Q: I’m considering buying a new place, and I want to know how a prospective buyer of a co-op or condo in New York can find out what repairs the building might need in the next four or five years. I’d hate to be hit with a huge assessment for repairs shortly after I move in, and I certainly don’t want to unknowingly move into a building with structural problems.
A: You can, and should, find out what problems the board knows about before you agree to buy an apartment. But you can’t foresee everything.
After your offer for an apartment is accepted by the seller, you negotiate a contract. During this time, your lawyer should do due diligence, asking for at least two years of board minutes and sending a questionnaire to the managing agent. The questionnaire should ask about things like how much money is in the reserve fund, the history of assessments, what capital improvements are on the horizon and what debt the building is carrying. The answers to these questions and the board minutes should offer you a clearer picture of what kind of building you are going to live in, and how it is managed.
The minutes should show you the issues facing the board. Perhaps there have been discussions about repairing the elevators, or maybe there have been multiple burst pipes on the line where your apartment is. You’d want to know that.
Unfortunately not all boards keep thorough minutes. “Sometimes you don’t have that much detail,” said Andrew B. Freedland, a real estate lawyer and partner in the Manhattan office of the law firm Herrick, Feinstein. “Sometimes you have to ask questions.”
But even with all this, you’re limited to what you can see — you’re looking at a snapshot of recent history. No amount of research will tell you what could happen tomorrow. You could move in and three months later, the building discovers that it needs facade repairs to comply with local laws, triggering an assessment. A major storm could flood the basement. “There is zero assurance that you can know what the case will be in four or five years,” said Pierre E. Debbas, a real estate lawyer and founding partner of the New York law firm Romer Debbas. “You can close and two months later there’s a major problem that just popped up.”
But despite the long-term uncertainty, the work you do before you buy the apartment should give you a better sense of how the building has been maintained and whether it has the funds to deal with problems that might arise.
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