Gea Elika's Blog, page 112

Taxes for Foreign Buyers in NYC: Understanding the FIRPTA Tax

In an earlier post, we covered the intricacies of buying property in NYC as a foreigner. As outlined, there are few obstacles to foreign investment in NYC real estate. Unlike many popular cities in the U.S. and worldwide, there are no special taxes levied on foreign buyers. However, this changes if you choose to sell or should you pass away. If you’re excited about moving to NYC or looking to invest, don’t start before first understanding the FIRPTA tax, Capital gains tax and estate tax.

 

What is the FIRPTA tax?

The Foreign Investment in Real Property Tax Act (FIRPTA) requires that any person who buys U.S. real property from a foreign seller must retain 15% of the gross purchase price. Once the IRS has determined that you are current on all taxes owed to the U.S. government, this will be refunded. The costs of compiling with the FIRPTA can be quiet substantial for foreign sellers. Once all legal, accounting and filing fees are added up, you can find yourself with a five-figure USD bill. But with 15% of the gross sale price on the line, it would be worse not to.

However, with some planning, the FIRPTA withholding can be reduced or even eliminated. Foreign buyers should apply ahead of time by filing for an 8288-B Application for Withholding Certificate. This will reduce the FIRPTA amount at the time of closing. Many things go into determining the amount it can be reduced by, such as original purchase price, length of ownership, capital improvements, closing costs and the location of the seller’s residency. When scheduling a closing date for your sale, foreign buyers should keep in mind that it takes approximately 90 days for the IRS to process an application for a Withholding Certificate.

There is no withholding required for U.S. citizens, permanent resident, and resident aliens. You can be classified as a resident alien if you meet the physical presence test of being present in the US for a minimum of 183 days in the current calendar year. Or the substantial presence test of being present in the US for an average of 183 days over three years.

It’s also possible to avoid the FIRPTA Withholding if the purchase price of the property is under $300,000 and the buyer has signed an affidavit stating that they intend to use it as their primary residence.

What is the capital gains tax?

There is both a State and Federal Capital Gains Tax on the net capital gains from foreign owner property sales in NYC. Currently, the Federal Capital Gains tax is 20% while New York State imposes a non-resident gains tax of 8.82%. Your net capital gains are calculated by adding your original purchase price, closing costs for both purchase and sale and the cost of any capital improvements together. This cost basis is then subtracted from your sale price.

What is the estate tax?

In the event of the owner passing away, and the property is valued at over $60,000, both the Federal government and New York State impose an estate tax on the value of the property at the time of death. For foreign owners, this can be very high with a 40% tax by the Federal government and up to 16% tax by the State.

However, foreign buyers can minimize this, along with the income tax, by structuring their U.S. holdings through a foreign trust or business such as a corporation or limited liability company.

 

The post Taxes for Foreign Buyers in NYC: Understanding the FIRPTA Tax appeared first on | ELIKA Real Estate.

New Construction Final Walk-Through Punch List

There are benefits to purchasing a unit in a newly constructed building. You are moving into a never before lived-in apartment. However, you still need to carefully inspect the unit. You are bound to find issues that you will want taken care of prior to moving in, even if these are minor.

Therefore, we advise creating a “punch list,” or a list of things you want the sponsor to address and fix, ideally prior to closing. The sponsor is not legally obligated to fix these issues, providing the unit meets the building code, but most contracts contain language regarding punch lists, particularly when a large developer is involved.

 

 

Watch the language

Typically, sponsors only include “commercially reasonable” language in the contract. This is vague and makes it even more important that you create a punch list. Ideally, your entire list is completed to your satisfaction upon inspection when you do your final walk through.

Electrical

You do not have to be an electrician to check the electricity. You can easily check the receptacles by plugging a device in. The sponsor should have overseen sure the plates are on right and screwed in nice and tight. Similarly, you can check the ceilings fans and lights by flipping all the switches on and off. It may seem minor, but you should verify the switches and receptacles are the right color.

A ground-fault circuit interrupter (GFCI) is an outlet that protects people from electrical shock. Typically, these are found in the kitchen and bathroom. There is a test and reset button built-in, making it easy for to make sure it works.

Testing the telephone jack requires you to bring your own phone. Similarly, you will need your own laptop to check the network jacks.

Plumbing

You should go around to each bathroom and flush the toilets. Turn on the faucets and check both the hot and cold water. You should do this in the kitchen and bathroom sinks, as well as the tub. This also lets you check the water pressure to see if it is to your liking.

