Given how notoriously cramped and small New York City apartments are, access to open spaces is something many New Yorkers look for in their dream home. For those living in co-op buildings, this might be achieved through having access to the building rooftop. Roof access is a cherished amenity, with the additional space becoming even more precious when it is the exclusive right of a unit. When purchasing a penthouse in a COOP’s building, clients often ask if they have the exclusive right to use a building’s rooftop. As a manhattan coop real estate attorney, Sishodia PLLC advises to look at several different factors in order to understand your rights. It is important to read carefully the offering plan and proprietary lease for the cooperative to check if an apartment has a terrace, balcony, roof, or portion of a roof allocated exclusively to it. However, when there is no such clear statement in the offering plan, how to determine whether the apartment comes with exclusive roof rights? A standard form proprietary lease for a COOP in New York City defines the premises leased to the shareholder as “the rooms in the building as partitioned on the date of the execution of this lease designated by the above-stated apartment number, together with their appurtenances and fixtures and any closets, terraces, balconies, roof or portion thereof outside said partitioned rooms, which are allocated exclusively to the occupant of the apartment.” Paragraph 7 of a standard form proprietary lease also states that “[i]f the apartment includes a terrace, balcony, or a portion of the roof adjoining a penthouse, the Lessee shall have and enjoy the exclusive use of the terrace or balcony or that portion of the roof appurtenant to the penthouse”. There have been different interpretations on what constitutes “appurtenant” and what “adjoins” the roof until the Supreme Court of the State of New York, New York County in Rushmore v. Park Regis Apt. Corp., 2018 WL 3126499 (N.Y. Sup. Ct., N.Y. Co. June 20, 2018) issued a clear ruling on the matter. In the case of Rushmore v. Park Regis Apt. Corp, the plaintiff claimed they had the exclusive right to use a portion of the building’s roof located directly above their penthouse apartment. On the other hand, the defendant stated that access to the roof was for all the building residents. The main issue was whether the building’s roof was adjoining or appurtenant to the penthouse in question-based on the standard provision of the coo’s proprietary lease. The Court distinguished between the portion of the roof of the building that is on the same level as the floor of the penthouse unit and the roof over the penthouse unit. The Court held that the roof above the penthouse apartment was not an “appurtenance” because an appurtenance “is a right of way that is necessary to give usable enjoyment to the conveyed premises” (citing Fischer v. Anger, 283 A.D. 2d 2nd 865 (3rd Dept. 2001) and found “that exclusive use of the penthouse roof by the owner of the penthouse [apartment] is not necessary to give that owner usable enjoyment of the [apartment], [nor] to give the owner of the apartment[s] immediately thereunder usable enjoyment of those apartments.” When the offering plan clearly states that an apartment comes with exclusive roof rights, it is still important to clarify during the due diligence process what that actually means. In fact, the shareholder may have roof rights to build above his/her unit with the filing of proper permits and approval by the city, especially due to building codes and fire safety protocols, but not necessarily the immediate right to access the roof. Accessing the roof before he/she builds above the unit may require a licensing agreement with the Co-Op, an engineer to ensure it is safe to congregate on the roof, and the building of a deck to protect the roof. Therefore, prospective buyers of apartments need to be aware of what exclusive rights and spaces they are purchasing into. Before signing the contract, it is important for your co-op purchase attorney to conduct thorough due diligence by reviewing the offering plan, its amendments, bylaws, board minutes, and financials for the building. Reading through these documents can be overwhelming and complex. An experienced real estate attorney who can help you navigate the technicalities of such a transaction can make the process go smoother. At Sishodia PLLC, we put an effort in ensuring our clients understand their rights and in empowering them through providing options. Our experienced New York City real estate attorneys conduct thorough due diligence of the building and property so that purchasers can take a well-informed decision when buying a property. We commit to delivering quality legal services to our clients that will allow them to meet their real estate goals. This article is not legal advice. If you are in need of legal advice, our experienced real estate Manhattan coop purchase attorneys may be able to help. Leave your contact details on our online form now to get in touch so you can make the process of buying and selling a home simultaneously go as smoothly as possible. Via https://sishodia.com/do-i-have-a-roof-rights-when-purchasing-a-penthouse-in-a-coop/
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In New York City and the United States in general, foreign property buyers are welcomed and typically not confined to specific property types. But while New York City itself is a highly global city, real estate purchases here can have some particular nuances, especially as they may concern a foreign buyer. Before you make any decisions, it is important to speak with a qualified foreign investment attorney. Which is Better For a Foreign Buyer – A Condo or a Co-op?Besides rental units, there are two predominant forms of apartment housing in New York City – the condominium and the co-op. While condos and co-ops are similar in structure, they each have differentiating characteristics. CondosCondos offer apartment ownership where the buyer owns the unit they live in and a portion of the common areas of the building. A condo owner will pay monthly maintenance to care for these common areas which are typically maintained by a professional management company. Condos will generally have fewer rules and restrictions than co-ops, especially as they are concerned about using foreign funds for purchase and maintenance. While condos are typically more expensive, they are also more flexible. They generally allow international buyers and investors to rent out or sublet their units with very few restrictions, but this will depend on the individual condo association by-laws. Each potential buyer must get the approval of a condominium board of directors, but this approval is usually just a formality. Co-opsCo-ops are also apartment dwellings, but unlike condos, the building is owned by a Cooperative Housing Corporation, and the buyer buys a share in the corporation with a proprietary lease on the unit rather than owning it outright. While co-ops are usually more reasonably priced and can be perfect for some buyers, they are typically less suitable for foreigners and investors. While it is not impossible for an international buyer to purchase a co-op unit, co-op boards tend to be very demanding and a foreign purchaser may find the whole ordeal much more challenging. Approval by the co-op board of directors can be time-consuming and difficult. Co-op boards typically want to see that their shareholders have established credit in the United States, work here, and file a U.S. tax return. They also usually have stringent rules on renting out, subletting, or renovating units. When an owner goes to sell their unit, it will be subject to the approval of this board as well, which can turn down any prospective potential buyers. Financing For Foreign/International BuyersA mortgage loan financing option is available for foreign buyers. It can be obtained through either a U.S. or non-U.S. bank. Lenders have tightened credit criteria since the 2009 credit crisis and will now require about a 40% down payment from foreign buyers. Financing allows the buyer to leverage funds and magnify returns. For example, an investor might buy a condo for $1 million cash and get the appreciation benefit of one apartment. If the investor is able to obtain mortgage financing with a down payment of 50%, he can buy two apartments and benefit from the appreciation of both properties. There are two ways to finance foreign buyers: U.S. lender financing – This is an option that can be arranged easily through a bank in America. It usually requires a 40% down payment (60 percent loan-to-value). The buyer must also show proof of liquid assets. These liquid assets are often based on multiples of monthly payments. The buyer would need to pay approximately 2 percent mortgage tax since the financing is done in the U.S. Home country financing – This is when a foreign investor obtains an international mortgage from their home country. The main difference between this type of financing from US lender financing is the savings on mortgage tax and other bank fees. There may also be additional fees that are associated with financing banks. An international investor must do a cost-benefit analysis before choosing which financing suits them best. It is a matter of comparing loan terms and amortization periods, interest rates, costs, etc. Speaking to an experienced foreign investment lawyer may help. Sishodia PLLC has a team of NYC real estate attorneys who are experienced in dealing with foreign investments. They may be able to help you understand which type of financing will suit your needs best. Contact us today to schedule a consultation. Other Challenges For Foreign PurchasersWhen a foreign purchaser is looking for financing for a property in New York, they will not have access to conventional mortgage financing for their purchase. These loans are specifically for United States citizens who work here, file federal income taxes, and have U.S.