Gea Elika's Blog, page 121
April 28, 2018
Dealing with Asbestos and Lead Paint
Pre-war buildings in NYC are always a top choice for many buyers. They present a slice of history and an aesthetic grandeur that you won’t find in newer buildings. However, they also come with some risks, namely the presence of materials once widely used in construction that are now classified as a health hazard. A primary concern of any NYC homeowner planning a renovation is whether they might end up exposing themselves and their families to these materials. The two most common of which are asbestos and lead paint.
Asbestos
Asbestos is a mineral fiber that because of its strength and heat resistance has been used in a lot of construction materials and insulation. It’s very common in NYC buildings constructed before the 70’s after which it was discontinued when research found that it is highly toxic when inhaled. Long-term exposure can lead to a person developing mesothelioma, asbestosis or other asbestos-related diseases.
It’s found mostly around plumbing and beneath the flooring. Anyone looking to carry out renovations in a pre-70’s building will naturally be concerned about encountering it. Not just because of the health issues but also potential costs of dealing with it.
What to do about it?
If you suspect the building has asbestos you should have it thoroughly tested by a licensed asbestos removal firm before you start on any renovations. In most cases, it can be dealt with through containment. Unless it becomes airborne, it is not a risk. Merely putting new flooring over it is usually enough to keep it contained.
However, if the renovations call for knocking down walls or anything that will disturb the asbestos, abatement is the only option. The costs involved depend on the scope of the project and how much asbestos is found. Removal costs can run from $5,000 to $10,000.
Lead Paint
The lead was very common in the paint which made it more vibrant in color and longer-lasting. However, it was later found to be very harmful to children and was banned from use in residential buildings in NYC in 1960. Later on, the City’s Childhood Lead Poisoning Prevention Act of 2004 was passed, making it mandatory for landlords to identify and remediate lead-based paint found in apartments with children under six years old.
It can be found wherever paint is found. Occasionally it can also be found in water, but fortunately, NYC’s tap water is of very high quality. The primary danger is of a child ingesting it as it tends to have a sweet taste. When ingested it can cause learning and behavioral problem and delay mental development.
What to do about it?
Most home depot stores sell over-the-counter kits that allow you to test for lead in your paint and water. However, it is better if you can hire a lead testing and abatement firm. If you find any lead paint but it is in good condition, not flaking or you don’t have any young children you could decide just to leave it be. If though you are concerned about it hire an EPA-certified abatement firm to take care of it. For properties with multiple occupants such as co-ops and condos, it is the responsibility of the owners to handle any removal and repainting. It must be done entirely by the EPA’s guidelines for dealing with renovations. Depending on the scale of the project you may need to vacate the home until it is thoroughly cleaned and repainted.
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What is Co-Broking and Why is it Good for Sellers and Buyers?
Anyone who’s looking to sell their home in NYC will want the services of a good real estate broker. One of the first things you’ll discuss with them is their commission. Everything in real estate is negotiable but once you’ve agreed on a price – let’s say, 6% – you’ll next want to ask them about co-brokering. This is one of many little tricks when it comes to getting a reasonable price, and with 80% of the deals in NYC done as co-broke deals, it’s obviously a very popular one.
What is co-brokering?
Co-brokering occurs when two agents agree to work together on a sale. One representing the buyer and the other the seller, with the commission being split between the two. By agreeing to work with another agent and divide the commission, a listing broker will get the advertisement out to a wider market. This includes back-end listings that are only visible to other realtors.
The good news for the people of NYC is that most real estate firms there is part of the Real Estate Board of New York (REBNY) which means they are required to co-broke. This is all covered in the RLS Universal Co-Brokerage Agreement which sets out the rules and regulations regarding the sharing of exclusive listings. Every leading agency in the city is a part of REBNY, and with approximately 50,000 licensees, a seller’s property is certain of getting the exposure it deserves. However, this is less common with smaller brokerages. If your agent doesn’t co-broker or lies about it, you’ll end up losing both time and money.
How does co-brokering benefit buyers, sellers, and agents?
Buyer’s brokers rely on their commission to earn their pay. If they find a listing that is not co-broke they’ll need to collect the commission from the buyer. However, this is a rare occurrence and in such case often the price of the property is negotiated down to offset the fee.