Appliances

When you are taking your tour and making your list, use this opportunity to flip the appliances on and off. This includes the dishwasher, washing machine, and dryer. Try the oven, too.

Do not forget the refrigerator. You want to make sure the freezer works, and along with all the items that come with it, such as an ice cube maker, and any fancy bells and whistles.

A/C and Heat

You do not necessarily think about one of these items in a particular season. But, try out the entire HVAC system. You can see that both the heat and air conditioning work, and how long it takes for each to come on.

A Tour

Before you walk into your apartment, check the common area to make sure everything is in the right order, and then ring your doorbell to make sure it works. Then, in your walk around the unit, you should check that everything is in good working order and in the proper condition. Cracked windows are obvious to see, but it should open and close easily, and lock. The windows also need to be properly sealed. The wood floors should not have scratches while the carpets are stain-free. You can also visually check that moldings and trim are where it is supposed to be, and it looks right. The tiled floors should not have any scratches or other blemishes.

You should ensure you are happy with the paint job checking for nicks, scratches, and a bad finish, but do not forget to look in hidden places, including closets. Beyond the paint job, the walls should not contain any dents.

Open and close the doors to ensure you can do so easily, and watch for “stickiness.” This includes the front door, which you should make sure locks and unlocks properly.

The cabinets and counter tops need checking. Not only should these function properly, but you need to ensure there are not damaged in any way. Certain materials look nice, but are known for scratching easily. Also inspect closely for any chops or cracks, which might’ve happened during installation. It is an easy fix, but the cabinet hardware should not only be present, but installed properly, which you can tell through opening and closing.

The sponsor might have promised various options, such as a garbage disposal, alarm, and intercom. If your unit comes with a fireplace, start it up.

Make your list

You can make your list with a pen and paper, or use your phone to take notes and even record your visit. The important thing is to document it and not try to remember it for future reference.

It is easy for these items to get misplaced since you likely will not see the contractors, but you want the instruction manuals and warranties. The sponsor should account for all of the unit’s keys.

 

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Closing Costs: A Complete Guide for Buyers and Sellers

When negotiating towards a final offer price on an NYC property, both buyers and sellers should have a reasonable idea of what their closing costs will be. This is difficult to estimate, potentially running into hundreds of thousands of dollars which will be added onto the purchase or sale of a property. Worst of all is that both buyers and sellers alike tend to underestimate those final closing costs. Whether you’re buying or selling, you’ll need a good overview of closing costs and how they are calculated before you get involved in the NYC real estate market.

 

 

How much to budget for closing costs in NYC
Buyers

Closing costs in NYC are usually 2-6% of the purchase for buyers. The final bill is based on a number of factors such as property type (co-op or condo), level of financing, purchase price and whether or not the property is a new construction.

If your purchasing a condo the closing costs will be higher. For a start, you’ll need to cover title insurance. This is set by New York State and comes with a number of administrative charges which all together come to about $3,000 to $4,000. Then there are the extra costs if you’ll need a mortgage. Bank fees run from $2,000 to $3,000 while bank attorney fees and the appraisal go from $500 upwards. If the loan is over $500,000, you’ll need to cover a mortgage tax of 1.925%, for loans under $500,000 it’s 1.8%, something which only applies to condos.

Whether you’re buying a co-op or condo, you’ll need to pay your attorney’s fees, which can range from $2,000 to $5,000. If the deal is a little more complicated than usual – for instance, you want to set up an LLC to purchase a condo as a foreigner – than attorney costs will go even higher as you require more specialized assistance.

Condo Closing Costs




Own Attorney:$1,500 + up


Managing Agent Application Fee: $300 +


Credit Report Fee:$75 - $100 per applicant


Lead-Based Paint Disclosure Fee:$0 - $50


Mansion Tax:1% of the purchase price when $1 million +


Move-in Deposit: $500 - $1,000 (refundable if no damage)


Common charges, real estate taxes, and insurance: prorated as of the closing


Condo Mortgage Associated Fees:prorated as of the closing


Mortgage Tax:(Paid by the buyer, condominium/townhouses only, when financing )


