purchasing

Another stupid meme and some info . . . .


We are expecting the book to be finalized in the next day or so and will be sending out copies shortly. If you wish to receive a free copy and have not already done so, please go to www.gocondo.nyc and sign up (providing us with your email). I really appreciate everyone’s support.-Thanks, Phil

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Another stupid meme . . .

go to http://www.gocondo.nyc for a free copy of my book, “How to buy a condo in NYC” in exchange for an honest review on Amazon.

Get a free copy!! – How to buy a condo in NYC

I am now at the point where I am asking all of my friends and family for some assistance (no I have not lost my wallet in another country).

I am looking to assemble a group of people who are willing to get a free copy of my book, read it and post an honest review on Amazon prior to the official launch of the book. The reason why that is so important is that the more reviews I get on Amazon, the more visible my book will be once the launch takes place in approximately 30 days. Of course feel free to spread the word to other people.

To be part of my street team, go to http://gocondo.nyc/ and sign in on my email list. Once it is finished (finally!), everyone will get a free copy of the enhanced version of the book accompanied with the a check list which will be integrated with the book. Each Ambassador will also be entitled to take part in a group Q&A session monitored by me.

Resource page

I am pleased to announce and invite you to Lavender Law Blog’s Resource section. It contains tools and pages that can help buyers and sellers of real estate. If you come across any tool, software or site that can assist others, let us know!

Selling a Cooperative Apartment- Quick Tip

An issue came up on a recent transaction and I thought it was appropriate to repost this quick tip originally published 6/24/2007.

Soon after entering into a contract for the sale of a cooperative apartment, order a payoff letter for the underlying loan being secured by the stock certificate and proprietary lease. By ordering a payoff letter, the lender holding your stock certificate and proprietary lease as collateral for the loan will start to the search; assign an attorney to receive the documents who will deliver them to the closing. Upon locating the stock certificate and proprietary lease the lender will send it to this law firm who will hold it until closing. Although the payoff letter can be ordered and updated on relatively short notice, locating the stock and lease may take some time. Ordering the payoff letter early assures the Seller that the stock certificate and proprietary lease will have them when needed. Ordering a payoff letter late in the transaction, may cause delays in closing while the bank locates these documents which will be needed in order to close. Be aware, sometimes lenders may lose your stock certificate and proprietary lease. The lender will issue an affidavit attesting to the misplacement of the stock and lease and indemnify the Seller and the managing agent from any liability resulting from the loss.

Purchasing a Condominium- BUYER BEWARE . . . not really, just do your homework

The real estate economy is slowly picking up encouraged by an abundance of condominium units on the market, Sellers motivated to move them,  historically low mortgage interest rates and the first time home buyer tax credit due to expire (unless extended) at the end of April, 2010.  I feel the need to revisit certain items of due diligence a prospective purchaser must look at when buying a condo.

As posted on this blog on September 17, 2007:  There are currently a great number of sponsor sold condominium units in the New York City market place. A sponsor is the person or entity who is developing a building as a condominium (or cooperative). Like everything else, there are condominium developments that have been built well and others that have been built poorly. Prior to entering into contract, the offering plan and all amendments should be reviewed. The offering plan is a full disclosure of a project to the public that is filed through the New York State Attorney General’s Office. The offering plan lists the name of the sponsor of a condominium building, its principals and other developments built by them. Research the names of the principals and their other developments on the internet. You may find references to any of the above and if the buildings and the units are built well or poorly. Even if the price is right, the carrying charges low and the location of the building prime, you do not want to invest in a building or unit that is poorly constructed. It is more likely that you will have problems in the future. Even if a warranty is given by the Sponsor, if a history of poorly constructed buildings exists, you may still need to go to court to enforce your warranty behind other disgruntled purchasers.

