Sponsor resale condo unit

What is the property interest, legally?

• The offering plan continues to control the sale even years after the building opened
• The sponsor uses its own contract form, which allocates risk differently than a standard resale contract
• Remaining sponsor obligations, including any construction warranty, are read from the plan and its amendments
• A large remaining sponsor holding affects board control and building governance
• The unit may have been rented, which raises a possession and tenancy question at closing

How is a purchase of this type financed?

• The loan is a recorded mortgage, so mortgage recording tax applies
• Lenders scrutinize buildings where the sponsor still owns a large share of the units
• A rented unit raises a delivery-of-possession condition the lender will want resolved
• Owner-occupancy ratios in the building affect whether the loan is warrantable

Which taxes and building fees apply?

• Mortgage recording tax applies to the recorded mortgage
• The sponsor commonly shifts NYS transfer tax and NYC RPTT to the purchaser
• Transfer tax paid on the sponsor’s behalf is treated as additional consideration
• The mansion tax applies at the statutory threshold

What does the approval path look like?

• Obtain the offering plan and all amendments and read the sponsor sale terms
• Confirm which closing costs are being shifted and negotiate before signing
• Confirm the unit will be delivered vacant, and on what date
• Title search, municipal searches and the questionnaire ordered as on any condo
• Closing held, deed recorded in ACRIS

What else should you read before closing?