Recording Tax Sales under $500,000:1.8% of the entire mortgage


Recording Tax Sales over $500,000: 1.925% of the entire mortgage


Application, Credit Check, etc.:$500 + up


Appraisal:$250 + up


Bank Attorney: $500 + up


UCC-1 Filing:$50 + up


Recognition Agreement Fee:$200 + up


Lien Search:$350


Fee Title Insurance: Approx:$450 per $100,000


Mortgage Title Insurance:Approx. $200 per $100,000


Recording Fees:$200 - $300


Origination Costs - Points: 0-3% of the loan value


Departmental Searches:$200 - $400


Real Estate Tax Escrow:2-6 months


If Purchased Directly from Sponsor * New Developments


NYC Property Transfer Tax: - 1% of purchase price up to $500,000


- 1.425% of purchase price over $500,000


NYS Transfer Tax:$4 per $1,000 of the purchase price


Sponsor's Attorney Fee: $1,500




Co-op Closing Costs




Own Attorney:$1,500 + up


Bank Fees: Points: 0% to 3% of loan value


Application, credit check, etc: $500+


Bank Attorney: $700+


Miscellaneous Bank Fees:$500+


Lien Search:$300


UCC-1 Filing:$100


Appraisal Fee:$300+


Application Fee (Credit Report/Appraisal): $500+ ( Short-Term Interest; Equal to interest

for the balance of month in which you close. )


Move-in Deposit:One-time fee of $500.00+


Recognition Agreement Fee:$200


Maintenance Adjustment:Pro-rated for the months of closing.


Mansion Tax:1% of entire purchase price where price is $1,000,000 or more.




Sellers

The closing costs for sellers are much higher. Sellers should budget for closing costs of at least 8-10% of the sales price. A large part of this will be to cover the brokers’ commission of 6% (split equally between listing and buyer’s brokers). Other costs include the transfer tax of 1.825% for sales of over $500,000 or 1.4% for those under $500,000. Both of which apply equally to condos and co-ops. The same goes for attorney fees which go up, depending on the complexity of the deal, from $2,000 to $2,500.

For co-op sellers, another thing to account for is the flip tax. This is a tax of roughly 2% which usually falls on the sellers. The building will say who they consider the flip tax to be payable by. However, it is possible to negotiate this.

Condo Closing Costs




Broker(s):Typically 5%-6%


Seller’s attorney (negotiated flat rate):$2,500±


NY City Transfer Tax:1% of sales price for sales of $500,000; or less 1.425% for sales in excess of $500,000


NY State Transfer Tax:$2 per $500 (or 0.4% of sales price)


Miscellaneous title company fees (if seller has mortgage):$450±


Move-out deposit or fees (condo):$1,000 (varies)


Managing agent fees (condo): $500±




Co-op Closing Costs




Broker(s):Typically 5% - 6%


Seller’s attorney (negotiated flat rate):$2,500±


NY City Transfer Tax: 1% of sales price for sales of $500,000; or less 1.425% for sales in excess of $500,000


NY State Transfer Tax:$2 per $500 (or 0.4% of sales price)


Flip tax (if any)*:Often 2-3%, consult managing agent


Managing agent fee:$600±


Stock Transfer Tax:$0.05 per share


Move-out deposit or fees:$1,000 (varies)


Payoff bank attorney (if seller has mortgage):$500±


UCC-3 filing (if seller has mortgage):Up to $100 per loan


*Flip taxes vary on amount and by whom they are payable (buyer or seller)




Extra expenses
1. Mansion tax

If the property is purchased at over $1,000,000 an extra 1% mansion tax is added, to be paid by the buyer. For instance, a property sold for 1.87 million would have a mansion tax of $18,700. It’s not uncommon in negotiations for the purchase price to get knocked just below the $1 million mark to avoid this tax.

2. The sponsors closing costs

A big expense for buyers of new construction properties is that they are responsible for the developers closing costs. This includes transfer fees, the attorney’s fees and, if applicable, their units share of the sponsor’s apartment. This also applies to sponsors in co-op apartments. Depending on the purchase price, this can all add up to hundreds of thousands of dollars.

3. Building Fees

Each co-op and condo is different in the fees they apply. Most co-ops and condos have move-in and move-out fees that range in price from a few hundred to a couple thousand dollars. Board application fees range on average from $500 to $700. When making your board application, they will send you a list of what’s needed, and the fees involved. Buyers should read this carefully, so they fully understand what they’re getting into.

Final thoughts

Both buyers and sellers should carefully consider all potential closing costs. Even with the best research, you’ll only get an approximate estimate. You won’t know the final bill until closing day. This useful calculator allows you to quickly get an estimate and comparison of closing costs for different types of properties.