-based credit histories. While there are several available lenders for foreign nationals, they tend to require larger down payments and charge higher interest rates than traditional conventional lenders. Getting Experienced Assistance as a Foreign BuyerThe best way for a foreign buyer to understand their options for buying property and financing this purchase in New York City is to get the advice of an experienced New York City real estate lawyer. At Sishodia PLLC, we have worked with international clientele from around the world, helping them make knowledgeable and educated decisions about real estate purchases in New York City. Contact our skilled NYC real estate attorneys at (833) 616-4646 or schedule a consultation with us via our online contact form. Via https://sishodia.com/what-type-of-property-can-a-foreigner-buy-in-new-york/ Chances are you’ve worked very hard to afford a home in New York. In fact, buying a house might be the biggest investment you’ll ever make. Because you’ve worked so hard and because buying a home is such a big investment, it is important to have all your bases covered during the purchase. While hiring a real estate agent is often necessary to help you find the right property, hiring a real estate attorney is just as important in order to ensure a smooth, problem-free transaction. For a free consultation with a top-rated New York real estate attorney, Natalia Sishodia, call now at (833) 616-4646. Real Estate Law in New YorkReal Estate Law covers the process of buying and selling properties. This includes land, as well as any structures built on that land. Real estate law also covers business transactions such as leases, loans, and mortgages. In addition, deeds and property taxes, estate planning, zoning, and titles may be included in the arena of a real estate attorney. Real estate lawyer’s job is to ensure that the proper procedures are followed when a property is bought or sold. He or she must be licensed in the state where the transaction takes place since the laws governing real estate vary from one state to the next. What Does a Real Estate Lawyer Do in New York City?A real estate lawyer specializes in real estate law. They are responsible for handling all aspects of residential and commercial transactions, they review documents, including purchase agreements, mortgage documents, titles, and transfer paperwork. In New York, you are allowed to buy a property without an attorney. However, for all practical purposes, almost all transactions in New York City do require at least two experienced real estate attorneys, one to represent a buyer, and one to represent the seller. A real estate attorney reviews or prepares all signed documents needed to complete a closing on a property. They will represent the buyer’s or seller’s interest at the closing and ensure that all parties involved are treated fairly. This is why it might be beneficial to have a professional estate attorney present at closing even if New York does not require one. Responsibilities of a Real Estate LawyerReal estate attorneys conduct due diligence (review board minutes, offering plan, and building financials), prepare and review documents like purchase agreements, mortgage and title documents, and transfer documents. Once hired, they handle the transaction and attend the closing with the buyer. They ensure that the transfer is legally binding and in the client’s best interest. Real estate lawyers can help their clients prepare documents, order title search and title insurance, lien search, and Eagle -9 Insurance (for coops) and complete a review of the title searches during the purchase of a property. They also handle escrow and the transfer of funds. If financing is required, the attorney shall work with your lender to facilitate the clearance of your loan. When Should You Hire A Real Estate Lawyer?Real estate law is a broad field that encompasses many different areas. There can be a lot of moving pieces when it comes to New York residential or commercial transactions. A real estate lawyer can help you navigate through the ins and outs of real estate law. Our team of real estate lawyers from Sishodia PLLC is here to help you. With years of experience navigating New York real estate laws, we will make sure that you get individualized legal solutions while keeping your best interests at the forefront. To get experienced counsel on all things related to property rights or to know more about how we can help contact us at (833) 616-4646. Via https://sishodia.com/what-does-a-real-estate-lawyer-do/ Finding your dream home should be an exciting, liberating process, as it marks a new beginning and adventure down the road; however, between the regulations, contracts and fees, it can also be incredibly stressful. Unexpected predicaments can pop up, especially at a closing, which can further delay the process of setting foot in your new abode. Thus, it is important to prepare yourself for obstacles at a closing, so that you can tackle them both efficiently and quickly. To help you make the best decisions, contact a qualified New York City real estate attorney. Apart from hiring an attorney to keep you protected and in-the-know, taking note of all legal documents with a detail-oriented eye, and maintaining your health, so that your brain is sharp and alert, you should mentally prepare yourself for issues that can occur at a closing and make your purchase less smooth and accessible than desired. Here are seven things that can go wrong at a closing and how best to take action. 1. A Low AppraisalUpon purchase, the buyer’s lender often requests an appraisal of the home, in order to guarantee that the contracted price is appropriate in worth. If the appraisal is under the agreed upon price, the buyer might be forced to make up that amount, if a contract does not call for 80% or more mortgage contingency, without assistance from the mortgage company. Be prepared that additional fees post-contract might apply, and have extra cash on hand in case. 2. A Need For High-Risk InsuranceOften based on location, some lenders may request that the buyer purchase a high-risk insurance plan in order to protect the property from natural disasters and other complicated conditions. Make sure to scour the area prior to purchasing and stay up to date on any location woes that might demand such a request. Plus, obtaining high-risk insurance can be tricky, so that can also lead to additional stress. 3. Mistakes In Legal DocumentsCommon errors can appear in the legal documents that will call for a re-print, thus delaying the closing process. Between misspelled words, erroneous information, mathematical issues and tampering of pages, it’s easy for writing and printing issues to be imperfect. Be prepared for a few extra hours or days for a closing to end, in case you are met with document complications. 4. Last Minute RequestsIt’s common for lenders to ask for additional information at the very last minute, such as copies of rental agreements, deposit checks and evidence of insurance arrangements. Because these little to-dos can be time-consuming, it can often cause delays in closing. Ask your loan officer well in advance for all the information required, and bring all documents and information that you have to the closing itself. Key documents to include are the homeowner’s insurance policy form, a photo ID, an insurance payment form, as well as finances for the closing cost. 5. Walk Through TerrorsUpon entrance for a home inspection prior to a closing, you might find that the home contains serious damages, termite or bacterial infestations, as well as other indicators of a poor living environment, such as roof impairment, leaky pipes, and hidden holes or stains (which can often be initially hidden by rugs, fixtures and paintings). Decide whether extermination and other repair techniques can solve these problems prior to closing. Such issues can take time to clear and can delay the closing process. Additionally, if they are incredibly problematic, it can cause the deal to fall through. In order to save the closing despite minor walk through issues, parties may agree on closing with escrow and the seller’s undertaking to fix the issues. 