It works similarly for sellers. If their agent doesn’t co-broke the property will be getting a lot less attention than it might otherwise. The key to getting the best offer is to attract the most buyers possible. Co-brokering also shows that the agent is working with your best interests in mind.
Although it mightn’t seem so at first, co-broker can also be beneficial for the real estate agents. They’ll be getting less of a commission but in exchange, they’ve expanded their network by working with another agent they wouldn’t have otherwise. The agent is likely going to think of them the next time they’re looking to co-broke.
Why would an agent not co-broke?
The best way to know if whether your agent does co-brokering is to directly ask them in the interview “What will you do to ensure my listing reaches the widest market possible?” if they give an indirect answer by saying how long they’ve been in the business or how large their network is you can be sure they are trying to avoid having to co-broke.
Also, in today’s world of online-apartment hunting, it’s very easy to monitor your apartments presence – or lack thereof. Another thing you’ll want to carefully consider is how much commission you are paying them. Smaller brokers will sometimes accept a commission of 3-4% rather than the usual 6%. If so, then brokers from larger firms might be less willing to show their clients the listing since they know they’ll only make a commission of 1.5 or 2%. As such, it’s better not to negotiate a commission so low that it hurts the agent’s ability to co-broke.
RLS UNIVERSAL CO-BROKERAGE AGREEMENT
The post What is Co-Broking and Why is it Good for Sellers and Buyers? appeared first on | ELIKA Real Estate.
What is Co-Brokering and Why is it Good for Sellers and Buyers?
Anyone who’s looking to sell their home in NYC will want the services of a good real estate broker. One of the first things you’ll discuss with them is their commission. Everything in real estate is negotiable but once you’ve agreed on a price – let’s say, 6% – you’ll next want to ask them about co-brokering. This is one of many little tricks when it comes to getting a reasonable price, and with 80% of the deals in NYC done as co-broke deals, it’s obviously a very popular one.
What is co-brokering?
Co-brokering occurs when two agents agree to work together on a sale. One representing the buyer and the other the seller, with the commission being split between the two. By agreeing to work with another agent and divide the commission, a listing broker will get the advertisement out to a wider market. This includes back-end listings that are only visible to other realtors.
The good news for the people of NYC is that most real estate firms there is part of the Real Estate Board of New York (REBNY) which means they are required to co-broke. This is all covered in the RLS Universal Co-Brokerage Agreement which sets out the rules and regulations regarding the sharing of exclusive listings. Every leading agency in the city is a part of REBNY, and with approximately 50,000 licensees, a seller’s property is certain of getting the exposure it deserves. However, this is less common with smaller brokerages. If your agent doesn’t co-broker or lies about it, you’ll end up losing both time and money.
How does co-brokering benefit buyers, sellers, and agents?
Buyer’s brokers rely on their commission to earn their pay. If they find a listing that is not co-broke they’ll need to collect the commission from the buyer. However, this is a rare occurrence and in such case often the price of the property is negotiated down to offset the fee.
It works similarly for sellers. If their agent doesn’t co-broke the property will be getting a lot less attention than it might otherwise. The key to getting the best offer is to attract the most buyers possible. Co-brokering also shows that the agent is working with your best interests in mind.
Although it mightn’t seem so at first, co-broker can also be beneficial for the real estate agents. They’ll be getting less of a commission but in exchange, they’ve expanded their network by working with another agent they wouldn’t have otherwise. The agent is likely going to think of them the next time they’re looking to co-broke.
Why would an agent not co-broke?
The best way to know if whether your agent does co-brokering is to directly ask them in the interview “What will you do to ensure my listing reaches the widest market possible?” if they give an indirect answer by saying how long they’ve been in the business or how large their network is you can be sure they are trying to avoid having to co-broke.
Also, in today’s world of online-apartment hunting, it’s very easy to monitor your apartments presence – or lack thereof. Another thing you’ll want to carefully consider is how much commission you are paying them. Smaller brokers will sometimes accept a commission of 3-4% rather than the usual 6%. If so, then brokers from larger firms might be less willing to show their clients the listing since they know they’ll only make a commission of 1.5 or 2%. As such, it’s better not to negotiate a commission so low that it hurts the agent’s ability to co-broke.
RLS UNIVERSAL CO-BROKERAGE AGREEMENT
The post What is Co-Brokering and Why is it Good for Sellers and Buyers? appeared first on | ELIKA Real Estate.