 

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Buying Property in NYC as a Foreigner

In recent years, the number of foreign buyers scooping up NYC properties has been on the rise. Mostly due to the lack of special taxes or levies on international buyers. It might take some time and work, but you’ll find that you are treated no differently than domestic buyers. The only exception is your tax treatment should you choose to sell or if you were to pass away. To make the process as straightforward as possible, it is recommended that you hire an experienced buyer’s broker. They’ll serve as a guide and put you in contact with all the right people.

Any successful property acquisition involves two distinct phases. The first, initial planning and the second, finding and buying.

 

 

Phase One: Initial Planning
1. Choose an ideal ownership structure

As a foreign buyer, you’ll need to decide on the ideal tax and ownership structure before you can begin looking for a property. The federal government, New York state and New York City each impose an income tax on rental income generated by properties in NYC. Combined, these taxes can be as high as 65% and also apply to gains from the sale of the property. Along with that, both the federal government and New York State impose a hefty estate tax on the value of the property transferred on the owner’s death.

If the property is valued at over $60,000, the federal government imposes up to a 40% tax. The New York State Estate Tax has a maximum rate of 16%. Unlike US citizens, foreigners do not enjoy any exceptions on either the federal or state estate taxes. For foreign buyers, a clever way of getting around this is by setting up two separate entities. You can purchase the property through a Limited Liability Company and form an offshore company to act as the sole member and owner of the LLC. You’ll need to do some planning and seek the services of an experienced attorney if you choose to go this road.

2. Obtain a U.S. Tax ID

Whether you’re planning to own the property in your name or through an LLC, you’ll still need to obtain a U.S. tax ID. For individuals, they’ll need an Individual Taxpayer Identification Number (ITIN) while business entities will need an Employer Identification Number (EIN). These are required for tax-reporting and opening a U.S. bank account. The application process for these ID’s can take as much as ten weeks or more so you should apply for them well in advance.

You can apply for an ITIN through the Internal Revenue Service (IRS) by submitting Form W-7, proof of identity and proof of foreign status. The most commonly used proof of identity is a foreign passport. However, it wouldn’t be prudent to send in your original passport; You can get a certified copy from the original issuing agency. Your embassy or consulate can help with this.

3. Open a U.S. Bank account

There is no hindrance on foreigner’s opening U.S. bank accounts. However, all banks must follow a set of rules known as Know your Customer (KYC). These rules require a bank to obtain specific information on their customers such as their ITIN, EIN, a copy of the customer’s passport or driver’s license, information on their sources of income and copies of their utility bills. The whole process can take several weeks and depends on how soon an ETIN or EIN can be acquired.

Phase 2: Finding and Buying Property in NYC
1. Find a property

To help you navigate the NYC real estate market, you should hire an experienced local buyer’s agent. Preferably one who specializes in the neighborhood that you’re interested in. As a foreigner, you’ll be largely restricted to condos in your search. Co-ops have rather strict rules on subletting and home rules which require a buyer to make the property their primary residence. Multi-family or townhouses also present difficulties because of the maintenance work that would be required. Condos present the least difficulty as your condo fees will cover the insurance policy, building maintenance and maybe some of the utility bills.

2. Financing

It surprises many foreign buyers to learn that they can qualify for financing from a U.S. bank. However, this will come with some restrictions such as a limit on the loan amount and a requirement that they keep a certain amount of money on deposit with the bank. As a reference, the current average rate for a 30-year mortgage is 4.48% (2018).

3. Make an offer

Once you’ve found a property that you are satisfied with it’s time to make an offer. Your broker will handle any negotiations and work to get the best deal possible in your favor. Once an offer is accepted the seller will send out a deal sheet to all parties involved. This provides a broad overview of the transaction and lists the who’s who in the deal such as the brokers, the attorneys, the lender and the buyer and seller.

4. Sign the contract of sale and make the down payment

Once the final details have been hammered out a contract of sale will be issued by the seller’s attorney. In NYC, a contract does not become binding until both parties have signed and the seller retains the right to make the final signature which gives them a lot of leeway in negotiations. Once signed, it becomes legally binding with neither party now able to back out with legal consequences. At this point you, the buyer, will be asked to make the down payment, usually a minimum of 10% of the offer price. This will be kept in an escrow account until the final closing.

5. Submit your application to the condo board

Condo boards have the right of first refusal so even if you’ve reached an agreement with the seller you’ll still to pass the condo board application. Your application package will include details on your financials, the transaction in question and your details. Condo boards tend to be a lot less intrusive than co-op boards, but you should still make sure everything is in order before applying. Most contracts of a sale will include a clause that allows the buyer out of the contract with no legal consequences if the condo board rejects their application.