6. A Loan Falls ThroughIn life, it’s common to experience unexpected obstacles, especially with regard to money, career and familial arrangements. Unfortunately, such major transitions can interfere with your ability to secure a loan. Even if the buyer is pre-approved for the loan, it’s possible for the lender to change the terms or void it entirely, which in turn will delay closing. Such reasons include: career change, debt to income ratio alterations, divorce and any abnormally large and sudden purchases. 7. A Lien Is Placed On The HomeUnfortunately, last minute liens can be placed on a property right before a closing and can interfere with the process of money transfer during escrow. If a title company finds a problem with the sale during inspection, it can place a lien and delay the sale from going through in time for closing. Such issues might involve a seller’s inability to pay off mortgage costs or property taxes. Removing the lien can take a few extra days, but if you hired a reliable title service and both parties have decided to sign off on the selling agreement, then your title company should penny up the costs the remove the lien. Working With a Law Firm Vs. An Individual AttorneyOne thing is certain in opera, sports, and real estate: it ain’t over until it’s over. Even if you’re prepared, an intruder could set off a fire alarm at intermission. This could mean that your team loses the game, the buyers could leave, or even your home could go up for sale. Hiring an experienced real estate lawyer will make a lot of difference. They will be familiar with the market and have the experience you need. You should be ready for any unexpected circumstances. However, you can prevent them from happening by double-checking every agreement and detail. Do not relax and let the process go by without checking that you have handed in your keys. It is important that you are aware of how much real estate lawyer fees will cost and what resources and experience a company has in NYC. Although you can get a cheaper price working with an attorney individually or in a small firm, it may take longer to prepare documents or receive a callback. When deciding on which firm or attorney to hire, make sure you consider the cost of the service and the quality you want. This is especially important for complex or time-sensitive transactions. The real estate lawyer fees NYC buyers have to pay are one of the smallest closing costs associated with an NYC purchase. Vast changes and transitions in life are never easy, and purchasing a home can definitely fill this profile, as it marks a momentous step in a person’s life. From both a buyer and seller perspective, many things go into securing a sale and moving on to that next chapter, and so it’s important to be mentally prepared for problems that arise and to take each encounter with grace, patience and strategic action. For more information, please contact Natalia Sishodia, Sishodia PLLC, email [email protected]. Via https://sishodia.com/7-things-that-can-go-wrong-at-a-closing-how-to-prepare-yourself/ The National Association of Realtors reported that first-time buyers made up a larger share of the residential market in New York (49 percent). According to CNN Money U.S., 2015 may be the year first-time homebuyers make a comeback since rents are rising faster than incomes. While working with first-time buyers in New York we observed the following most common challenges that they face: Closing Cost Unexpected Fees“One of the most surprising aspects of buying or selling a New York City apartment—and thus, one of the more stressful—is the amount you’ll spend on closing costs, potentially tens of thousands of dollars that get tacked onto the purchase or sale of a home,” stated Brick Underground. Surprisingly for some first-time buyers, the net available at closing is not the same as a loan amount. The lender usually deducts all their fees, including but not limited to lender’s counsel fees, appraisal fees, escrow fees. Moreover, the closing costs amounts vary with each property. For example, closing costs purchasing from a sponsor, where the original owner is a developer, in most of the cases purchaser will paying new York city and state transfer taxes, sponsor’s legal fee, working capital fund(which usually consists of two months of common charges or maintanence), persontage of the management unit etc. Purchasers, who finance will end up paying a mortgage tax which will appear as a substantial amount on their title bill. Misconseption of the Closing DateMost of the Real Estate Contracts in New York will have a Closing Date “On or about”. However, this does not guarantee that closing will occur on that particular day as many first time buyer’s assume. It is simply a tentative closing date and in New York, it was customary established that each party has 30 days from the “on or about “closing date to adjourn the Closing. Such a closing date is really helpful if buyer’s are financing and not sure how much time exactly it will take to clear the loan for the closing. On the contrary, when you buy from the sponsor or developer, closing date is going to be as time as of the essense. In such cases, any party not prepared to close on the given date will be in default, regardless of the reasons. Even though most of the sponsor’s contracts will not provide with exact date but rather have a provision that buyer will be given a thirty days written notice of the closing date at the later stage when building declaration is recorded. Most of the practicioners negotiating sponsor contracts will request for a right to adjourn the closing one time without penalty which will give purchaser a little flexeability to close and even put financing in order if financing is involved. If the Buyer is ready to close is not nessesary the closing may take a place at buyer’s convenience.Since there are multiple parties involved in a real estate transaction, delays can happen. When you schedule the closing you need to geather several parties at the same time in the same place, which can be challenging due to the conflict in schedules. Main parties for the coop purchase transaction: transfer agent or real estate attorney, seller’s counsel, seller, buyer’s counsel, buyer, lender’s counsel(if financing is involved), pay off attorney(if seller has a loan on the premises). Main Parties for condo purchase transcasion: seller’s counsel, seller, buyer’s counsel, buyer, lender’s counsel(if financing is involved), title company. Additional challenge arises when closing figures are not available until the closing date. Preferably, the seller and buyer are given the closing figures prior to a closing. However, it does not always happen in practice. There are currently changes that are being made in the documents that are prepared for closing and the figures that go along with a real estate closing. As of October 2015 the HUD-1, as well as the Good Faith Estimate, will no longer be used for closings. They are being replaced by the closing disclosure and loan estimate. The changes enacted by the 2010 Dodd-Frank Financial Law in 2015 are developed to help borrowers better understand the terms of their mortgages. Thus, the lender is required to provide borrowers with new “Know Before You Owe” forms so they can review the final lend terms. These new forms, the TILA-RESPA Integrated Disclosures (TRID), are applicable to mortgage rates and fee quote documents, with more time built into the process for reviewing them. Home Inspection may reveal crucial factsWith regard to a home inspection, timing is a crucial aspect. It is important to mention that buyers should perform the home inspection before entering into a binding purchase agreement to avoid adverse consequences. Once a buyer signs the agreement, the chance to change the agreed price based upon the bad conditions of the real property will be highly diminished. Especially buying a house in New York, a home inspection may reveal environmental issues(like soil contamination, high level of radon, bacteria in a vail, structural defects, toxic mold, etc.) Ordering Lien Search prior to the board approval may be a waste