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New York Apartment Buyers Face Powerful Co-Op Boards

Thu Jan 20, 8:33 AM ET Entertainment - Reuters Celebrity/Gossip

By Ellen Wulfhorst

NEW YORK (Reuters) - Imagine buying a new home where your neighbors can decide how it's decorated, what you cook for dinner, how big your dog is and what kind of sex you have. And they can toss you out if they don't like it.

You got a problem with that? Millions of New Yorkers live with it every day.

Residential life in New York is ruled by the almighty co-operative, whereby apartment owners form a board to run their buildings and decide who may live there and who may not.

The city is filled with tales of co-op nightmares. A first-time buyer bidding on a tiny studio might well be rejected over an overlooked bill paid late years ago.

At the other end of the scale, media mogul Rupert Murdoch is paying a record $44 million cash for a multi-floor spread in a Fifth Avenue building where all buyers must pass muster before a very choosy co-op board.

Murdoch was not even the highest bidder. Someone else wanted to offer $1 million more but only had $100 million in assets, said real estate agent Barbara Corcoran.

"We knew he wouldn't get through the board," she said.

By law, a co-op board is free to reject anyone, so long as it does not discriminate on such factors as race or religion.

"Of course, they go too far," said Corcoran. "And the more money there is, the more difficult it is."

FROM NIXON TO BANDERAS

Co-op residents buy shares in a company that owns the apartments and then pay fees for repairs, taxes and such. Co-ops make up some four-fifths of privately owned housing in Manhattan.

"They're almost a unique institution to New York," said real estate attorney Joel Abramson, who said co-ops help the urban middle class own rather than rent their homes.

In an oft-told tale, former U.S. President Richard Nixon was rejected by a co-op after his resignation from the White House. Other famous co-op board rejections have been handed to entertainer Madonna (news - web sites), heiress Gloria Vanderbilt, singers Carly Simon (news) and Mariah Carey and designer Calvin Klein.

Actors Antonio Banderas (news) and Melanie Griffith (news) were just turned down for a duplex in the Dakota building, which has been home to such celebrities as Lauren Bacall (news), Leonard Bernstein, Rudolph Nureyev and Mia Farrow. Beatle John Lennon was slain at the building's gates; his widow Yoko Ono (news) still lives there.

The Dakota board turned down Griffith and Banderas without meeting them, according to a letter written in dismay by the apartment's would-be sellers.

"We were shocked by the board's narrowness of vision," the owners wrote, calling the decision "arbitrary" and "arrogant."

Not just celebrities get such tough treatment. Along with insisting on background checks and financial reviews, some co-ops have been known to interview prospective buyers' dogs.

Once buyers move in, co-op rules can determine the hours one may do the laundry and what noises and smells can waft out the doors. Loud sex is frowned upon, as is cigarette smoke.

One couple bought side-by-side studios with the co-op's assurance they could knock down walls and create one apartment. Once they moved in, however, they learned that should they move out, they must put the two units back as they were.

Pets are a persistent issue, with co-ops determining what they are, how many there are and how big they are.

"There's a terrible problem in the city with people hoarding pets," said Mary Ann Rothman, executive director of the Council of New York Cooperatives & Condominiums. "If one kitty cat is nice, then 17 are 17 times as nice."

CO-OP WITH WOLVES

One Manhattan co-op discovered a resident was raising wolves in his apartment, said real estate attorney Aaron Shmulewitz. "They weren't little. They were big," he said.

A co-op overlooking Central Park caused an uproar in December when it evicted a red-tailed hawk that had nested on a cornice for more than a decade. Protests from bird lovers including celebrity resident Mary Tyler Moore forced the co-op to back down and allow the bird called Pale Male back.

Some residents are not so lucky. The most annoying, such as a Manhattan man accused of wandering the halls half-naked and stealing clothes from the laundry, can be forced to sell.

Co-operative boards took hold in the 1970s when many city landlords were faced with high costs of heating rental apartments and many buildings resorted to private ownership.

On their behalf, co-ops can create a community.

"New York is a big city," said Neil Binder, author of "The Ultimate Guide to Buying and Selling Co-ops and Condos in New York City." "Do you want to be in an environment where nobody knows you and you know nobody?"

Headaches aside, co-ops remain a point of pride.

"It really is an 'only in New York' kind of thing," Corcoran said. "You tell a New York board story, and it makes you sound more interesting that you're in the know. It's never boring to tell these war stories."

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