Here’s How To Navigate Your Purchase With Ease
by The Deanna Kory Team
Ambitious residential development projects are now a ubiquitous sight throughout the city, from well-established neighborhoods such as the Upper East Side and Tribeca, to Harlem and Hell's Kitchen, and beyond to Long Island City and Bushwick. Buying an apartment in a new building, or even in a building that does not yet exist, has enormous appeal for good reasons, including:
- Everything is new: For some buyers there is nothing like owning a brand new home that no one has lived in before.
- Ease of purchase: When purchased directly from the sponsor of a new development there is no intrusive board approval process
- Flexibility for owners: With very few exceptions, new development projects are condominiums. Owners are permitted to rent with limited, if any, restrictions at all.
- Luxury lifestyle: New developments typically offer an array of luxurious amenities, including stylish high-end kitchens and bathrooms, as well as special facilities for the whole building to use.
- Cutting edge design: World-renowned architects and designers have become major players in new residential projects, adding to their cache.
|  | But buying an apartment that may only exist on the drawing board presents challenges as well. Buyers of new development must carefully study the sponsor’s “offering plan,” containing essential info the building. And here are other important points to consider:- Closing date: Those who have a clause in their sales contract stipulating an end-date for the closing are protected from tying up their down payment if the sponsor fails to complete the project in a reasonable length of time.
- Mortgage financing provisions: The best scenario is to have unconditional mortgage commitment from a lender. Otherwise, loan commitments can expire before a building is complete; also, lenders may refuse to provide funds for a closing if less than five units in the building have closed, or if the common areas and amenities have not been completed.
- Estimated finances of building: For a new development, an expected property tax abatement will not go into effect until the building has received a Certificate of Occupancy (C of O), so those who close with a temporary C of O will have a tax bill, at least temporarily, that could be much larger than expected. An upward adjustment in common charges once a new building is up and running may also come as a surprise.
- Fixtures and appliances: A pre-closing walk-through is essential to verify that the apartment is ready for occupancy and everything in it is in order.
- Use of commercial space: Find out what plans the sponsor has for filling any space dedicated for commercial use. Some residents may not be happy with a noisy bar, restaurant, or unappealing business on the premises.
- Adjacent properties: Is there a possibility that future construction will negatively impact the building and/or the unit you are purchasing? It’s wise to research neighborhood zoning laws and nearby sites that could be developed in the future.
- The developer: What’s the developer’s track record? Their business history can reveal past successes or failures, resolved or pending legal issues, or a reputation for quality or shoddy construction. Best to know all this up front.
Final note: Buyers who are aware of potential problems and take steps to minimize their risk greatly improve the likelihood that their purchase will be trouble-free. Although buying an apartment which may exist only on paper presents a unique set of challenges, most purchases proceed with little or no difficulty.
Deanna Kory is a senior vice president at the Corcoran Group, where her team ranks among the top three in residential real estate sales in the company.
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