of buyer’s moneyA similar timing aspect is applicable to lien searches and other records. These records include Real and Personal Property transfers, interest, and ownership information. The Offices of the City Register maintain the New York City public records for the Bronx, Brooklyn, Manhattan, and Queens. Nevertheless, the best advice here is not to order a lien search prior to the board approval. Otherwise, it would be a waste of the buyer’s money if the approval were denied by the board. Lender’s Preapproval may not 100% guaranty a loanIn order for the purchaser to get financing there three conditions to be met: 1) buyer has to qualify financially; 2) project, building has to be approved by the lender; 3) Apprasal has to be at a purchase price for the lender to provide 80% or more of the Purchase Price. Another challenge for first-time buyers is the underestimation of lender’s preapproval. “Not to be confused with a prequalification, which is essentially a crude calculation of how much of a loan you might qualify for, a preapproval is a written estimate from the lender stating how much you will likely be able to borrow based on an initial review of your credit and financial information,” the NY Times stated. Borrowers may be required to explane any large deposits in their bank account within two months prior to the buyer’s application for a credit. Thus, it is important to prepare for this preapproval process in advance. Additionally, it would be beneficial for buyers to learn how much they can afford. Real Estate DisputesSometimes things don’t work out as planned after closing. There may be issues down the line with the title, land use, landlord-tenant, deed limitations, zoning issues, landlord/tenant issues, and issues with easements. For any dispute, it is important to consult a New York City attorney. Sometimes, a case or statute may cover the issue and you may need a legal professional who can help you understand your rights in the transaction. It may also be possible to reach an agreement before costly litigation ensues. For example, tenants may have a right of habitability implied in a lease. This right of habitability covers tenants who occupy residential buildings that are rented to them, as well as the common areas. However, if a tenant makes the apartment unsafe or unlivable, the tenant might be required to repair it. Although commercial tenants may not be as protected as residential tenants, they do have rights. For example, they have the right to terminate a lease if a rental is no longer available or unfit for occupation through no fault of the commercial tenant. The tenant may have the right to leave and surrender possession of the rental property. They will also be freed from paying rent. When you deal with a real estate dispute, whether it’s connected to a commercial or a residential lease, it is always best to consult a qualified New York City real estate attorney. Call to make an appointment to speak with Natalia Sishodia (833) 616-4646. Preferable Rates of Homeowner’s Insurance may not be easy to obtainHomeowner’s insurance which also requires credit qualification. Author Kristi Waterworth of usmortgagecalculator.org states: “Just because you can get a mortgage doesn’t automatically mean every insurance company is going to go out of their way to offer you homeowner’s coverage, though”. Our advice here is to apply to several insurance companies in order to create a backup plan. Natalia Sishodia, Esq. With assistance in Research by Natalia Lantonio All rights reserved by Sishodia PLLC Via https://sishodia.com/first-time-buyers-in-new-york/ Closing costs are any charges over and above the price of the real estate that is due at closing. No matter which side of the real estate transaction you are on in New York City, you will be subject to some type of closing costs. Whether you are a buyer or a seller, closing costs can either take a chunk out of your sales proceeds or significantly affect your purchasing power. It’s important to be prepared, so it isn’t a surprise when you least expect it. In some cases, closing costs can be negotiated between a buyer and a seller and it may be to your advantage to explore those options if they are available to you. Speak with your Manhattan real estate lawyer to learn more. The Closing ProcessThe closing of a real estate transaction usually takes between 60-90 days from the date the contract was signed. In NYC things move slower so expect closing to take place closer to 90 days. The buyer will need to send the attorney the down payment after the contract is signed. The buyer can lose their down payment if the buyer walks away from the contract prior to closing unless there is a valid reason such as a mortgage contingency. In New York, the average down payment is 10%. This money goes into an escrow account. The buyer’s attorney must complete several tasks before closing. First, they must order a title check to see if the seller has any outstanding issues. Unsatisfied liens are the most frequent title problems. It is crucial to resolve title problems and ensure that your purchase is legal. The buyer’s attorney will also then work closely with the client to fill out any documents required by the lender. The attorney can also help their client calculate how much they owe any lenders or title companies, as well as any third-party entities that are involved in the transaction, such as co-op boards. On closing day, the real estate attorney will ensure all documents that you sign, such as deeds, tax returns, and mortgage documents are in order. At that point, the buyer will need to make a payment. In NYC, there are additional regulations and customs involved in real estate transactions which can make closings very complex. An attorney that specializes in real estate law may be able to help you understand the many aspects of the process. This is why it is so crucial to find attorneys who specialize in real estate transactions. At Sishodia PLLC, attorney Natalia Sishodia and our team of experienced real estate lawyers will guide you through every step of the process. Closing Costs Paid By the Seller in New YorkIf you are the seller, you will be paying closing costs that can run more than 8% of the sales price. This is because the seller is responsible for paying the real estate commission for the sale. The real estate commission makes up the largest percentage of your closing costs as the seller, with commissions typically ranging from 5 to 6 percent of the sales prices. This commission is then typically split between the two agents. In addition, the seller is responsible for any city and state transfer fees. The NYC transfer fee is 1% of the sales price for properties $500,000 or less or 1.425% for properties over $500,000. State transfer fees are an additional .40% or .65% for any properties selling in excess of $3 million. In those cases when the seller is a foreign national, there is an additional 15% tax withholding known as FIRPTA. To add to the complexity, out-of-state residents also have to take into consideration a mandatory income tax payment at closing equal to 10.9% of the gain. A knowledgeable real estate attorney experienced in handling sales involving both foreign sellers and out-of-state residents’ sales can guide you on the issues such as withholding (FIRPTA), exemptions, and your options when it comes to withholding certificates. In addition to New York state-specific taxes, the seller is responsible for their pro-rata share of real estate taxes for the current year and any attorney fees. Closing Costs Paid By the Buyer in New YorkBuyers should expect to pay closing costs ranging from 2 to 5% of the purchase price of the property, depending on their mortgage terms and property type variables. These will include
