My apologies about the titles of these blogs, but my web guys say they are good for the site. In any case, as a New York City Real Estate lawyer my office deals with the purchase of new construction condos quite frequently. And whether it be in downtown Brooklyn, or Manhattan, one thing is abundantly clear: Make sure you receive credit for the repairs that are supposed to be fixed before the time of closing. We all know the familiair story in New York by now. Buyers plunk down serious cash for a purchase of a condo in a building that is not yet finished. In their initial walkthrough, buyers notice several things are missing, out of place, dont work, etc. While buyers notice these things, and include them in their “punchlist” (which is developer talk for a piece of paper stating what is wrong with the unit), the list is usually not completed by the time of closing. Furthermore, 9 times out of ten the Contract the buyers signed says something to the effect of “Sellers shall make reasonable efforts to fix all items in the punchlist either before closing, or within a reasonable time after closing.” Legally speaking, this is almost like saying “I will pay you a certain amount of money, not to be disclosed yet, at a certain time in the future. If I dont pay by that time, I’ll have some more unspecified time to pay the money.” Why would you sign that? The answer is you shouldnt…in my opinion.
In the above situation, here is what will most likely happen. On the day of the closing the developer likely will not have finished all the repairs, but they buyer will have paid all of the money that they are required to. The developer will then say “Don’t worry, we’ll have this fixed in no time.” Sometimes that happens, other times legal action is involved, or the developer goes belly up, or the development is sold, or twenty other possibilities. The only way to guard yourself from this is to insist that a credit be issued to you in the Contract, at the time of Closing, if in fact the punchlist items are not repaired. Most developers attorneys will balk against this, and fight tooth and nail. Some will even threaten to kill the entire deal. You then have to ask yourself if this deal is worth it in the first place. If the developer is selling a unit for $500,000.00, it would appear somewhat strange that they wouldn’t be willing to put $5,000 on the table, should they be unable to fix the things they are required to fix. In fact, every day you put money down that you’ll do the things your supposed to do in the time you’re supposed to do them. If you buy a car, you state that you’ll pay by June 30th, or else youll pay late fees. Or if you buy a house, and get a mortgage, youll state youll pay be a certain date, otherwise the bank can take your home. It therefore does not seem sensible that a developer cannot do the same thing. This issue is incredibly prevelant, and many purchasers don’t take the time and effort to insist that this clause be put into the Contract. The truth is that when a developer sees that they will have to give up money if they don’t fix a small issue, they are much more likely to fix it. It’s just something you should always look out for if you are buying a new construction condo in New York.