6. Close the sale by the power of attorney

The time it takes between the signing of the contract and the closing date is subject to a lot of variables such as financing, board approval and the people involved. In general, a closing in NYC takes 30-60 days though 90 days is not uncommon. How fast and smooth the whole process relies a lot on the competency of your attorney. In New York State a closing can only be done by an attorney so make sure you choose a good one.

Fortunately, the buyer does not need to be present on the actual closing date. This is when the remaining amount is paid to the seller, and the property deed is transferred to the seller. You can use the power of attorney to have them act on your behalf. However, to be declared effective under state law the power of attorney must be notarized in a U.S. embassy or consulate. Scheduling an appoint for this can take anywhere from one to three weeks, so foreign buyers have one set up well ahead of time.

Summary

Purchasing property in NYC as a foreign buyer presents little more difficulty than a domestic buyer. However, the process can still be a long one, even for local buyers, so foreign buyers should have everything well planned out before even looking for a property. If you’re planning to sublet the apartment or sell in the future, there will be some extra tax hurdles to overcome which will be covered in a future article.

 

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Evaluating a Building’s Financial Statement

A co-op or condo board’s financial statements provide a unique insight into the building’s health, and even gives a peek into the future. It lets you know if the building is well run or if there any problems that could lead to a special assessment or hike in your monthly maintenance or common charge.

Your lawyer will go through the financials, but it is good for you to have some basic knowledge, too. We provide key areas to probe in order for you to uncover these important clues.

 

The accountant’s letter

This is an easy place to start. It is right at the front of the financial statements, and you are merely looking for certain language. You are reading to make sure the accountant states he/she presented the financial information fairly. Any qualifying language is a red flag.

The building is not required to have its financial statements undergo an independent audit. Given the expense involved, many small buildings forgo an audit, and you should not misinterpret it. However, larger buildings typically undergo an audit, and a lack of one is a potential warning sign.

Moving on the balance sheet

The balance sheet is typically the first financial statement shown, and there are key items for you check.

Cash is king, and you want to see a sufficient amount. This helps offset the expense when the board needs to order significant repairs, mitigating the need for a special assessment, borrowing the funds, or raising maintenance/common charges. It can also help protect shareholders/unit owners in the event the building hits hard times.

Accounts payable is the amount the building owes for its regular bills, such as suppliers. An unusually large balance could indicate the building is having trouble paying its regular operating expenses.

Before moving on from the balance sheet, you should note the debt balance. While the building may have a mortgage, you want to ensure there is not excessive borrowing to fund other items, such as regular operating expenses. The notes provide additional insight.

The income statement

Unlike a for-profit company, a co-op or condo should not produce a large net income. Ideally, the board seeks to raise revenue to pay its operating expenses, and have some left over for a rainy day. Otherwise, they are charging residents more than necessary to fund the building.

However, it is important to understand the sources of revenue. Unit owners generally provide a stable and reliable amount, but there are other revenue generators that you need to investigate. Commercial tenants that provide an outsized amount should raise your level of concern since a departure could hurt the building’s revenue, and ultimately cash flow, which places a higher burden on the unit owners. It is particularly troubling if one or two larger commercial tenants are responsible for a lot of revenue.

Turning to the building’s expenses, you would like to see it split roughly evenly between mortgage payments, property taxes, payroll, and other operating expenses.

The cash flow statement is divided into three sections. These are the cash flow from operations, cash flow from investing, and cash flow from financing activities. Ideally, you do not want to see an operating cash flow deficiency funded by financing activities, namely borrowing.

The notes

The financial statement’s notes are where the details reside. You are looking for unique items, such as litigation. This is the area where you can find out more about the building’s debt. For instance, if the building has more than one mortgage, this is a sign the board is taking on excessive borrowing and not correctly managing the building’s financials.

 

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Using Constructive Eviction To Break Your Lease

Every renter dreads hearing the word eviction. To most people, the word conjures up images of being kicked out on the street by their landlord for failure to pay rent or some other major infraction. But there’s also a way it can be brought against the landlord, constructive eviction. This is a whole different ball game in which the landlord “evicts” a tenant by not fixing an uninhabitable rental. If you’re looking to get out of a lease early and the conditions in your apartment are severe enough to make it unlivable this can be a valid defense.

 

Constructive eviction: What is it?

