- Recreational Facilities: The Attorney General=s regulations require that such facilities be described in detail and that the offering plan include floor plans of recreational buildings, a description of equipment to be installed and details regarding size and materials to be used in the construction of such things as pools and tennis courts (whether they will be blacktop or clay, whether there will be outdoor lighting, etc.)
- Landscaping: The regulations require that the landscaping be disclosed in detail, including such things as the number and type of trees to be planted, the approximate number of bushes, whether the grass will be sod or seeded topsoil, whether there will be an underground watering system, etc. However, in most developments, sponsors install minimal but adequate landscaping, and when purchasers want an upgrade of this item, they must pay for it themselves.
- Appliances and Amenities Within Units: The Attorney General=s regulations require that the offering plan contain the brand name, the types and the model numbers of appliances to be installed, which gives the buyer information on the quality of those appliances, and whether the home will contain any other amenities such as a fireplace or jacuzzi. Keep in mind that if the item is not promised in the offering plan, the sponsor is not obligated to provide it and probably will not, except at substantially higher prices. Offering plans frequently state that the sponsor can substitute equal or better appliances, but not appliances of lesser quality.
- Facade: Low rise homes can have various kinds of siding including wood (pine is cheapest, cedar is the most expensive; plywood is not as good as lumber), vinyl (cheaper than wood and costs less to maintain), or brick. Many larger buildings in urban areas have facades made of materials such as brick, cement or exterior insulation finishing system (“EIFS”). Purchasers may wish to consult with an architect or engineer to understand the differences between façade materials. Purchasers should also review the offering plan to determine whether the sponsor is providing any form of warranty with regard to the façade.
- Frames: Most low rise homes are wood framed but some are steel with concrete floors; buyers should know how their homes are built. Larger buildings in urban areas are almost always steel construction.
- Common Areas: For townhouse type developments that have grounds around the homes, buyers should read the offering plan with respect to roadways (the thickness of each layer should be listed) and whether they will continue to be owned by the condo or dedicated to the town or village; sidewalks, if any; drainage systems; and retaining walls. Occasionally there are discrepancies between what is listed in the offering plan and what is provided, and buyers need to know what is in the offering plan.
The Physical Aspects When purchasing a unit in a cooperative or condominium, most consumers focus on location, size, amenities, and the price. Equally important is an analysis of the physical aspects of the property. This is true for newly constructed buildings, as well as existing buildings that are being converted to a cooperative or condominium. Physical aspects include the quality and condition of basic building components such as the facade, roof, flooring, appliances, sub-soil conditions, elevators, air conditioning and heating systems, windows, electrical wiring and plumbing. Many people who have little or no technical training are intimidated by these issues and overlook them entirely, trusting that all is well or that experts will take care of these problems. Whatever your training, purchasers should develop an understanding of these issues in order to fully appreciate what they are buying and to better protect themselves from unpleasant surprises about the actual physical conditions of a major investment. The New York State Office of the Attorney General has promulgated regulations that govern the offer and sale of interests in cooperatives and condominiums. Sales of cooperative and condominium units are made pursuant to the terms and conditions of an offering plan. The Real Estate Finance Bureau reviews offering plans to ensure compliance with Attorney General’s regulations, as well as Article 23-A of the New York General Business Law (the “Martin Act”) and other applicable laws. Every offering plan includes detailed information related to the physical aspects of the building or group of buildings being offered, whether it’s new construction or an existing building or group of building undergoing conversion. This guide highlights certain requirements of the Attorney General’s regulations, problems that frequently arise, and the necessary steps buyers can take to protect themselves. The Attorney General highly recommends that a prospective purchaser read the entire offering plan and consult with an attorney BEFORE signing a purchase agreement. The purchase of a unit in a cooperative or condominium has many significant legal and financial consequences. Prospective purchasers should consider the risks associated with purchasing a unit in a cooperative or condominium. In addition, to the extent that the sponsor or its representatives have made any material representations to the prospective purchaser that are not clearly set forth in the purchase agreement or offering plan, it is important for prospective purchasers to ensure that such representations are set forth in writing (e.g., a rider to the purchase agreement) between the prospective purchaser and sponsor. 1. NEW CONSTRUCTION A buyer of a unit in a building or group of buildings that is under construction should first understand that the text of the offering plan governs the sponsor=s obligation regarding the size and construction of the buildings, units and any ancillary spaces such as recreational facilities, parking spaces, or roof top cabanas, to name a few. Selling agents frequently make grandiose statements about ancillary spaces or amenities in the unit that, if not specifically promised in the offering plan, are not required to be delivered and probably will not be. Buyers must therefore carefully read the A Description of Property@ section in the offering plan to determine the sponsor=s obligations and should not rely on advertising brochures, verbal statements from selling agents or beautiful pictures of architect=s renderings. What To Look For In The Offering Plan The following are some of the problem areas about which there are frequent misunderstandings and discrepancies between what is stated in the offering plan, what is promised by a selling agent and what is actually delivered: