New York Residential Real Estate Attorney
As a New York residential real estate lawyer, Rubin Ferziger has represented business individuals in all types of transactions and proceedings dealing with residential property. He knows that buying residential property in New York City, and making an advantageous long-term purchase, presents challenges both in good and difficult economic times. Most buyers will eventually become sellers. Consequently, every purchase is best viewed from the perspective of its ultimate ability to attract a profitable offer when up for sale.
Following are five critical points to keep in mind when buying a co-operative or condominium apartment, or a single or multiple family house.
Five Expensive Home-Buying Mistakes That Hurt When You Sell … and How to Avoid Them
Buying a property that's hard to resell. Whenever you intend to purchase a house, co-op or condo in New York City, think at least 10 years down the road. That means to consider how potential buyers may react to the property. You may be willing and able to live with certain shortcomings that future prospects may find completely unacceptable.
For example, let's say you've fallen in love with a gorgeous co-op apartment in a luxury doorman building, on a high floor with spectacular, sweeping views. However, the maintenance is about 30 percent higher than other similar units, because of the building amenities such as extra staff, etc. But you and your spouse are earning well and can afford it.
Well, if recent economic hardships have taught us anything at all, it's that recessions can be worse than anticipated, real estate markets can crash for a long time, and even the best, seemingly stable jobs can evaporate. If you need to sell, and most buyers can't afford or are turned off by the excess maintenance, you're stuck. If you have to raise cash, you may have to take a major loss on the selling price.
Aside from potentially unattractive financials, beware of incurable defects. These are problems that cannot be fixed at reasonable cost. For instance, in New York City, views can affect property value. If there is anticipated development in the neighborhood, the view from the apartment you are interested in may be substantially altered, to the detriment of its future selling price.
For apartment purchases, litigation against the building and among owners may also reveal important information. Be aware that certain types of cases can be a disincentive for lenders to make mortgage loans. It's a serious point of discussion to have with your lawyer, because it may affect the future salability of your unit.
Get unbiased opinions on future salability. Otherwise, when you become the seller, your anticipation of appreciation may be an illusion. A knowledgeable real estate lawyer can usually direct you to several sources for independent verification of potential future value.
Making a purchase with someone you aren't married to, without an agreement. In New York City, many people live together. Unmarried couples sometimes buy a house or apartment together. If the relationship later ends, many legal issues arise concerning ownership.
To avoid a future dispute, it's best to have a written agreement that specifies what happens with the property if the relationship is terminated. If the home is to be sold, the paperwork should detail the percentage each partner receives from the proceeds of sale, or from a buyout provision. This will depend on individual contributions to the down payment and mortgage, improvements and other costs.
Another option is for one person to stay, with the other vacating. This can be more complicated, especially if the remaining partner can't afford to pay the one who leaves. Contentious issues tend to surface over who is named on loan documents. For example, if you leave and are still liable for a mortgage, you may not be able to qualify for another loan.
In this instance, the agreement could provide a period of time for the individual who remains to refinance, and pay the departing partner an appropriate buyout sum.
It's wise to note that in litigated matters of this sort, courts will generally rule that the property must be sold and the proceeds divided according to individual rights, unless there's a very good reason not to sell. Most times there isn't.
Not hiring your own inspector. If the seller has paid for an inspection and would like you to accept the results, don't. Retain your own inspector, and not one recommended by the real estate broker or the seller. Real estate brokers are commissioned sales people, and therefore have an incentive to suggest inspectors who are less likely to disrupt a deal.
It's a good idea to accompany the inspector when the premises are toured, so you can have a firsthand discussion about any serious problems.
A genuinely independent inspector you hire may uncover problems and defects that would otherwise have a major impact on the property's future value.
- Not having appropriate contingency clauses in your contract. You need to be able to escape the contract if there are fatal problems with the purchase. Specifically, the purchase agreement should make the offer null and void if the inspector you hire turns up major defects, or the home appraisal does not meet or exceed the purchase price. These are just two critical contingencies – your lawyer may want to include others.
Not knowing the Board. This pertains specifically to an apartment purchase. If you're going to buy a co-op or condo, you should have a good sense of the Board of Directors' or condominium association's predisposition to maintaining the property before you buy. Your lawyer may be able to uncover relevant facts and clues from reading the Board's meeting minutes.
For example, if a Board has a tendency to be excessively frugal, that may indicate there may be a delay in making necessary repairs. Patch jobs mean problems. Let's say the building is an older property, and the plumbing has deteriorated. Leaks and floods are relatively frequent. If you buy an apartment there, at some point you may be standing in six inches of water in your newly furnished unit. That would be very disconcerting.
Individual co-op Boards and condo associations have a collective "personality," so to speak. Get a clear picture of it in advance. Real estate professionals who handle many purchase and sale transactions of co-op and condo apartments may have knowledge of different Board and association preferences, and can provide you with insight. Ask about it.
As you can see, it's easy to make a real estate mistake if you lack proper professional guidance. The money you spend in retaining experienced help can reward you many times over with a better purchase, and ultimately, a more beneficial sale.
If you need legal assistance with buying a home in New York City, please contact the Law Office of Rubin Ferziger today at 212-490-8585.