Simply put, constructive eviction is when a landlord interferes, through action or failure to act, with a tenant in a way that prevents them from using the property. It must be proven in court, and if so the tenant is released from any obligation to pay rent on the remainder of their lease term. Essentially it allows the tenant to break the lease without any legal consequences.

What are grounds for constructive eviction?

To claim constructive eviction, you must demonstrate that the landlord has failed to uphold the warranty of habitability conferred on all rental apartments by New York law. The problems must be severe, such as led paint, asbestos, a lack of basic utilities or anything else that makes the unit unlivable or exposes you to a clear and present danger. Tenants also have a right to “quietly enjoy” their unit for the duration of the lease. Tenant harassment or the constant commitment of similar lease violations, such as the landlord repeatedly entering the unit without notice or reason are also grounds for constructive eviction.

How to file a constructive eviction claim

As mentioned, the problems must be serious. A creaking door or peeling (nonlead) paint are not good arguments. The standards are high for this because you are essentially asking the court to conclude that the landlord is forcing you out by making the unit unlivable.

In New York State, you must first move out to claim constructive eviction. But before doing so, you should document the problem to give you the best chance of success. Call 311 and have the Housing Preservation Department or Department of Buildings send out an inspector to document the issues. You should also do your documentation by taking photos, keeping copies of letters you’ve sent to the landlord and call in other experts to confirm the problems such as asbestos, mold, lead paint, etc.

To prove your case, you must demonstrate to an attorney the five following things:

That your landlord owed you a duty, such as providing basic utilities or a residence free from toxic materials like lead paint.
That the landlord neglected this duty.
That because of this neglect the apartment became unlivable.
That you gave the landlord notice of this neglect and plenty of time to fix it.
That you left the apartment within a reasonable amount of time after the landlord’s failure to fix the problem.

Final Thoughts

The courts have shown varying interpretations in what constituent’s constructive eviction, so you must have a rock-solid case. Although it may be possible to withhold rent after you’ve moved out you may have to pay it later back if you don’t win your claim. However, if you do win then your lease will be terminated, and you will be free to move on to more livable accommodation. You might also be liable to sue the landlord for costs and damages caused by the problem and having to move. Before moving ahead with anything, you should consult an attorney on the issue as well as the housing courts in your area.

 

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Contemplating The Co-op Questionnaire

Your lawyer should ask the co-op’s or condo’s managing agent questions as part of his/her extensive due diligence. This is typically sent in a written form and should provide your attorney with more information than just reading the financial statements and board minutes. Your lender will also require a questionnaire be completed.

 

 

There is not a standard form, but your lawyer is looking for certain information to help you completely understand your purchase. While the managing agent typically charges to fill out a questionnaire, the information gleaned is essential.

Financials

Your lawyer is trying to understand the building’s financial situation better. He/she is asking the questions, so you do not get hit with large maintenance fee/common charge increases, or special assessments down the road.

Pertinent questions include the historical maintenance fee/common charge increases. No one likes to pay higher monthly fees, but you do not want to see charges that are too low, indicating the managing agent is forgoing necessary repairs are upkeep. Typically, a modest, steady rate of increases is normal. Your lawyer should also ask about special historical assessments. If this is happening regularly, it is a warning sign that the board is not adequately managing the funds or is artificially trying to keep regular monthly fees low through a “back-end” increase.

Your lawyer can see the reserve fund balance from reviewing the financials, but he/she can find out more details, such as whether the board is borrowing money against the fund, which weakens your protection.

Lifestyle

Aside from ascertaining the financial condition, your lawyer also wants to find out about the building’s lifestyle. Some are simple questions, such as the board’s policy on pets and washers/dryers. Other softball questions include inquiring about storage space and parking availability. Harder questions relate to the building’s history, such as plumbing, electrical, or mold issues, which the managing agent is more reluctant to answer.

Other areas

Other potential areas to explore include the maintenance history. He/she can ask about regular maintenance and major repairs. If the board has not kept up on these, the board could impose a special assessment in the future since they may confront a major expense.

If the building is more than six stories, it has to comply with Local Law 11. Your lawyer should certainly inquire about the status. The building could receive one of three grades: safe, safe with a repair and maintenance program (SWARMP), unsafe. You need to understand what the management company is doing if it received a SWARMP or unsafe grade, how much it will cost, and how it plans on funding the repairs.

Co-ops, in particular, are known to have strict policies against subletting. However, there are different ways to restrict it, such as a complete ban, or allowing it for a specific time frame. Even if you do now plan on subletting, you should find out the policy since you do not want to own a unit with a lot of renters since they have different incentives and it could hurt your resale value.