Depending on the type of mortgage and the market, closing costs can be negotiated between a buyer and seller, although in a very hot real estate market, the seller doesn’t usually have much incentive to do this. Getting the Guidance of a New York City Real Estate LawyerWhen you are purchasing a piece of real estate in New York City, it is always advisable to have the advice of an NYC real estate attorney to ensure that everything is in order and you are not paying for anything that is not your responsibility. An experienced real estate attorney will work with you from contract to closing to protect your legal rights and prepare you for all your contractual and financial obligations and closing costs. At Sishodia PLLC, our skilled team of New York City real estate lawyers is with you each step of the way to ensure that your entire real estate transaction goes smoothly and that there are no surprises. Whether you are a buyer or seller, we can help. Call us at (833) 616-4646 or contact us through our online contact form to schedule a free consultation. Via https://sishodia.com/who-pays-real-estate-closing-costs-in-new-york/ New York City is a desirable destination for foreign buyers for a variety of reasons, including the city’s position as one of the most important centers of culture, art, commerce, and arts around the globe. However, international buyers may be uncertain about many things, including how New York real estate works and the many options available. Anyone considering buying real estate in New York regardless of whether they are a resident or citizen of another country needs to understand many things surrounding their purchase. Foreigners are not restricted from owning real estate in the United States. Foreign nationals and corporations make up a large portion of New York’s real estate. Co-ops and other special types of special housing require that buyers present US tax returns. This makes it hard or impossible for non-US taxpayers to purchase certain types of real estate property. However, there are many other kinds of real property, like condominiums or townhouses, that are not subject to restrictions, and these are extremely popular with foreign buyers. A New York State foreign investment attorney can help you if you are a foreigner and your goal is to purchase real estate properties in New York City. The rules surrounding tenant relations and tax filings can make it difficult. From the first offer through closing, our New York City real estate lawyers at Sishodia PLLC will handle all aspects of your sale or purchase. Call us today at (833) 616 4646 to speak with an experienced real estate lawyer. Step-by-step Process of Buying Real Estate for ForeignersBuying real estate properties in New York is a complicated process that involves presenting documentation, conducting research, meeting with brokers, choosing bankers, and selecting the right lawyer. Having an experienced real estate attorney is an important step and should be one of the very first steps a potential buyer should take. A lawyer will help you through every step and make sure you understand your rights in the transaction. Aside from the aforementioned, the following are the steps you need to know as a foreigner who is interested in buying real estate in New York City:
It is important to be prepared before you start your search for New York real property. Before jumping into your search for a property, you should first decide on a few things such as the neighborhood you want to live in, the type of real estate property you want to buy, and the amount you are willing to spend for the property you are looking to buy. Foreign buyers should meet with a banker or mortgage broker before they begin their search for a home. An experienced attorney can refer you to a local mortgage broker or banker with the right background. Should you need financing, a banker can help you get pre-approval. A pre-approval will improve your odds of meeting with various boards, increase your negotiating power and let you know what the buyer’s spending limits are. Tax specialists are highly recommended for international buyers. Your tax liability may be significantly different from that of citizens in the United States. Tax liability will vary depending on whether you are buying a property to invest in or live in.
The selection phase is one of the early stages of any purchase. Once you have viewed the property and selected the one that you like best, you can make an offer to purchase it. This offer does not have to be binding. You can make multiple offers in order to get the best price. New luxury property developers are less likely to accept a lower price. They usually want to sell the properties for the asking price. After an offer has been accepted by the seller, either the agent of the lawyer or the buyer will provide the contract and building bylaws to you for review.
Your lawyer will usually review the contract between you and the seller within 5-10 business days. The seller might choose to keep showing the property or accept a lower offer until the contract has been signed. Contract terms are crucial and will govern all future purchases. The buyer will need to pay a 10% deposit once all parties have signed the contract. This deposit must be made in the United States or wired to the lawyer of the seller. The money will then be protected in the seller’s lawyer’s escrow account. Only certain conditions will allow for refunds of deposits. A mortgage contingency is one that allows buyers to receive refunds if they are unable to secure financing. Although this clause must be in the contract they are not always approved by sellers.
Though it is more difficult for a foreign buyer to get financing, it is not impossible. There are banks in New York that will provide loans to foreign investors for the purchase of real estate with 34-40% down and three years of mortgage payment in liquid assets located in US Bank Account. For the foreign investors that are willing to move their assets to US Bank, banks may offer asset-based loans. Experienced financial advisors shall be able to guide on the best asset-based loan available. Foreign investors purchasing in cash save on the New York mortgage tax, about 2% of the loan amount, and save on various bank fees related to financing.
Foreign investors may purchase real estate in New York in their personal name, company name(LLC, Corporation, or Partnership), or a Trust. It is important to consult with a knowledgeable real estate attorney and a tax professional to understand what type of ownership works best. It is also important to know that company and trust ownership will be suitable for a condo purchase, but not for co-op purchases in NY. Coops normally do not allow purchase into entities. Though owning real estate in New York in the personal name seems to be the easiest and less expensive form of ownership, it exposes a foreign investor to the Foreign Investment in Real Property Tax Act (“FIRPTA”) withholding tax (15% of the Sale Price) through, New York State withholding tax through IT-2663 form (10.90% on gain) on Sale at Closing and 56% of Market Value Estate Tax on owner’s death. Knowledgeable foreign investment lawyers shall be able to guide you on the best form of ownership by foreign buyers with less exposure and maximum asset protection.
The Individual Tax Identification Number (ITIN) is an important tax processing number assigned by the IRS to the individual resident or non-resident aliens in the US. The number is issued to ensure such individuals are able to comply with U.S. tax laws. ITIN can be obtained through the IRS by submitting an application W-7 along with all necessary identification documents.
When it comes to foreign investors, it is important to talk about asset protection. Though US residents have Estate Tax Exemptions based on the value cap for the Estate, Foreign owners do not get the same benefit. Thus non-US resident owners may end up paying 56% Estate Tax (between Federal and State Tax due) at the time of their death. This payment can be avoided through estate planning by a knowledgeable real estate attorney and asset protection attorney on your team
You must be approved by the Board of the Building before you can buy an apartment in New York. There will be a lot of requirements including financial and personal information, such as bank statements and tax returns. Interviews are required for co-ops. Co-op boards usually have strict requirements and enforce them. Condos have rules that are similar to those of co-ops but are much easier. Condo approval is less complicated than a co-ops approval process. Most of foreign investors prefer to purchase new development condo units that do not require completion of the purchase application or board approval.
You have extra time after the contract has been signed to obtain financing or do additional research about the legal and physical condition of the property. You will need to conduct the appraisal and survey required for the mortgage. The documents will be reviewed by your lawyer, who will also conduct a title search and look for violations and liens. If a buyer applies for a mortgage, then the bank will verify his documentation and assets, as well as financial details about the building. After everything is approved by the bank, the entire loan amount will be wired directly to the attorney of the buyer, together with closing costs, down payment, and any other fees. A buyer should visit the property before closing by scheduling a pre-closing walkthrough through the real estate agent to ensure that it looks the way they expect. Most of the time foreign buyers do not even physically come to the US for the walkthrough and it is conducted by their trusted real estate agents through video conference.