April 24, 2018
Top 5 Local-Approved Things To Do In NYC This Spring
You’ve seen the Empire State Building a hundred times, been in Times Square a thousand, and you refuse to walk up a single stair at the Statue of Liberty again. Even for locals, it can be easy to get lost in tourist traps in NYC. Here are – local approved – our top picks for things to do in NYC this spring!
1. National Museum of the American Indian
A little lesser-known than the Museum of Modern Art or the American Museum of Natural History, the National Museum of the American Indian is a great way to absorb some culture and history without the crowds. The NMAI offers daily guided tours to give you a little more insight into the incredible collections of exhibits and artifacts. Admission is also free at the NMAI, so you can bring the whole family without worrying about breaking the bank.
2. The Cloisters
Closed only for Christmas, New Years, and Thanksgiving, you can see this Medieval European museum almost any day of the year. And for you locals, admission is free with a valid ID; but of course, you’re welcome to give a donation for admission if you so choose. At the Cloisters, you can experience Medieval Europe and see over 2,000 pieces of art and other various cultural artifacts right in NYC.
3. Chelsea Galleries
The Chelsea District is loaded with incredible art galleries; it’s the perfect place for art enthusiasts looking to spend a nice afternoon. Or if you’ve never been to an art gallery before, it’s also a great place to dip your toes in and give it a try – since admission to most galleries is free. With all the galleries available, there’s always new artwork and artists to check out.
4. Hudson River Park
The Hudson River Park is teeming with fun activities for the whole family to enjoy. Especially in the warmer months, the Hudson River Park is a great place to enjoy water activities like rowing, kayaking, canoeing, and the like. Not to mention, they have soccer fields, basketball courts, tennis courts, and more. Whether you want to kayak on the Hudson, play some pickup basketball, or just take a nice stroll along the waterfront, the Hudson River Park has all your bases covered. They even have free salsa dance lessons on Tuesday nights during the summer!
5. Immersion Theatre
If you’ve never heard of immersion theatre before, you’ve got to check it out. Unlike a regular show where you sit there nodding off between sips of your cocktail, these shows will have you on the edge of your seat. The whole premise of immersion theater is to immerse the audience in the performance – the audience becomes part of the show! Yes, that means you! Check out the Accomplice in Manhattan or Then She Fell in Brooklyn for an unforgettable theatre experience.
These are just a few of the things on our local-approved to-do list for NYC this spring. If none of these things pique your interest, don’t worry; in the city that never sleeps, there’s always something fun and exciting going on to keep yourself entertained… and away from the tourist traps!
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Post-Closing Possession in NYC
Many sellers in NYC face the problem of needing the proceeds from the sale of their existing home to close on their new one. As such, it’s very rare to see anyone close on the home their selling and the one they’re buying on the same day. One way for sellers to deal with this is called the “post-closing possession.” Under this agreement, the seller is allowed to remain in the property for a specified amount of time after the closing. This article covers everything you need to understand about the post-closing possession, for both buyers and sellers.
What is a post-closing possession
Through a post-closing possession agreement, the buyer agrees to let the seller remain on the property for a set period of time after the closing. It’s great for the seller as it means they won’t need to move to a hotel but for buyer’s, it presents some risks. Because of this, you’ll usually only get a buyer to agree to it if it’s made a condition of the sale.
What are the key provisions of the post-closing possession?
A typical NYC post-closing possession agreement will include at a minimum the following:
Length of Occupancy – since the typical closing time on an NYC property in 30-60 days the standard occupancy limit through the agreement is 60 days. If the unit is in a co-op building or there are lenders involved it’s very difficult to get any more than this.
Cost of the Post-Closing Possession – to stay on the property, the seller agrees to pay all carrying costs for the duration of their occupancy. This includes the mortgage payment, monthly maintenance fees, utilities and any other costs related to the property.
Escrow Amount – to protect the buyer, a portion of the sales proceeds will be held in escrow until the seller has vacated the premises. This amount is negotiable but is typically 2-3% of the sale price.
Holdover Fee – to further ease any concerns for the buyer, a holdover fee is included for the seller should they overstay the length of the agreement. It can be a daily, weekly or monthly fee which is deducted from the escrow account.