Your lawyer could also ask if there is an individual that owns a significant percentage of the units. This presents a risk to you since he/she could sell and place pressure on prices.

Final thoughts

This gives you an idea about the areas your lawyer will explore. There could be additional questions, such as the unit’s square footage and a list of banks that finance purchases in the building. Your lawyer may also have other areas to ask about, depending on the circumstances.

 

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Best Indoor Plants to Purify the Air In Your Apartment

Air pollution can cause a variety of health problems such as asthma, cancer, and even heart disease. We often hear about the dangers of outdoor air pollution that are caused by factories, automobiles, power plants, and incinerators. It’s less often that we hear about the real dangers of indoor air pollution.

Bringing potted plants into a living space to liven it up is a trick that’s been used by interior designers for years, but did you know that our leafy friends are also powerful filters that purify the air around us? In fact, several studies have been conducted showing that individual plants can rid a room of up to 89 percent of harmful VOCs like formaldehyde and xylene.

 

 

How Do Indoor Plants Clean the Air?

Plants absorb air-polluting organic and inorganic chemicals and break them down into compounds that the plant can use for energy. In turn, we get to breathe in the clean air that the plants provide for us – all we must do is make sure the plants receive enough water and sunlight for survival If you think about the prices of some of those fancy air filtration systems out there, it’s a bit surprising that more of us don’t just purchase some plants instead. So, we made a list of some of the best indoor plants for cleaner air.

Peace Lily

 

Peace lilies are easy to care for and very resilient, making them especially popular with those who don’t necessarily have a green thumb. The plant can grow to about 16 inches and produce lovely white blooms. Peace lilies can help reduce toxins such as benzene, ammonia, formaldehyde, acetone, xylene, ethyl acetate, and trichloroethylene.

Snake plant

 

Snake plant or mother-in-law’s tongue (really, could they have thought of a better nickname?) is a very popular house plant that can be used outdoors in areas without direct sunlight. It’s native to West Africa and, with its upright leaves, has a lot of architectural interest making it a popular choice for contemporary homes. Snake plant is a very useful indoor air cleaner removing ammonia, formaldehyde and carbon monoxide

Gerbera Daisy

 

Gorgeous Gerbera daisies not only cheer up your home but do it some good too. Gerbera daisies are rare plants in that they also release oxygen during the night, so keep them in the bedroom for restful sleep. They need sun and water as soon as the dirt in the pot dries out. Gerbera daisies rid the air of benzene, formaldehyde, and trichloroethylene.

Bamboo palm

 

The bamboo palm is another popular purifying houseplant due to its tropical look and insect-repelling quality. This plant also packs a big punch when it comes to purifying the air. The bamboo palm can remove substances like benzene, formaldehyde, chloroform, carbon monoxide, and xylene.

Aloe Vera

Not only is the aloe plant wonderful to have on hand in wound-or burn-healing emergencies. The gel within each leaf contains a mixture of amino acids, vitamins, and enzymes with anti-bacterial, anti-inflammatory and soothing benefits. While the plant itself filters formaldehyde from the air.

Weeping Fig

 

 

Not only will you love the sweet and plentiful fruit yielded from a healthy ficus benjamina (or weeping fig) the plant needs infrequent watering and indirect sunlight, which means that its relatively low maintenance. Bring it inside during the colder months to decrease pollutants like benzene and formaldehyde from indoor spaces and move it outside in the warmer months where it will thrive and grow to heights up to 6-feet!

 

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Estimate How Much Your Apartment is Worth Before Selling

Buying real estate in NYC can be a high-stakes game. With property values and buyer preferences in a constant state of flux, it takes some careful research to arrive at the right price to set for your apartment. Whether it’s a condo, co-op or townhouse, you’ll eventually have to settle on a price before putting it on the market. Here are the factors you need to consider when deciding on your asking price in NYC.

 

 

Research your neighborhoods selling points

If you plan to list your apartment soon then now is the time to start looking at other listings in your building and the surrounding neighborhood. The quality of life in the neighborhood is just as important as the property itself. A great resource for researching your neighborhood it AddressReport. It provides data on everything from demographics to crime to even the air quality and a number of street trees. See what other sellers are asking for and how your apartment stacks up against theirs.