Closing refers to a sale or purchase transaction. It usually occurs several weeks after the contract has been signed. The closing is when the seller and buyer, their attorneys, as well as the bank and title attorney representatives, sign the final documents. Your attorney will make all payments, including taxes and fees. Title insurance and any other fees are paid at the time of closing. The buyer will be given the new title and title insurance in exchange for the keys to their new apartment. Foreign buyers do not need to physically be in NY to purchase property and can do so overseas. Most of the foreign investment closings are conducted via Power of Attorney and wire transfers. Foreign investors in New York City can have a difficult time dealing with all the requirements and challenges a real estate transaction may bring. This is where an experienced foreign investment lawyer can help. A lawyer can help the investors ensure they understand their rights and get the most out of the deal. Call Sishodia PLLC today to schedule a consultation. Types of Real Estate in NYThere are many types of property in New York City’s real estate market. It can be difficult to choose which one is best suited for your needs. Each type of real estate in New York has its own advantages and disadvantages and can have an impact on your final decision. You should know and understand these differences before you start hunting for real estate to purchase. It can be confusing, especially for a first-time foreign real estate investor to pick which one is best. This is why speaking to an experienced real estate lawyer in New York City is very important. They may be able to provide you with more information about each type of real estate. The main types of real estate in New York City include: Co-opCo-op structures are those in which the company is the owner of the whole building as well as the rights to it. A homeowner, or buyer, is in essence a shareholder of the business. When he or she purchases shares, they enter into a lease agreement. The buyer buys the shares and rights to the property for specific tenants. Cooperative owners can rent their houses under the sublease, second-landlord, or other leases because they are tenants by default. Co-op properties are cheaper than condominiums and account for over 70% of all real estate properties in New York City. A co-op was the most common type of property in New York City in the past. While most high-end properties were co-op at the time, condos came later. Condos are now the most preferred option for buyers. They have outperformed Co-ops in price and appreciation. CondominiumCondominiums are considered “real property” under New York City law. This means that the buyer is the owner of the property. Owners of condominiums have a lot more control over how they use their space for sub-letting or renovating. A condo purchase is much easier than other types of property. Condos allow up to 90% financing and there are no interview requirements. A contract can usually be signed within one to two months. A deed is issued to buyers just like a buyer would for a townhouse. The monthly fees condo owners pay are based on the square footage of their unit, but these charges are not separate from city taxes Investors and homeowners who want flexibility and freedom are attracted to condominiums. Condominiums are a great option for those who want to remodel a unit or sublet and don’t like the regulations. New DevelopmentNew developments, also known as new construction properties are popular among foreign investors for the easy purchase process with no board approval or formal purchase application process. This type of investment is also very appealing to foreign investors because of distinctive architectural designs and high-end finishing. Purchasing a new development condo project in New York City may be one of the easiest ways to invest in American real estate for a foreign citizen. To learn more about purchasing new investments, call to speak with Natalia Sishodia today (833) 616-4646 TownhouseTownhouses are typically three or four-story buildings that are attached to other buildings on the block. They can be single-family homes or multiple-apartment dwellings spread over their floors. Townhouses can be narrower than detached houses, but they are more private than apartments. They often come with rooftops or backyards. Townhouses can be expensive, as many are priced at more than $ 1 million (or as high as $88million depending on where they’re located). Single-FamilyThis is what most Americans consider when looking at home options. The traditional American Dream is a one-family house. However, foreigners who are seeking to move to the USA are also looking for single-family homes in New York City. The best spots for single-family homes are usually Brooklyn, Queens, and Staten Island all have numerous single-family houses. In terms of privacy, a single-family home is the best option. This may be the right move for you if you like yard work, don’t mind paying someone else to do it, or don’t travel much. Multi-familyMulti-family properties are in all boroughs of New York City. Because the property spans multiple floors, it can accommodate more than one family. The purchasers can own the property and they may rent the space out to others. Sometimes, multi-family homes can be made into single-family homes. Rental BuildingA rental building is similar to a multi-family property that is owned and used only as an investment. The landlord or owner of a rental property is usually a corporation. A company manages the whole operation of the building. There is no neighborhood council so you only need to request a lease. This greatly expedites the renting process. A Property Owner’s Expenses in New YorkAs a buyer of a real estate property, it is important to remember that there are additional costs associated with New York property ownership, regardless of the type of real estate chosen. Many of these costs can be deducted from an owner’s taxable income. Real estate taxes in the US will be charged to owners of real estate properties. Monthly common charges are for condos and co-ops. Taxes can vary depending on how large or small the property is. Common charges and maintenance fees are the same. They can range anywhere from several hundred to many thousand dollars per month, depending on how big and what type of property they are. Monthly payments will be higher if the building provides additional services. The owner can deduct real estate taxes from their taxable income. Co-op owners can deduct a portion of their monthly maintenance, which includes, among others, interest payments on the co-op’s building mortgage. Investors can deduct most expenses in the same year that they are incurred. Common charges, as well as real estate taxes, are deductible business expenses in the same year they were incurred. If you are a foreigner looking to buy a real estate property in New York City, it is important that you understand what your obligations are as well as the requirements you need to fulfill. Speaking to an experienced foreign investment lawyer may be able to help you secure a better deal and get the most out of your real estate transaction. Call Sishodia PLLC today to speak with a skilled real estate attorney. Getting the Skilled Advice of an Experienced Foreign Investment LawyerAt Sishodia PLLC, attorney Natalia Sishodia and our skilled foreign investment lawyers are well-versed when it comes to international real estate law and investments as they concern the foreign investor. We are prepared to protect our clients’ interests each step of the way during a real estate purchase, sale, or litigation. With our attorneys on your side, you have an aggressive and knowledgeable ally working diligently to ensure that your legal and financial interests are protected and that you understand all responsibilities, options, and consequences under our laws. To learn more about how we can help with your investment planning, call us today at (833) 616 4646. Disclaimer: All information provided is for educational purposes only and is not intended to provide Tax or Legal Advice. It is also not intended to be used, and can not be used, for avoiding tax payments, or tax penalties that may be imposed on a taxpayer. Via https://sishodia.com/step-by-step-guide-for-foreigners-buying-real-estate-in-new-york-city/ The New York Real Estate market has been very attractive to foreign investors as one of the superior returns in the investment market. According to various Real Estate Brokerages, there was a decrease in foreign buyers in New York over the last couple of years and especially during the lockdown. Speak with an experienced Manhattan real estate attorney before you make any decisions on buying or selling property. The