Prospective building owners should do their homework before pulling the trigger on a purchase. There could be restrictions on the property or fees unrecognized in the sales price. Large buildings will typically get a due diligence report from an expediting company. Here are five things owners have to look into before buying New York City property.
Buildings on a zoning lot merger may be restricted from expanding. If the purchase site lies on a lot with another site, the shared air rights could have been used up. This would prohibit an increase in FAR or the selling of the air rights.
It’s advisable to research the zoning district of the purchase site to see if there are any whisperings of a zoning district change. Look for news articles and check the City Planning website. If the district will be upzoned, the site can acquire more FAR. If the district will be downzoned, FAR decreases and the site can lose value.
New property owners assume responsibility for existing building violations. This includes violation fees, corrections and hearing appearances. Open violations can prevent refinancing, a property sale and the obtaining of a new Certificate of Occupancy. The DOB will issue new job applications if there are open violations, but won’t issue work permits.
Violation fees can be expensive. If a prospective owner recognizes the violations, they can negotiate for the sales agreement to include an escrow account to settle the fees.
New property owners assume previous applications that aren’t signed off. New owners will have to sign-off or withdraw open applications before new ones with the same work type are issued. Signing-off old applications can be tricky and usually requires an expeditor to step in and clean up the mess.
A property with a lien could have a large tax debt. New owners of a property assume responsibility for all unpaid taxes.
Looking to make a purchase and need a due diligence report? Contact us.
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