Thursday, June 26, 2008

Background Checks on Co-op Applicants May Dig Deep

The New York Times
June 26, 2008
The Fix
Applicant Checks May Dig Deep
By JAY ROMANO
http://www.nytimes.com/2008/06/26/garden/26fix.html

BUYING a condo or co-op, or even renting an apartment, can be arduous, and most applicants understand that part of the process may involve being investigated by a board or a management company.

What some do not realize, however, is how extensive the inquiry might be.

Bruce A. Cholst, a Manhattan real estate lawyer, said his clients were using more tools, including the Internet, to predict whether someone would make a good neighbor.

For example, he said, he recently told one co-op board member that it was “perfectly legal” to search the Internet for information a prospective co-op buyer might have posted about herself. The board member went to Facebook.com, a social networking site geared to college students, and found, Mr. Cholst said, that “the applicant characterized her favorite activity as ‘partying.’ ”

“So his concerns about the person as a potential neighbor were legitimate,” Mr. Cholst said.

Boards or property owners might also search MySpace or LinkedIn, or search a person’s name using Google or Yahoo, but they might find nothing. In any case, information found on the Internet is not always reliable. But Mr. Cholst said that information people have posted about themselves under their name was “fair game” in a background check.

Most background research, with the exception of a check of an applicant’s credit history, does not require the permission of the person being investigated.

Arthur Davis, a Manhattan management consultant, said some boards and sellers had hired private investigators to check out prospective purchasers. A board might want to verify information on a buyer’s application. A seller in turn might not want to waste time with a buyer who could not win board approval.

As long as a co-op board does not discriminate for reasons prohibited by federal, state or local law — including race, religion, gender, sexual orientation, disability, and, in New York City, even occupation, among others — it generally has broad power to reject a sale, Mr. Davis said.

Condo boards have less power to block a purchase, Mr. Davis said, but they too are looking for information about potential owners.

Buyers are not the only applicants who might be investigated. Prospective rental tenants might find themselves under scrutiny.

Robert Grant, director of Midboro Management in Manhattan, which manages buildings for landlords and co-op and condo boards, said his company would ask former landlords if an applicant paid rent on time, got along with neighbors, was noisy or had an excessive number of guests. “We also try to get verification and longevity of employment,” Mr. Grant said, “and, if the employer is willing to provide it, the applicant’s future with the company.”

Another factor of interest to owners and boards is the tenant or buyer’s litigiousness. Many clients request a search of Housing Court and state Supreme Court records to determine whether an applicant has failed to pay rent or maintenance or is litigious, said Adam Leitman Bailey, a Manhattan real estate lawyer. “A few of our clients have us do criminal court searches,” he said.

Mr. Cholst said he would also recommend searching a prospective tenant’s name in the sex offender database maintained by each state under the requirements of Megan’s Law.

Boards and landlords also want to know about an applicant’s financial status. James Goldstick, vice president of Mark Greenberg Real Estate in Lake Success, N.Y., said his company did financial checks, looking for a prospective tenant’s credit history, bankruptcy filings, liens, judgments and collection accounts. That report, which costs about $60, is usually paid for by the management company or property owner, he said.

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