Inside Third & Bond: Week 134
The Temporary Certificate of Occupancy is like the bell at the top of a climbing wall. On the way up you use every bit of strength to grasp whatever minimal hand or footholds are available to you, keeping your eyes on the prize. Sometimes there’s nothing close so you have to let go and leap….
The Temporary Certificate of Occupancy is like the bell at the top of a climbing wall. On the way up you use every bit of strength to grasp whatever minimal hand or footholds are available to you, keeping your eyes on the prize. Sometimes there’s nothing close so you have to let go and leap. Ringing the bell at the top of the first run is a sweet but temporary victory. Then you cast your gaze skyward and there’s another run to the true apex.
The Temporary Certificate of Occupancy (TCO) is necessary to live in the units legally. Few lenders will close on a unit that is not legally inhabitable yet, not to mention that most have pre-sale requirements. We are over 20% sold now, so closing in on 30% sold. Thirty-percent is the magic number for FHA closings to start. Many if not most of our buyers are getting FHA loans. We do have a few buyers paying all cash but expect they’ll want to wait until TCO to close as well.
Having a TCO means…
…the building has met Code requirements but there is some outstanding paperwork, and possibly outstanding construction work. In our case, the construction work will be complete on the interior, aside from minor punch list items like touch up paint. TCOs are valid for one month and then have to be renewed. Since we have to pay DOB fees for each renewal and pay the expeditor for her time, we want to minimize the time between TCO and Permanent Certificate of Occupancy (PCO). No resting between climbing runs!
Where are we in the TCO process? This question is rapidly becoming a favorite of our buyers. We have been telling them not to look for TCOs before July. We recently got our emergency appointment from the Department of Buildings (DOB) to deal with an outstanding permit issue that has to be resolved prior to TCO. The appointment is June 24. Wonder how far in the future regular appointments are being scheduled? It’s aggravating to have to wait two weeks for an appointment, especially since we’ve been waiting on DOB for awhile now. Our plan examiner somehow quit our filing and it took weeks to get a new examiner assigned. Although our job is done as of right, the review is complicated by the fact that there are 8 buildings in the project. It’s going to take an appointment or two just for the new plan examiner to get up to speed. DOB has also lost a couple of our filings, like the folder for our boiler inspection. Whenever they lose a folder, we have to replace everything that was in it and that takes at least a couple of days.
In the meantime, we’ve found another foothold to push off on: we’ve scheduled construction inspections for several of the buildings next week. This inspection is a necessary precursor to TCO. A DOB inspector will walk through each building and let us know if there are any changes to make. Although you might expect otherwise, the construction inspection is the easy part. Once we pass the construction inspection, it’s pretty much just paperwork and appointments until TCO. Though it’s the paperwork and appointments that makes getting up the wall tough.
Climber, ready!
Inside Third & Bond: Weeks 1-133 [Brownstoner]
Our legal fine print: The complete offering terms are in an Offering Plan available from Sponsor. File No. CD080490. Sponsor: Hudson Third LLC, 826 Broadway, New York, NY 10003.
Uh… yeah, pretty much. For most of the housing history that I remember, that has been the standard. The fact that it’s out of whack now? Seems to me to indicate that ownership is problematic. Look, maybe I am wrong. Not trying to belittle your $750K 1000 square foot condo. Just some of us aren’t into that.
By Heather on June 10, 2010 4:40 PM
And I have this crazy idea that my mortgage payments should be less or the same as what I’m paying in rent.
…
Why would you believe that to be true?
Do think ownership conveys less or the same rights as tenancy?
Has anyone heard of applying and getting a perm. CO and never receiving a TCO? In other words, bypassing the TCO.
Tybur, I know I can’t afford that apartment. Also, sadly, it is not much larger or more opulent than our rental, whose location, despite the dearth of decent coffee, I like more. And I have this crazy idea that my mortgage payments should be less or the same as what I’m paying in rent. Nuts, right?
But yeah, I maintain it was either keep interest rates and downpayments low, or knock another 30% off all housing prices. I’m still not sure we’re better off. You and I are not on dissimilar sides.
Following this long tale, it appears that the DOB has it’s head continuously wedged up it’s collective ass.
I hear stories from my brother about construction out west (Cali, AZ, New Mexico, Hawaii), and his so-called “nightmare” jobs are nothing compared to the crap that you have to put up with.
The only part that concerns me is the fact that the Federal government gets involved to backstop the loans.
I bought my first place (not in the US) with 5.5% down and an interest only mortgage. But that was completely between me and the bank – no govt guarantees.
Umm… heather… Really? That is the choice? And what do you mean by “collapse”?? I think 3.5% is crazy.
You want to buy a SIX HUNDRED SEVENTY THOUSAND DOLLAR apartment… I’m thinking you probably should have to pony up a little more than $27,000. I find this disgusting.
If you think you can afford this property, you should be able to afford a REASONABLE downpayment. Almost nothing is *not* reasonable.
It was either FHA loans for all or let the housing market collapse more. I like the development, but I think all of this stuff is still way too expensive.
“Many if not most of our buyers are getting FHA loans.”
Rewrite:
“Many if not most of our buyers cannot afford to buy an apartment”