Building types
New-development condo
A first sale from the sponsor of a newly built condominium, governed by an offering plan, often delivered on a temporary certificate of occupancy.
What should you check before buying a new-development condo?
Quick Answer
What is the property interest, legally?
- The offering plan and its amendments are the governing documents and are filed with the Attorney General
- The sponsor may amend the plan, and amendments can change budgets, dates and unit configurations
- Delivery is commonly on a temporary certificate of occupancy, renewed until the permanent one issues
- Sponsor warranties and the punch-list process are set in the plan rather than negotiated fresh
- The first-year budget is a projection, and common charges routinely rise after the sponsor turns over the board
How is a purchase of this type financed?
- The loan is a recorded mortgage, so mortgage recording tax applies
- Lenders require a minimum percentage of units sold before they will lend in the building
- A temporary certificate of occupancy can limit which lenders will fund
- Rate locks are hard to hold when the delivery date moves, which is a scheduling risk to price in
Which taxes and building fees apply?
- Mortgage recording tax applies to the recorded mortgage
- Sponsor contracts routinely shift the NYS transfer tax and NYC RPTT to the purchaser
- Paying the sponsor’s transfer tax increases the purchaser’s taxable consideration
- A 421-a or 485-x abatement, where claimed, has its own conditions and expiry schedule
What does the approval path look like?
- Read the offering plan and every amendment before signing anything
- Confirm in writing which closing costs are shifted to the purchaser
- Confirm the certificate of occupancy status and the outside delivery date
- Confirm the abatement claimed, its term and what it is conditioned on
- Closing scheduled after the walkthrough and punch list, with the deed recorded afterward
Can you close on a TCO?
Yes, and it is common in new construction. A temporary certificate of occupancy permits lawful occupancy for a stated period and is renewed until the permanent certificate issues. The questions worth asking are which lenders will fund on it and what happens if renewals lapse before the permanent certificate arrives.
Who pays the sponsor’s closing costs?
The offering plan says, and in most New York new-development plans the purchaser pays the transfer taxes and the sponsor’s attorney fee. Those are negotiable in a slow market and immovable in a fast one, but either way they belong in the purchaser’s cost estimate from the start.
What is a 421-a or 485-x abatement worth?
It reduces the real property tax on the unit for a term set by the program, after which the tax steps up to the unabated amount. What matters to a purchaser is the remaining term, the step-up schedule, and the conditions the building has to keep meeting to hold the benefit.
What else should you read before closing?
In the glossary
- TCO (Temporary Certificate of Occupancy)A Certificate of Occupancy issued for a limited period while construction is completed. Renewals are routine, but a lapse stops closings until the ...
- Certificate of Occupancy (C of O)The Department of Buildings document that fixes a building's legal use and occupancy. Lenders and title companies read it to confirm the property c...
- Transfer tax (RPTT and NYS)Taxes on the conveyance itself, one City and one State. Rates step up at higher prices, and who pays is set by custom and then confirmed by the con...
- Mortgage recording taxThe New York tax due when a mortgage is recorded, computed on the new money secured. A CEMA is the standard structure used to reduce the taxable am...
- Mansion taxA New York State tax paid by the buyer on residential conveyances of one million dollars or more, graduated upward through a series of higher price...
- ACRISNew York City's public index of recorded property documents. Deeds, mortgages, satisfactions, easements and many liens are recorded here, which mak...
Questions this raises
- What gets recorded after a NYC closing?Deed, mortgage, assignments and satisfactions record through ACRIS with the City Register, along with transfer tax returns. What is filed instead o...
- What happens after the closing table?Recording, recorded copies, the final policy, satisfactions and post-closing lender conditions. The New York closing tail and the documents to keep...
Building types
- Standard condoA New York City condominium unit: real property conveyed by deed, recorded in ACRIS, with an undivided interest in the common elements.
- Sponsor resale condo unitAn unsold condominium unit the sponsor still owns years after the building opened, sold under the original offering plan rather than as an ordinary...
- Condo in a converted buildingA condominium created by converting an existing rental building, where non-purchasing tenants, the reserve fund and building-wide conditions carry ...
- Townhouse and 1-4 family condo declarationA small building divided into condominium units, where outdoor space, party walls, multiple-dwelling registration and the certificate of occupancy ...
The statute itself
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Legal Disclaimer: This page is general information about New York practice. It is not legal advice, it does not account for the terms of any particular contract, building or transaction, and reading it does not create an attorney-client relationship. This is attorney advertising. Prior results do not guarantee similar outcomes.