Settlement takes place when the Flynn Company has all of the verifications and supporting documents in hand including the Lender’s loan approval and the Co-op’s approval. A settlement statement is prepared which follows in principle the standard HUD-1 form for all real estate closings.

At settlement, the seller will assign his/her right, title and interest in the Ownership Documents to the purchaser. The purchaser accepts the assignment, signs the various loan documents and pays the balance of the purchase monies to complete the sale.

Loans made to purchasers or owners of co-operative units are secured by a pledge and assignment of the unit owner’s Ownership Documents. The lender holds the Borrower’s original Ownership Documents as collateral security for the loan. The lender’s security interest in the Ownership Documents is further perfected by recording a Uniform Commercial Code Financing Statement (UCC-1) with the Recorder of Deeds in the Chattel Records which evidences the borrower’s debt on the public records.

In transferring an interest in real property there is no need for the seller to bring his/her deed to settlement since a title search would have confirmed the seller’s ownership interest in the property. It is imperative, however, that the seller of a co-op unit bring his/her original Ownership Documents to settlement since these documents are not recorded. If the seller is unable to locate his/her Ownership Documents, the co-op will issue substitute Ownership Documents provided that the seller completes one of the following requirements as dictated by Co-op Policy: (1) provide an affidavit of loss and indemnification agreement, (2) the seller purchases a surety bond in favor of the co-op to indemnify it and the buyer against loss, or (3) initiate a suit for Quiet Title. Both the bond and the suit for Quiet Title are costly measures. The purpose of these actions is to ensure that the seller’s ownership interest has not been conveyed or pledged to an unknown third party.

If the Ownership Documents have been pledged by the seller as collateral security for a loan, the lender will release the ownership documents to the Flynn Company after payoff.

Following settlement, the settlement office must arrange for the President and Secretary of the co-operative to sign and seal the buyer’s new Ownership Documents and, if there is a loan involved in the transaction, the Recognition Agreement must be signed as well. This is usually coordinated through the co-operative’s Transfer Agent.

There are certain economies involved in the transfer of an interest in a co-op unit. Since the transfer involves personal property, there is no real estate transfer tax or real estate recordation tax, which is a requirement in most jurisdictions for the transfer of real property. Likewise, except for the Promenade, there is no real estate tax adjustment or title insurance as is common when conveying real estate.