Purchasers of New York City condos and co-ops are afforded a degree of protection from the state, providing you purchasing from a sponsor. In this case, the New York State Attorney General regulates the sale of condos and co-ops, which must be made via an offering plan. However, since many are unaware of these regulations, it does not provide the full intended benefit.
While your attorney can assist in the matter, you should have the understanding to be a more informed buyer and ask pertinent questions. This area is too important to completely delegate to others.
What is an offering plan?
An offering plan describes the physical characteristics of the building. There are typically several sections, which are similar to each building’s plan. These include an intro, a description of the property and improvements, information related to prices, and commercial space.
The Real Estate Finance Bureau reviews offering plans to ensure compliance with the Attorney General’s regulations. Since this can be confusing, we outline the salient points to look for in the plan, which differs for existing and new buildings.
What to look for – new building
When buying new construction, there are special considerations since the work may not be complete when you purchase the unit. It is important to note that the property description section governs what the building and unit will include. The selling agent may promise you that your unit includes a parking space or high-end appliances. He or she may even put it in writing, but if it is not in the offering plan, do not expect the building’s sponsor (i.e., developer) to provide it.
The Attorney General’s office provides specific guidance on areas to zone in on.
- Appliances/amenities within the unit: This is a major area of potential contention. A selling agent may promise you high-end appliances, but these might only be available if you pay for an upgrade. The offering plan requires not only the type but must also include the brand name and model numbers.
- Common areas: You should see what is provided.
- Recreational facilities: This includes areas such as gyms and pools. You should look at what is going to be installed, and the type of materials being used.
- Frames: The Attorney General’s office notes frames are almost always steel in larger buildings located in urban areas.
- Façade: Larger buildings in the city are likely to be made of bricks and cement.
- Landscaping: New York City apartment dwellers may not pay too much attention to this, but if there is landscaping, the number and types of trees/bushes are areas to focus on.
What to look for – existing building
This covers purchasers of units in an existing building or one that is being converted into a co-op or condo. Under these circumstances, the requirements are less onerous on the sponsor. The sponsor has to hire a professional engineer, and uncovered defects must be disclosed. After this, it is in the buyer’s court since the sponsor is not obligated to fix the problems.
You may not be concerned by specific problems since you are buying a co-op or condo, and feel these are covered by maintenance/common charges. However, these could increase to fund these repairs.
There are steps buyers can take to afford more protection:
- Keep in mind, façade defects, upgrading plumbing/electrical, and boilers are expensive fixes.
- Read the board minutes. This will give you more information on defects, and what is being done.
- Review the financial statements. Doing so reveals the building’s financial condition, and whether there is a sufficient reserve to fund major repairs.
If you uncover problems after purchasing the unit, re-read the offering plan to check if it was disclosed. In cases where it was not, you should give the sponsor a chance to fix the issue. But, if this is not done on a timely basis, you can escalate your complaint to the Attorney General’s office.