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September 13, 2009
Is This Shady?
Hey Brownstoners,
I got some great advice here the other day, so I'm back for more.
I'm wondering if you guys can weigh in and tell me if you think this is shady or not:
A married couple bought an apartment in the condo building I'm looking to buy in (new construction) a few months ago and decided after living there for a month or two that it was too small for their need. They worked something out with the sponsor and moved into a larger apartment in the same building. Then, after a couple of months, they decided this 2nd apartment was ALSO too small for their needs. So, they once again made a deal with the sponsor to move into yet another apartment in the building which is considerably larger. They were able to get more money from their lender in each scenario to cover the price difference.
They are still wiating to move into the 3rd apartment, as some final fix-ups are being completed. Meantime, I happened to be shown the apartment they are currently living in by the sponsor's agent and fell in love with it.
I'm very, very close to bidding on it, but the sponsor is treating this as a new construction sale. It is not, in other words, being sold by the current apartment owners to me, but by the sponsor to me.
Is this shady at all? Should I still have to pay transfer taxes and the other fees associated with a new construction sale, or should this be a resale from the current owners of the apartment?
As a note, the sale was officially recorded in July of this year, so it's not as if it's not public knowledge that the unit was bought and closed on by the current occupiers.
I hope this all makes sense! Very complicated situation!
Thanks for your help,
PV
Comments
Actually, I take that back. The listing was taken down from StreetEasy in April of this year, not July. And StreetEasy lists the property under its "may or may not have been sold" section. So I'm not sure if the sale closed or what.
But how the heck would this couple be living in the apartment otherwise? It's totally furnished with their stuff, as if they moved in and expected to stay ... until they apaprently decided (again!) that they need more space!
Is this weird or what?
Posted by: PropertyVirgin at September 13, 2009 7:19 PM
Maybe they worked out a deal with the sponsor to rent-with-option-to-buy. With so much new construction unoccupied, the sponsor is probably bending over backwards to keep these people in the building rather than risking their looking elsewhere. Sponsor knows they are ready to buy, so why not make nice with them until they make up their minds? Under that scenario, the sale to you would be a purchase from the sponsor and you would have to pay the associated fees.
Posted by: zeebee_in_bklyn at September 14, 2009 8:19 AM
All you really have to work from are the official title and transfer documents that your lawyer will be working with. If there was some fraud rescinding a legit sale I suppose you could try and alert the city or sue them yourself, but that probably is not worth the fight. Talk to your lawyer, and remember that there are a lot of apartments out there -- be ready to walk away.
Posted by: corolla at September 14, 2009 8:33 AM
Thanks, guys, I appreciate the response!
I have found out some more info, after badgering the sponsor's agent:
The couple occupying the apartment never did close. They went into contract, and the sponsor allowed them to move in early, prior to closing.
As it turns out, there are three other apartments in the building occupied by people who have not yet closed but who have been allowed to move in.
Does this seem unusual? I agree with Zeebee that sponsors may just be bending over backwards right now to keep good buyers interested, but does this seem to indicate that maybe the building hasn't sold 51% and therefore closings are not happening -- or not happening in a timely fashion, anyway?
As a note, the seller's agent claims the building is more than 51% sold and that the final C of O is in place ... but I had been told previously that only 8 units were currently occupied, so now to be learning that 4 of them are occupied by people that have not closed makes the whole thing seem dicey!
What do you guys think?
Thanks again for your help!
PV
Posted by: PropertyVirgin at September 14, 2009 10:24 AM
If anyone has lived in this apartment, you should not give in to a demand to pay xfer taxes, attys fees, etc. It's just the developer being greedy. Threaten to walk. In this market, they'll give in.
Posted by: zinka at September 14, 2009 12:42 PM
Hmmmm. . . this is starting to sound shady. I'm curious as to why so many people are moving in prior to closing? Certainly would make sense in a rent-to-own building, but it doesn't sound like that's what this is. Maybe the building only has a temporary CofO and some people negotiated to not close until the permanent CofO was obtained? You should check the CofO status on the DOB website.
Posted by: pringler at September 14, 2009 1:29 PM
I'm very close to signing a contract on a new construction building in PH...is this 475 sterling place?
Posted by: redbone at September 14, 2009 8:46 PM
Hi Redbone,
No, this building is not in PH. North Brooklyn.
PV
Posted by: PropertyVirgin at September 15, 2009 9:58 AM
You can check ACRIS at the department of finance website to find out who is recorded as the owner on the title of any separately titled property in New York City. The Department of Buildings Building Information System can provide the status of the certificate of occupancy.
Redbone - there is only one sponsor rented unit at 475 Sterling Place, all the other units are occupied by the registered owners (~25 units), their children (~2 units), and in once case a market rate tenant. I don't think that the sponsors are up to any shenanigans. The parking spaces at 475 are a steal.
Posted by: bohuma at September 15, 2009 2:39 PM
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