Construction Tips

New Construction Tips

Just one look at the Manhattan skyline gives instant verification that new development is very much alive and well in New York City. New residential condominiums have taken the city by storm, and more purchasers are investing their cash in these projects, as both primary residences as well as investment properties.
Before entering into a contract of sale purchaser’s must consider the following:

Closing Dates:
•The actual closing date will not be set for some time, often months beyond the original expectation; a sponsor cannot convey title until the City issues their Certificate of Occupancy for the premises, and this occurs only when construction is substantially completed.

Views:
•Unless the shell of the building is already erected, you will need to visualize what your views are likely to be, given the surrounding area and buildings, and how your belongings will fit in the new space.

Locking Mortgages:
•Because of the long time frame normally associated with new construction or gut renovations in conversions, you may not be able to lock in a mortgage rate for many months.

Finishes:
•You may not receive the exact appliances, fixtures and finishes as you see in a model unit; the sponsor will have the right to make substitutions, but they must be of equal or greater quality and value.

Closing Costs:
•The closing costs associated with a new condo are normally higher than in purchasing a re-sale unit; in almost all instances in the NYC metro area, the sponsor will shift the liability to pay Transfer Taxes to the purchaser, (1.825% of the purchase price), as well as some other miscellaneous fees like sponsor attorney fees ($2,000 – $3000), and several months of common charges to establish a condominium fund. Despite these “unknowns” and the higher closing costs, most buyers are ultimately satisfied in proceeding with this type of purchase. Re-sale potential to both foreign investors as well as traditional buyers is higher in a newer building. As well as the potential for equity gain when you purchase a unit in an early stage of sales even before the closing date and before you are paying your mortgage and common charges. In addition there is a limited inventory of condominiums in NYC. One should always know all the facts before making a purchase of this type. The right lawyer/broker team can help you do so. Any buyer should be armed with as much information as their attorney and broker can provide, ensuring a smooth and pleasant eventual closing.