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February 7, 2008
C of O Question
We are in contract to buy a townhouse. The previous owner bought it as a two family and renovated to make it a one family. He was in the process of changing the C of O to a 1 family when he put it up for sale
Now the sale is being held up because it hasn’t gone through yet.
My question is, does it really need to be changed?
I would rather it stay as a 2 family, so that it gives us more options
tia
Comments
Technically it should be changed,yes. Who exactly is holding up the sale though? Your bank, the seller?
Posted by: guest at February 7, 2008 6:30 PM
Its been held up because its in a pile of documents at the DOB
Posted by: CobbleHilller at February 7, 2008 6:46 PM
oh your screwed
Posted by: guest at February 7, 2008 7:04 PM
You cannot close on a townhouse with an open Certificate of Occupancy.
Well you can, technically perhaps, but you would not be able to get financing for it from a bank. If you are paying cash for the entire deal or the seller is providing the financing you do not really need to worry about it.
Otherwise, your seller has two choices: 1. withdraw the application for the C of O. All things being equal, this is usually the easier path. 2. The seller must complete the C of O prior to closing. Might be a little difficult as C of O sign-offs can take many, many months.
If the seller is unwilling to do these things immediately, then the value of the sale should reflect that -- a building that can only be sold in an all cash deal is presumably valued at less than one that could be financed.
There is another complication. You may not have the seller's full disclosure on the all the details regarding the C of O filing. It may not be possible to simply withdraw or complete the filing quickly due to things that need to be resolved in the building. I will give a simple and extreme example -- if the building has its main stairs rotted out and the rest about to collapse, the DoB would not be satisfied with merely withdrawing the application, this would have to be remedied. While this is an unlikely example, it shows how there might be other issues outstanding that prevent the quick completion of a filing withdrawal.
I would recommend withdrawing from the contract unless the seller remedies the situation immediately or offers seller financing that is to your advantage
Posted by: Smokychimp at February 7, 2008 8:23 PM
without getting into all of the issues that smokychimp discusses regarding an open application, there is no real difference from any legal standpoint. if the application wasn't already in, I'd say don't bother - give yourself flexibility for the future by keeping it 2 family and save yourself a lot of expense with the DOB.
Posted by: guest at February 8, 2008 12:03 AM
Leave it as a two family. It will cost you too much time and money to change it back should you choose to do so. You should inquire about structural changes he has made the may be inconsistent with two family requirements. If he hasn't made any, take the 2-family and run.
TRUST ME!
Posted by: guest at February 8, 2008 3:41 PM
Smokeychimp, If you cant close until there is C of O,
how does this apply to new condo construction. Many new condos close with just TCO?
Posted by: guest at February 8, 2008 3:52 PM
we just bought a property from someone who wanted to change the co from 2 to 1 fam and we kept it as a 2 fam filed the reno plans as an alt 2 with the dob and finished making it a 2 fam and just had the DOB in to withdraw the original change to 1 fam and we are in as a 2 fam.
Posted by: guest at February 8, 2008 4:38 PM
3:52 TCO is an excellent question, and is certainly a possibility. You see it more frequently in commercial construction -- buildings changing around their fire alarm system or whatever get a quick TCO to lease a space and then continue monkeying around with the C of O.
A TCO would be much faster to obtain, to be sure, and is an option for residential properties but I don't know how a lender would react to a TCO used in this way. Again, what I've described above comes not at all from city regulations or code or housing, but lending practices from banks.
Given the climate with mortgages right now I would guess banks would shy away from a TCO, but this could be wrong. You might be able to find an underwriter familiar with NYC construction practice in a local bank that would be cool with it.
Posted by: Smokychimp at February 8, 2008 5:56 PM
OP: What's in the contract? Is it being sold as a single- or two-family? In either case, it's on the seller to make it right.
If the former, then the seller must complete the C of O to satisfy the contract.
If the latter, then the seller must withdraw the change.
IANAL, but we went through a similar situation when we bought our two-family house. It took us six months to close (it seemed like MUCH longer!). Your real estate lawyer should advise you on your options, including withdrawing from the sale if the seller cannot satisfy the contract.
Posted by: Xris at February 11, 2008 12:09 PM
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