a board may ask for
a ''management fee'' from parents: an extra 10 percent of a year's
maintenance.
The opposition isn't just financial. Another reason that boards
don't like parents helping their children buy apartments is that
the children often don't feel they have a stake in the building.
Especially in smaller buildings in Greenwich Village and Brooklyn,
agents said it was hard to find residents to pitch in, either
by serving on the board or on a committee. The young people, Mr.
Thomas said, may not have the same cooperative spirit of all for
one and one for all.
Some buildings that don't like guarantees will still allow parents
to purchase an apartment for their children to live in.
That way, agents say, the board figures the parent has a stake
in avoiding a default. But not all parents want to own a co-op:
if they own more than two residences, the mortgage payments are
probably not tax-deductible.
Ms. Corcoran said that in Manhattan, high-end buildings were more
likely to refuse to allow guarantees, but Mr. Thomas said that
in Brooklyn the practice was more prevalent in the lower end,
for studios and one-bedroom apartments.
''After all,'' he said, ''that's where you'd have parents buying
for their children -- not in the $2 million Park Avenue duplex.''
Correction: June 15, 1999, Tuesday
An article in the House & Home section on Thursday about co-op
boards in Manhattan that do not accept financial guarantees from
the parents of apartment applicants referred to one building incorrectly.
The co-op at 41 Central Park West has no such prohibition.