So you’re finally applying for a co-op. That’s great! But, naturally, you have some questions. Or you love reading articles you know the answer to, but that seems doubtfulI. n this article, we’ll take you step by step through the Aztech Recognition Agreement, and answer any lingering questions you may have relating to an often confusing part of the purchase process. 

How an Aztech Recognition Agreement Works

The Aztech Recognition Agreement is signed by three parties: buyer, lender, and co-op. It is designed to protect the buyer, the lender, and the cooperative. Any co-op purchase requires the buyer to gain shares, instead of an exchange of title, effectively making them shareholders in a corporation. The Aztech document is almost always necessary when financing in New York City for a coop purchase (It is named Aztech after its parent company, Aztech Document Systems) because typical financing requires a lein against the title. Should the buyer default on their payments, the lease cannot not be changed without letting the bank know in advance. Any effort to add additional financing or cancel shares and/or leases by the co-op will have to be approved by the lender as well. For the lender, the co-op has to notify them if the buyer doesn’t pay co-op or maintenance fees. Procedures are also outlined for the co-op and lender if faced with a default. The system allows for lenders to gauge a buyer’s financial situation, and also helps them make payments on their behalf, preventing a foreclosure.

How Does it Help Me as a Buyer?

The biggest draw of the Aztech Recognition Agreement is its ability to allow for buyers to finance the purchase of a co-op when traditional financing options aren’t available. The Aztech form sets loan amounts for the bank to give out as well. This is a major benefit for all shareholders, who are also held accountable by the lenders as a result. Lenders monitor the time between payments by the shareholder, and act as guarantors for the shareholder’s maintenance fee payments. It also gives the bank priority, or lien, over the shareholder in the case of a default. This sets up a mutually beneficial system that invites accountability into the process. 

At its heart, the main point of the Aztech Agreement is to protect co-ops from potential defaults, leading to the protection of the lender’s security as well. Aztech documents are given by the banks when traditional financing options aren't available to co-op buyers. However, the terms and conditions must be agreed upon by all three parties involved. The reason why these agreements are both loved and misunderstood can be for this reason as well. It can take a long time to come to terms, but once completed, shareholder, lender, and co-op can all rest assured that they are in a better position after signing the paperwork.

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