Compare your building type with similar buildings

NYC has a lot of different categories for the types of buildings that can be found there. Pre-war, post-war, new developments, full-service buildings and so on. When researching other listings in your building and neighborhood it’s important that they are compatible with your own apartment. Don’t try and compare an apartment in a full-service building with one in a low service one. Or an apartment in a pre-war building with a post-war one. The same goes for comparing a condo and a co-op apartment as the pricing between them can vary widely.

Check the price per square foot in your building

Once you have a list of comparable properties based on your neighborhood and the building type check the price per square foot (PPSF) of your apartment. This is a bit challenging as there are a number of different interpretations of how PPSF is calculated. Start by looking at the average and then look at recent sales that were way above the average and way below. You should start to get a good idea of how your apartment compares. Don’t make the mistake of comparing the PPSF of your older condo to a luxury new development condo whose starting prices are way above yours.

Compare the layout of your apartment

This is hardly groundbreaking but it’s important that you compare your apartment with properties that have a similar bed/bath count and overall layout. Optionality is always more valuable. Even if your apartment is in a similar building with similar square footage but the other one has an extra bathroom or a balcony it wouldn’t be appropriate to compare the two. Making a valuation based on layout adjustments is obviously a little subjective but it goes by common sense.

Compare the difference in the condition

Obviously, it wouldn’t be right to compare a newly renovated apartment with one that it is getting on in years. If property A has a newly renovated kitchen or bathroom (generally the most expensive renovations) while property B does not, a price adjustment would be needed. In general, the price difference between a property with a newly renovated kitchen and one without can be $20-30K. For one with both a newly renovated kitchen and the bathroom can be as much as $60k. Another important factor in condition is flooring. In NYC, a typical hardwood floor can cost $2-6 per square foot for materials along with $2-4 per square foot for installation.

Summary

Coming up with the right asking price is crucial if you expect to have a fast and easy sell. If you’re not getting multiple offers within the first three weeks then you’ve probably priced too high. Hiring a good listing broker will give you a better chance of coming up with the right price. They have the market knowledge, insider information, and experience from previous sales of what makes a competitive price. All the same, though you should have a good idea of what goes into an asking price. It will make you savvier when it comes to negotiations and deciding on multiple offers.

 

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Special Assessment in a Condo or Co-op

While we have discussed special assessments, condo and co-op owners, as well as those contemplating a purchase, will find this more comprehensive review useful. A board typically levies these charges to pay for a major project or repair. While no one likes to pay extra, you should understand the board’s options and why they are undertaking this one.

 

A board’s basic options

A board has either decided to undergo a significant project, or circumstances dictate it, such as the need to undergo a large repair, such as a new roof, boiler, or façade. One way for your co-op or condo board to handle it is to have a reserve fund. This helps you budget your money better since the board has anticipated these needs and put aside money for large capital projects. Of course, you have likely paid extra monthly charges in order for the board to accumulate this fund.

The Board could also implement a special assessment. In this case, the project’s cost is typically allocated among the co-op’s shareholders based on the number of shares owned, or a condo’s unit owners. While it is usually paid over a period of time, the board could decide not to have an end date or impose a lump sum on the shareholders/owners. The board may choose the latter, even though it imposes a greater hardship if the work needs to get done urgently.

A tax break

An assessment used to fund capital projects adds value which is added to your original cost. When you are ready to sell, this lowers your capital gain, if you are fortunate enough to sell at a higher price than you paid.

However, should this fund operating expenses, this does not get added to your cost basis.

Less appealing choices 

Aside from the aforementioned two options, a board may decide merely to increase the monthly maintenance or common charges. Generally, they are loath to do so since these are permanent. This causes the resident’s ire to go up and could hurt the resale value since prospective buyers compare the regular monthly charges across the different buildings.

The board could choose to borrow the funds to pay for the project. This could hurt the building’s financial position, and may just delay the day of reckoning, however. 

You have a say

While certain repairs are unavoidable, as an owner, you have a voice in these matters. For instance, you can bring up a less expensive option. If the board is imposing a special assessment to fund an operating shortfall, you need to question the board’s financial acumen. Certain projects are discretionary, ostensibly done for the residents’ enjoyment. Depending on the cost, you can voice your opposition to the board.

When there is a sale

If you are contemplating a purchase, your lawyer’s due diligence includes reviewing the financials and board minutes, which should help you understand whether or not the building’s finances are stable.

During the co-op or condo buying process whose board has already implemented a special assessment, you should know this is open to negotiation, meaning that you are not necessarily stuck paying the extra amount.

 

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