good news is, according to a Bloomberg News article titled, “Manhattan Luxury-Home Buyers Come Back, Lured by Deep Discounts,” “CONTRACTS to buy Manhattan luxury homes are faring well even in the pandemic, with more deals signed in the past three months than in the same period last year.” Working with international buyers and in light of new regulations, we observed that even with investing billions of dollars in New York’s market, foreign investors still faced several challenges. Here are some of those challenges: 1. Language Barriers for Foreign Investors in the U.S. It is a well-known fact that the U.S. is a country of immigrants. New York City is the most populous city in the United States with a population of 8,550,405 as of July 2015. NYC Department of City Planning states that “half of all New Yorkers speak a language other than English at home, and over 200 languages are spoken in New York City.” However, foreign investors still face many challenges associated with language barriers. The WSJ suggests that “in 10 years, a small earpiece will whisper what is being said to you in your native language nearly simultaneously as a foreign language is being spoken.” While the new innovation work is still underway, one solution to this problem is to cooperate with law firms that not only speak, but also provide you with valuable legal advice in your native language. Foreign investors who do not speak any or speak poor English prefer to work with real estate professionals who speak their language, be it a Real Estate Broker, Mortgage Banker or a Real Estate Attorney. People with a similar background to you in terms of culture and/or language can truly understand the mentality of foreign investors and address their needs to achieve best-desired results. 2. Disclosure of Identities in All-cash Purchases of Homes Priced at more than $300,000 According to the Geographic Targeting Orders (GTOs), U.S. title insurance companies are required “to identify the natural persons behind shell companies used in all-cash purchases of residential real estate. These renewed GTOs are identical to the May 2020 GTOs. The purchase amount threshold remains $300,000 for each covered metropolitan area including New York City. The information must be disclosed to the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN). The terms of this Order are effective beginning November 6, 2020 and ending on May 4, 2021. GTOs continue to provide valuable data on the purchase of residential real estate by persons possibly involved in various illicit enterprises. Reissuing the GTOs will further assist in tracking illicit funds and other criminal or illicit activity, as well as inform FinCEN’s future regulatory efforts in this sector.” Earlier attempts by FinCEN was capped at $3 million in 2016. As noted in a 2016 The New York Times article “U.S Will Track Secret Buyers of Lucury Real Estate,””government has required real estate companies to disclose names behind cash transactions, and it is likely to send shudders through the real estate industry, which has benefited enormously in recent years from a building boom increasingly dependent on wealthy, secretive buyers.” However, there have been several gaps in the above-referenced regulations, such as disclosure would apply only to all cash checks and not the wires received by the Title Companies; or the above regulation was a court order addressed to specific Title Company underwrites, so it can be interpreted that other underwriters are not required to disclose buyers identities. 3. Banking Regulations and Challenges for Investors Borrowing to Purchase Real Estate Most foreign investors buy all-cash newly developed properties, but, for example, with 3mln to invest, the same investors could invest in two different properties by putting 50% down and financing the rest. The Community Reinvestment Act of 1977 (CRA) “applies to banking institutions with deposits insured by the Federal Deposit Insurance Corporation (FDIC), such as national banks, savings associations, and state-chartered commercial and savings banks.The CRA requires federal banking regulatory agencies to evaluate the extent to which regulated institutions are effectively meeting the credit needs within their designated assessment areas” (where institutions have local deposit-taking operations). In spite of established banking regulations, challenges remain for potential investors planning to work with banking institutions in the U.S. In particular, new criteria in KYC banking regulations have led to a number of challenges from rising costs to the difficulty of implementation. Another challenge for investors is the absence of their own credit story. Some lenders in New York are friendly to investors and will require only proof of personal financial track records. However, in this case, investors will pay back for this kind of “friendship” by providing a huge down payment and a hefty interest rate. Working with foreign investors, we observed that HSBC runs the most competitive investor friendly lending program. Some other lenders that we would recommend for foreign investors to check are: Citi Bank, Guardhill Financial and private lenders depending on the particular case, location of the property, and the investor’s background, investor’s portfolio and liquidity. However, when you are a foreign investor, it is always better to work with the Mortgage Banker that has experience dealing with investors with particular backgrounds as it may affect the process. Experienced Mortgage Bankers can guide you accordingly and make the entire borrowing process as smooth as possible. 4. Investing in Property Tax Liens in New York While for the American owner it is a norm to pay Real Property Taxes on a property owned, many other counties do not have Real Property Taxes, thus it is not uncommon to meet foreign investors in the USA who miss their property tax payments and faced with the Tax Lien Situation. When a homeowner fails to pay taxes, the government agency can place a tax lien on the property for the unpaid amount. The property that has a lien attached cannot be sold or refinanced until the taxes are paid and the lien is removed. In tax lien states, when a lien is attached to the property, the taxing authority issues a tax lien certificate. These certificates can be sold to a third party at auctions. In tax deed states, when a third party purchases a tax deed, it is purchasing an actual property. Thus, when a tax deed has been sold to a third party, the prior owner cannot reclaim their property. According to the document “State Guide To Tax Lien And Tax Deed Investing,” “New York is a mixed state. Some counties have tax lien sales and others have tax deed sales. Most of the state conducts deed sales. Nassau County sells liens, as do the five boroughs of NYC. The tax lien sales in NYC, however, are not open to investors. They are private sales where the liens are sold to city fund companies. Later on these companies may have public sales.” Once the lien is sold and a new owner threatens the investor with summons to start foreclosure, it is an additional legal expense for the foreign owner. At that point, there isn’t much of a window for negotiations and to safeguard the property. The investor then has to pay off the lien amount along with any interest accumulated in full, cover the plaintiff’s attorney legal fees and pay for their own legal fees related to the foreclosure and settlement procedure. 5. FIRPTA Withholding Rate Went Up from 10 to 15% The IRS’ website states, “The disposition (sale or exchange, liquidation, redemption, gift, transfers, etc.) of a U.S. real property interest by a foreign person (the transferor) is subject to the Foreign Investment in Real Property Tax Act of 1980 (FIRPTA) income tax withholding.” Based on the FIRPTA law, “persons purchasing U.S. real property interests (transferees) from foreign persons, certain purchasers’ agents, and settlement officers are required to withhold 15% (10% for dispositions before February 17, 2016) of the amount realized on the disposition (special rules for foreign corporations).” Therefore, “if the transferor is a foreign person and transferees fail to withhold, they may be held liable for the tax unless there are some exceptions.” One exception is applicable when the property is acquired for use as a residence and the amount realized (sales price) is not more than $300,000. For this exception, the transferee must be an individual, and in this case only notification is required. It can become quite pricey for the real estate investor if he is not guided properly with purchasing when the same investor ends up paying 15% FIRPTA withholding on the purchase price when selling the property. Whether you are a foreign person Seller, or foreign person Purchaser, consult a knowledgeable International Real Estate Attorney to learn more about FIRPTA withholding. 