As you begin to navigate through a NYC condo or coop transaction, think about taking a few steps that are guaranteed to make the journey smoother. Yes, we’ve all heard how the NYC Real Estate Market is a daunting and overwhelming place, but it really doesn’t have to be. With Debbie’s and your attorney’s guidance, and by doing a bit of your own “due diligence”, you’ll be better equipped to make educated decisions with the speed that is often required in these transactions.
Q. I am selling my unit, Apartment 4CD. It was combined several years ago. May I assume I don’t have to do anything in order to sell it?
A. Actually, you should ascertain if the combined unit, (or even a unit where significant renovations were done), has been “signed off” by the City. Many an unsuspecting seller learns that there is an “open construction permit” on record, or that certain paperwork was never submitted, as they’re going to contract with a buyer. If you discover this, do not panic, but speak candidly with your Debbie Baum and your attorney and they can explain the steps to be taken to remedy the situation – and this can alleviate last minute surprises. Buyers, and most importantly, lenders may have a difficult time with any open or incomplete permits. The same goes for ensuring there is a valid and current Certificate of Occupancy for the house or building.
Q. I have a very good income and significant assets. I assume I will be immediately approved for a Mortgage, regardless of the building I choose. Is this true?
A. Not necessarily. A common reason that loans are declined is because Mortgage Underwriters do not approve the coop or condo, as opposed to approving you. Chances are good that you have good credit, and sufficient assets and income to move forward with a purchase, but it is crucial to ask mortgage professionals if a certain building is “approved” by a particular lender. Banks look at owner occupancy vs. rentals/tenants, coop and condo reserve funds and insurance among other factors. Your broker and attorney will do extensive due diligence on the building prior to going into contract, but keep this in mind if you are financing.
Q. I want to buy into a building but it is covered with scaffolding. Does this mean I will have to pay additional maintenance or assessments?
A. Possibly but not always. One of the reasons there are so many buildings with scaffolding all over the City is because of Local Law 11, a City regulation that requires all buildings over 6 floors to have their facades/brickwork inspected every 5 years. When repairs are needed, it can be quite costly. Much will depend on how much the coop or condo has in their reserve fund, the cost of the project and if assessments are already in place, and the payment of special assessments is absolutely something to be negotiated. Scaffolding in and of itself does not mean you will receive a bill, but is does mean that additional due diligence will need to be done by your representatives.
Q. Do I need to have an engineer’s inspection when I am buying a condo or coop?
A. The correct answer is “probably not, but it depends.” To clarify, most buyers of multi unit coops and condos in New York City do not have independent inspections or engineers visit the premises. There are several reasons, but primarily A), usually anything that is systemically wrong (electrical, plumbing, heat) is affecting more than one unit and is the responsibility of the coop or condo to repair — and because it affects many parties, it WILL be addressed. There are strict housing code guidelines for the provisions of heat, electricity and water; B) there is not much more an engineer will find that you cannot discover yourself during your visits to the Unit and your pre-closing walk through inspection (issues like sewer, septic, foundation, termites, etc, which are critical to ascertain in a single family home, are not applicable in these transactions), and C) most condos and coops do not provide access for outside inspectors to the roof, boiler room and other areas for liability reasons. There ARE exceptions of course — if you are buying into a small coop or condo, i.e. less than 8 or so units, or a condo/coop that is part of a brownstone, an inspection may be warranted as issues arising in a house may be worth investigating in this situation. But generally, your attorney will assemble information as part of the due diligence that will address most if not all of your concerns.
Q. How can I tell if the apartment I’m buying has had bedbugs or leaks?
A. Prior to signing the contract, we will present you with a full summary of all of the due diligence assembled. This includes a digest of the coop or condo board minutes, a review and analysis of the financial reports for the building, and the management company will be interviewed pursuant to a 50 point questionnaire to gather as much information as exists — history of maintenance/common charge increases, floods or other casualties, leaks or bedbugs in the unit you’re buying and any other area of the building, facade repairs, status of boiler inspections, pet policies, sublet policies, and the list goes on. In New York City, you will not sign a Contract unless and until you are comfortable with the apartment.