As Tom Gimer previously wrote, unless there is a notice of the violation recorded in the public records (or the OP received an extended form title policy) it's unlikely there would be policy coverage, but it never hurts to file a claim.

I have a co-op in Manhattan that I want to sell.

Sold my last house to a real estate agents brother in-law, the above average Co-op fee money staying in the family might not have mattered, will never know?  

The OP is an agent.  

Have you ever tried to do a deal with a FSBO and they were adamant about not doing a co-op?

I think the question from the OP is to validate that they are actively managing the rental so they can take the losses against their other W2 income. 

We currently own a co-op that we rent out and are living in a 2 family where we rent out half.  

Sorry to the OP for hijacking the thread.  

It kind of sounds like the OP is actually a renter that might have gotten screwed out of his application fee.

To answer the OP’s question: it was my goal for this year to buy an apartment building, but with the eviction moratoriums that kept getting pushed out, I pivoted and took advantage of the low interest rates right now and 1031 exchanged 2 smaller STR units for 2 larger ones.