6. Foreign persons who acquire properties in New York and then leave the USA need to be aware of Federal ESTATE USA Taxes on death. According to the IRS, “deceased nonresidents who were not American citizens are subject to U.S. estate taxation with respect to their U.S.-situated assets. U.S.-situated assets include American real estate, tangible personal property, and securities of U.S. companies. A non resident’s stock holdings in American companies are subject to estate taxation even though the nonresident held the certificates abroad or registered the certificates in the name of a nominee”. “Estate tax treaties between the U.S. and other countries often provide more favorable tax treatment to nonresidents by limiting the type of asset considered situated in the U.S. and subject to U.S. estate taxation.” Executors for nonresident estates should consult a knowledgeable USA Estate Attorney if such treaties where applicable. Executors for nonresidents must file an estate tax return if the fair market value at death of the decedent’s U.S.-situated assets exceeds $60,000 and pay 40%. In addition, the article “Federal Estate Tax Considerations for Foreign Investing in the United States,” adds that “the estate of a nonresident alien may deduct from the gross estate the value of property passing to the decedent’s surviving spouse if the spouse is a U.S. citizen or resident alien regardless of whether the spouse lives in the U.S. or abroad. However, if a spouse is also a non-resident alien, the unlimited spouse exemption does not apply.” Knowledgeable Estate & Trust Attorneys can guide you through the process and educate you on possible Estate Planning Techniques that will help you minimize your Estate Taxes on death. These are some of the most common challenges that we faced dealing with foreign investors in New York. Here at Sishodia PLLC we are happy to receive your inquiries and questions on other challenges for foreign investors that we will be happy to address in our next post. Our private clients at Sishodia PLLC include clients from many backgrounds including self-made wealth, inherited wealth, lottery winners, celebrities, international investors, clients with digital wealth. We have worked with international buyers and sellers from a multitude of countries – including Russia, Switzerland, Canada, the UAE, UK, Turkey, Mexico, China, Korea, Italy, India, Singapore, Bulgaria and France. We recognize that making decisions and planning for high-net can be personal and sensitive in nature, thus, our firm offers individualized solutions for your specific needs – whatever those needs may be. If you are interested in learning more about our Private Client Practice, please contact our firm today for a free initial consultation. We look forward to assisting you in creating your Legacy. Natalia Sishodia, Esq. With assistance in Research by Natalia Lantonio Updated 12/08/2020 All rights reserved by Sishodia PLLC Via https://sishodia.com/challenges-for-foreign-investors-in-new-york/ Unlike purchasing other types of property in New York City, a co-op is not the purchase of a piece of real property but buying a share of a corporation that owns and manages the building. In exchange, you get the use of an apartment as part of that transaction. Consequently, the board that governs the management and ownership of the building have a significant interest in who they accept to be one of their shareholders. And the questions they ask during the interview can feel a bit intrusive. Before going to a co-op board interview, it may be helpful to speak with an experienced real estate attorney. A skilled real estate lawyer may be able to help you prepare to answer the questions during a co-op board interview. Common Questions that the Board May AskA co-op board will take a very personal interest in anyone purchasing a unit in their building, and they may ask questions that seem very personal. But by this time, they already have extensive financial information about you, and the interview process itself is more like a meet and greet. However, it is still an important step in the process and you can still be turned down by the board depending on your answers. Questions that a co-op board may ask include:
Being asked very personal questions by a group of strangers can be uncomfortable, and answering uncomfortable questions with as much dignity and grace as possible will be the only way to get through these interviews. But as personal as these questions may feel, there are some questions that co-op boards are forbidden to ask. A Co-Op Board Cannot DiscriminateA co-op board may not ask any questions that may be construed as discrimination under New York City’s human rights laws. They cannot ask about your relationship status, your country of origin, your religion, or even how many children you have or plan to have. While they may want to know all these things, they cannot outright ask them. Consequently, they may try to phrase questions in a way that they get the information they want without seeming discriminatory. Via https://sishodia.com/what-questions-are-asked-in-co-op-board-interviews/ Buying real estate in NYC offers several options. When it comes to apartments, purchasers will generally have the choice between purchasing a co-op or a condo. While they make look similar, the structure of the transaction and ownership are very different, and depending on your needs, owning a condo can have significant advantages over owning a co-op in NYC. It is important to seek the legal advice of a skilled NYC real estate lawyer when dealing with matters such as the purchase of a condo. Having a skilled attorney may be able to help you assess what may be the best option for you and help you avoid making mistakes. You Own Real PropertyWith the purchase of a condo, you are purchasing real property, unlike a co-op where you are purchasing shares of a cooperative corporation. With a condo purchase, you get a deed and own the unit in the building as well as a portion of the building’s common areas. The HOA Can’t Dictate Anything About the Financial Transaction of the PurchaseUnlike a co-op, the condo homeowners association cannot dictate how much money you must put down, what your debt-to-income ratio is, or anything else about the financial transaction of your condo purchase. While you are expected to pay your monthly HOA fees toward the maintenance and expenses of the building, the board of directors of the HOA has no access to any of your financial information and can’t accept or deny you based on that. A Condo HOA Can’t Deny Your Purchase or SaleA condo board does not have the right to accept or reject the sales price or you as the purchaser of a condo in the same way a co-op board of directors does. A co-op will want to approve the sales price of a unit and will deny it if it is low enough to impact the value of other units in the building. A condo cannot accept or reject a sales price or you as a buyer, but it does have the right of first refusal to purchase the unit under the same terms and conditions. You Have More Control Over What You Do With Your UnitA co-op can have highly restrictive rules. When you own a condo, there are fewer restrictions, and you typically have more latitude about what you can do with it. While you must abide by the rules and by-laws of the homeowners association, in most cases, condos can be sublet and used as investment properties as long as they comply with by-law restrictions. Sometimes, condo by-laws will restrict rentals to avoid short-term rental of the unit. Consequently, some condos have tried to discourage investors in favor of owner-occupants. Condos Are Easier to SellCo-ops in NYC impose stringent rules on residents, from limiting renovations to limiting subletting. Many also do not allow a unit to be used as pieds-a-terre. Co-ops discourage investors so it is often much easier to sell a condo in NYC than a co-op. Condos Are Easier for International Purchasers to BuyBecause condos have fewer restrictions, they are more flexible and generally allow international buyers and investors. If you need guidance regarding a condo purchase in New York City, the NYC real estate attorneys at Sishodia PLLC have worked with clients from around the world, helping them make important decisions about their real estate transactions. Contact us at (833) 616-4646 or schedule a consultation with us via our online contact form. Via https://sishodia.com/what-are-the-advantages-of-owning-a-condo-in-nyc/ |
About UsSishodia PLLC founded by New York lawyer Natalia Sishodia is a boutique law firm practice dedicated to areas of real estate law, estate planning, elder law, and business law. ArchivesNo Archives Categories |