7 things you need to know before buying new condo in NYC

You’ve found the perfect slice of New York City real estate; NEW condominium.

Sure, the asking price is a bit steeper than for that coop nearby. But the condo offers the complete package: pool, fitness center, movie screening room and playroom – with a few strings attached.

Never fear. The strings can be untied with the help of a savvy real estate lawyer and some good, old-fashioned education. Without proper knowledge, though, a string can easily trip you up.

The condo difference

Condos are among the fasting growing real estate offerings today. Unlike their New York City cousins -- cooperative apartments or coops -- condos are fully owned by the buyer. That is, they belong to the purchaser from the walls inward . With full ownership comes greater freedom to buy, sell and often (but not always) rent your unit, whereas coops – which give each owner a pro-rated share of the entire building – are administrated almost entirely by a group made up of the shareholders themselves.

The grounds, common areas, and the maintenance of condominium extras falls to the Homeowners Association (HOA) or the Condominium Association, a democratic institution made up of all the condo owners. The fate of each individual abode, and, therefore, every bank account, is tied to the health of the entire structure. So some common knowledge is uncommonly helpful, beginning with:

The offering plan

State law mandates that every building file a full description of the property. Apartments, whether coops or condos, cannot be offered or advertised until the Attorney General approves this massive document, averaging 300 and 500 pages. Densely worded, the offering plan is best deciphered by a real estate attorney–particularly one familiar with new condominium construction.

The plan helps owners estimate the common charges and it also details the developer’s promise to the new owner. That is, it guarantees that the nice reclaimed wood floors and the Viking stainless appliances you saw in the model apartment will actually be in your unit, too. It also confirms the square footage of your unit so double-check that, too. While a mistake of several inches may be acceptable, rooms that are a foot or more smaller than advertised call for a renegotiation in price.

The sponsor’s intentions:

Many banks shun condos that are filled with renters, so too many leased units can affect your ability to get financing. Ask upfront, or have your attorney determine, what happens with unsold real estate. For extra measure, ask her to check the institution that provided the construction financing. Is it solvent? On shaky ground?

Tax laws or abatements:

Particularly in up-and-coming neighborhoods, developers often get financial incentives to build. These can result in lower taxes during a specific period, occasionally stretching beyond several decades. After the abatement ends, taxes rise to match market conditions, so it critical to know the timing.

Banking basics

Mortgage lenders can be tougher on a new building because it lacks any track record, Closing costs also tend to be higher, too, as bank not only investigate the individual apartment buyer, but also the solvency of the entire building. And since new bulding may not have comparable properties available to compare values to, appraisals can be problematic. At the same time, if the developer is particularly itchy to sell, he may more willing to bargain the price down or share the closing costs.

Occupancy status:

A building needs an official Certificate of Occupancy before anyone can move in, so be sure to ask about the C of O status, any potential impediments, and projected completion and move-in dates.

Inspection

Hire an inspector, particularly someone familiar with new construction, to check out your dwelling before you take possession. An antsy developer may cut corners or substitute inferior materials to rush things along. You need to know if those floors are really made of reclaimed wood or unclaimed lumber.

This isn’t the whole list, but it’s a good start. Read it carefully, because you’ll face the ultimate test soon– your closing.