Most important sections of condo offering plan in NYC

[showtime]

If you've ever seen a new construction condo offering plan, it's massive. How are you supposed to properly diligence this? I know your lawyer is responsible for legal and financial due diligence, and your real estate attorney will be going through the OP, but how can they manage such a massive document?

Real estate attorneys must know which parts are important and which parts are fluff. What are the most important areas of a condo offering plan to focus on during real estate due diligence?

[aslan]

Schedule A of the condo offering plan will have all the core info on the properties for sale. For example, floor plans, sale prices, etc.

The other very important section is the Special Risks section. All sorts of disclosures are made in this section. Some are obvious, like the risk that the sponsor may not be able to sell enough units for the project to be declared effective. Or that they might meet the threshold but decide to hold some units back for rent instead of selling (since this is typically disclosed these days, you can't sue the sponsor for operating part of the building as rental units later).

There will be less obvious disclosures like whether certain of the windows are lot line windows. I remember one deal where the master bedroom had many windows on two walls. However, 70% of the windows on one wall were unfortunately lot line windows.

As a side note, you should always compare what's given to you in marketing materials with what's actually in the offering plan. I've seen an egregious example where the sponsor deliberately hid the presence of lot line windows in the marketing floor plan, even though it was disclosed as required by law in the offering plan. Their excuse was that in the case of conflicts, you should always refer to the offering plan. What scumbags!

Note: In a proper floor plan drawing, regular windows and lot line windows should be depicted differently. Usually the lines for normal windows are thicker than those for lot line windows.

I would also confirm the number of bedrooms you are buying. Please reference the NYC legal bedrooms guide by Hauseit. Developers can get really tricky with this, but just remember that a bedroom needs a real light and air source (i.e. usually a window and a certain size) to be considered a legal bedroom. Also, the requirements for the 1st, 2nd and 3rd bedrooms actually differ.

And if you're a listing agent for a sponsor reading this, bedroom counts really do count. You can only market an apartment as a 1 bedroom if it legally is a 1 bedroom. Otherwise you're bound to get in a lot of trouble with the NY Attorney General.

[showtime]

Thanks Aslan, very helpful! I found this overview of the special risks to buying a new construction home in NYC very useful as well.

You should also be wary of sponsors telling you on the sly (i.e. verbally whispering in your ear) that you can easily add bedrooms to your duplex unit when the bottom level is below ground. Yes a duplex can have a lower level that's a basement and below grade, and yes the space can count towards your finished square footage. However, you can't count any rooms down there as legal bedrooms!

I love how sometimes sponsors will like to advertise it as if it's something you could easily do, and they just haven't bothered doing it themselves. Very unethical, especially since their contract will say that any violations caused by renovations done by the home owner are the sole responsibility of the home owner!

[Benny]

I would also carefully peruse the offering plan to see how they're using FAR (Floor Area Ratio) and if any shenanigans are going on there. Remember that storage space does not count towards FAR vs livable residential space. So I've seen shady developers in Brooklyn create mezzanine levels and certify the additional space as storage vs living space so they could build taller.

This is a very nasty move, and I remember these developers telling buyers verbally that they could drop the ceiling after closing if they wanted to!