When dealing with New York real estate, prospective buyers of condominiums and co-ops should receive and review offering plans provided to them at least three business days before signing a contract with either the developer or the co-op sponsor. This document is critical to review prior to purchasing real estate as it should disclose vital information including floor plans, unit pricing, buying procedures, building bylaws, board finances, board operations, and in the case of buildings not yet operating how those buildings will be run once open.
Understanding Offering Plan Components
There are two components of offering plans – a narrative segment followed by supporting exhibits pertinent to the property and the prospective transaction.
In the narrative section, the property’s features and purchase procedures are disclosed to the potential buyer. These details will usually include:
- A buyer’s responsibility for down payments;
- The timeframe for closing;
- Delegating who is responsible for handling taxes and closing costs;
- Developer contact procedures if construction issues arise;
- Time limits and manner for reporting construction defects; and
- The operations of the developer regarding the co-op or condominium complex.
When reviewing the narrative section of the offering plan, potential buyers should be wary of several situations that increase risk and should be disclosed. The risks may affect the property, price, or buying procedures and include:
- Lack of a financing contingency in the offering plan may prevent a buyer from receiving their down payment back if they cannot secure purchase price financing;
- Any adjacent property the developer owns (and could develop) that may affect future use and enjoyment of your property;
mixed usedproperty where residential owners have no control over how commercial units are used; or
- A leasehold co-op or leasehold condo in which the buildings are developed by a party who doesn’t own the land under the building.
Offering Plan Exhibits
The offering plan also contains a section of exhibits for buyer review. A copy of the by-laws, associated documents pertaining to the property, the proposed purchase agreement, architect descriptions, and floor plans are usually included. Though these documents are often voluminous, tedious, and dense, it is important to read them over thoroughly or seek legal counsel, as some details may be easily overlooked and the plans may also offer a very small window for down payment return if there are any terms that and fundamentally non-negotiable and will destroy the deal.
Negotiating Terms of Condo or Co-Op Offering Plans
Nonnegotiable terms listed in the offering plan may include charges associated with the property you are purchasing, as these are often directly based on the building percentage you will own. However, even if some terms in an offering plan are not flexible, there are many elements that may be up for discussion. Closing costs, fixtures and appliances, transfer tax amounts, parking spaces
New York Real Estate Law Firm