Another thing a potential purchaser of a condominium unit can do is speak with the current occupants of a condominium building. Unlike real estate brokers who have an underlying motivation to sell a condo unit, an existing owner of a condo unit in a building typically does not have an agenda to hide the truth from anyone who asks. People love to complain. If there are problems you will hear about it. I would ask more than one person just to make sure that the complaint spoken of, is not the exception and but the rule. One complaining unit owner may have a particular set of circumstances that do not necessarily apply to the entire condominium building and taint one’s decision to buy.

It may be beneficial for the prospective purchaser of a condominium unit (whether a resale or a Sponsor sold-newly constructed Unit) to engage the services of an engineer or home inspector before purchasing a condominium unit. It is not only good to know what the physical condition of the unit you are purchasing, but it is important to know the overall condition of the condominium building. The need for repairs to the common elements and infrastructure of a condominium building may result in unplanned assessments that may not fit into a prospective purchaser’s budget.

One of the things prospective purchasers need to look at is the number of the units in a particular condominium building that are sold or in contract. If the number of unsold units is too great, banks will refuse to give mortgages in that particular building and prevent a person from buying a unit in a building despite good credit. Some developments are able to get a building “pre-approved” by a particular lender and may even require a purchaser obtain a pre-approval letter from a particular lender who has already consented to providing mortgages in a particular building.

I came across a recent New York Times article written by Elizabeth Harris that highlighted certain things a prospective purchaser must look at prior to signing on the dotted line.  I thought it was informative and encourage you to read it.

http://www.nytimes.com/2010/01/31/realestate/31cov.html

I do not do this very often but I will tell you that I have worked a number of times with Tom Le of the Corcoran Group who was quoted in the article. I have found him to be very knowledgeable in the field of condominiums. He is a very savvy customer orientated broker. All of my clients who have used him (developer and consumer alike) have been very happy with the services provided.

Purchasing a condominium unit due dilligence-Quick Tip

There are currently a great number of sponsor sold condominium units in the New York City market place. A sponsor is the person or entity who is developing a building as a condominium (or cooperative). Like everything else, there are condominium developments that have been built well and there are others that have been built poorly. Prior to entering into contract, the offering plan and all amendments should be reviewed. The offering plan is a full disclosure of a project to the public that is filed through the New York State Attorney General’s Office. The offering plan lists the name of the sponsor of a condominium building, its principals and other developments the principals have built. Research the names of the principals and their other developments on the internet. You may find references to any of the above and if the buildings and the units were built well or poorly. Even if the price is right, the carrying charges are low and the location of the building is prime, you do not want to invest in a building or unit that is poorly constructed. It is more likely that you will have problems in the future. Even if a warranty is given by the Sponsor, if the sponsor has a history of poorly constructed buildings, you may still need to go to court to enforce your warranty behind other disgruntled purchasers.

I am currently representing a client who wishes to purchase a condominium unit from a sponsor of a newly constructed building. Inquiry reveals a very real concern that the sponsor (a very large developer) is not very liquid and has a reputation of selling poorly designed and constructed buildings. As part of our due diligence we will need to ascertain what percentage of the units is being kept by the Sponsor. This is important because if there are a large number of units being held by a sponsor of a condominium and that sponsor is not able to pay common charges, the business of the condominium association may be severely hindered. We wish to ascertain how realistic the first year budget is. If it is not, you may be subject to additional assessments or an increase in common charges.

 

 

Purchasing a cooperative apartment-Due Diligence

When purchasing a cooperative apartment it is important that you (and your attorney) perform some research about your new home and investment. As you may already know, ownership of a cooperative apartment consists of owning shares of stock in the corporation that owns the building accompanied with a proprietary lease permitting occupancy and typically laying the ground rules concerning the use of the apartment and living in building where it is located.

When I represent purchasers of coop apartments I will review the offering plan, all amendments and the last two years worth of financials of the cooperative corporation. An offering plan is the required disclosure filed with the New York State Attorney General’s Office and contains information about the building, apartment and the cooperative corporation. The offering plan and amendments should be examined which contain the corporate by-laws and other important documents (including the proprietary lease) and any changes that have been made to them over the years.  These documents contain the obligations and rights that affect ownership. As shares of stock to a corporation are being bought, it is important to determine the financial health of the corporation and any evidence of potential liabilities (including pending litigation) that may result in increases in maintenance or imposition of assessments. I feel the review of financial statements are so important (audited statements are preferred), that it is my practice to request a client’s accountant also review the financials as a second set of eyes.

Attorneys shouldn’t have all the fun. I will suggest that a purchaser of a cooperative apartment review the minutes of the meetings of the board of directors. This may be difficult if the corporation keeps very poor or no minutes of such meetings. I will give clients a list of things to look for in the minutes that may reveal the physical condition of the building and evidence how the coop conducts business. It is important that the purchaser review the minutes because they will be the occupant and each person is different. One person may think a certain condition at the building is perfectly fine. That same condition may cause another not to purchase an apartment in a particular building. Another good idea, depending on how shy a person is, is to travel to the building and ask people who look like they live there, how they like being in the building. If there are problems, you will hear about them. Try to speak to a few people to get a good cross section of opinion.

As contracts of sale typically are not contingent on performing due diligence, it is important that the financial and physical conditions affecting a cooperative apartment and the building be explored prior to going into contract. It is usually done at the same time the attorney is reviewing and negotiating the contract of sale. Doing so will increase the likelihood that the investment being made in your new home is a wise one. 

Purchasing a home. Can you afford it?

This sounds like a very basic question that everyone who anticipates buying a home should think about prior to entering into a contract of sale. Not giving some thought to this elementary but crucial calculation happens more times than you would think. This is no reflection of intelligence. It is more common that you think. First time homebuyers often get caught up in the thrill of the chase and make bids on homes they cannot afford or are prompted by a real estate broker, mortgage broker or seller who does not have best interests at heart. There have been a few times where I have represented a potential purchaser of multifamily home from a Seller whose business is the sale of “affordable” homes. On more than one occasion the Seller has urged them to use their “Purchaser’s attorney” and their title company. As part of the sales pitch, the in-house agent of the Seller justified the sale to my clients based on potential rents as a way of paying a mortgage that would not be able to afford. A primary question that I ask a client is whether or not they can afford the loan if the tenant is unable or unwilling to pay the rent. If the answer is no, I ask the client to consider this when purchasing the home. The seller of these affordable homes would push the purchasers to closing as quickly as possible (sometimes entering into contract and closing on the same day) otherwise someone else would purchase this great deal out from under them. To make a long short, neither transaction closed.

When purchasing a home or investment, in addition to the amount allocated towards the down payment, you will need to consider the costs charged by the bank and title company at closing. Some of the bank fees will be paid prior to closing but a majority of the fees due the lender will be paid at closing. The lender is required to give you and you should request a good faith estimate of closing costs from your loan representative or officer. You will be required to get title insurance for any lender you elect to use in addition to title insurance for you as the Purchaser. The lender needs insurance to insure that they have a valid lien against the property to secure the loan. When you are purchasing a home, many times the bank will require that you pay for a provide proof of one year’s worth of liability insurance for the home.

Lastly, you will need to determine if you will be able to afford your new home on a monthly basis. Many people who contemplate purchasing only consider the monthly principal and interest charged. In addition to monthly payments of principal and interest, you may be required to pay monthly installments of real estate taxes, hazard insurance and private mortgage insurance (“PMI”). PMI is charged if your loan amount is higher than 80% of the value of the loan. The bank if escrowing will require payment of a monthly installment of that annual premium so that at the end of the first year there will be enough money to pay the following year’s premium. Additionally there are payments of utilities (phone, electric, gas, water and sewer) to consider.

In considering all of the purchasing and carrying costs of your new home there is a quality of life issue to consider. Even though you may be able to pay all of your bills, you should leave yourself enough of a monthly cushion that can pay your current other sundry expenses and food bill. You do not want to over leverage yourself so that you spend all of your time in your brand new house sitting on a milk crate, living on crackers and water.