Managing Agent/Building Approval – each co-op and condo building has their own rules regarding post-closing possession agreements. These will need to be worked out before the contract can be finalized. They’ll be very wary of allowing occupancy for more than 60 days.
Lender Approval – like co-op buildings, lenders are very wary of allowing seller occupancy for more than 60 days. The risks involved are too great.
Liability Insurance and Indemnification – an agreement without any provision stating that the seller agrees to maintain liability insurance and indemnify the buyer puts the buyer at extreme financial risk. It’s crucial for the buyer that this is included.
Occupancy Rights – lastly, the agreement must spell out clearly who exactly has the right to occupy the property post-closing.
Buyer Considerations
Because all the risks of a post-closing possession agreement fall on the buyer, they need to make some considerations to protect themselves adequately.
Make sure the word ‘Lease’ is not mentioned in the agreement – it is crucial that the agreement uses the word ‘License’ rather than ‘Lease.’ If the seller refuses to leave a very costly eviction process has to be started. This can be avoided by having the language of the document state that the occupant as a license rather than a lease to stay on the property.
Include a substantial damages clause – to protect against the seller overstaying their term of occupancy a substantial penalty should be included for each day they overstay. For this to work the penalty should be more than what it costs to stay in a hotel and more than the apartment would rent for. This is likely to be the most fraught aspect of the negotiations
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Understanding the Post-Closing Possession in NYC
Many sellers in NYC face the problem of needing the proceeds from the sale of their existing home to close on their new one. As such, it’s very rare to see anyone close on the home their selling and the one they’re buying on the same day. One way for sellers to deal with this is called the “post-closing possession.” Under this agreement, the seller is allowed to remain in the property for a specified amount of time after the closing. This article covers everything you need to understand about the post-closing possession, for both buyers and sellers.
What is a post-closing possession
Through a post-closing possession agreement, the buyer agrees to let the seller remain on the property for a set period of time after the closing. It’s great for the seller as it means they won’t need to move to a hotel but for buyer’s, it presents some risks. Because of this, you’ll usually only get a buyer to agree to it if it’s made a condition of the sale.
What are the key provisions of the post-closing possession?
A typical NYC post-closing possession agreement will include at a minimum the following:
Length of Occupancy – since the typical closing time on an NYC property in 30-60 days the standard occupancy limit through the agreement is 60 days. If the unit is in a co-op building or there are lenders involved it’s very difficult to get any more than this.
Cost of the Post-Closing Possession – to stay on the property, the seller agrees to pay all carrying costs for the duration of their occupancy. This includes the mortgage payment, monthly maintenance fees, utilities and any other costs related to the property.
Escrow Amount – to protect the buyer, a portion of the sales proceeds will be held in escrow until the seller has vacated the premises. This amount is negotiable but is typically 2-3% of the sale price.
Holdover Fee – to further ease any concerns for the buyer, a holdover fee is included for the seller should they overstay the length of the agreement. It can be a daily, weekly or monthly fee which is deducted from the escrow account.
Managing Agent/Building Approval – each co-op and condo building has their own rules regarding post-closing possession agreements. These will need to be worked out before the contract can be finalized. They’ll be very wary of allowing occupancy for more than 60 days.
Lender Approval – like co-op buildings, lenders are very wary of allowing seller occupancy for more than 60 days. The risks involved are too great.
Liability Insurance and Indemnification – an agreement without any provision stating that the seller agrees to maintain liability insurance and indemnify the buyer puts the buyer at extreme financial risk. It’s crucial for the buyer that this is included.
Occupancy Rights – lastly, the agreement must spell out clearly who exactly has the right to occupy the property post-closing.
Buyer Considerations
Because all the risks of a post-closing possession agreement fall on the buyer, they need to make some considerations to protect themselves adequately.
Make sure the word ‘Lease’ is not mentioned in the agreement – it is crucial that the agreement uses the word ‘License’ rather than ‘Lease.’ If the seller refuses to leave a very costly eviction process has to be started. This can be avoided by having the language of the document state that the occupant as a license rather than a lease to stay on the property.
Include a substantial damages clause – to protect against the seller overstaying their term of occupancy a substantial penalty should be included for each day they overstay. For this to work the penalty should be more than what it costs to stay in a hotel and more than the apartment would rent for. This is likely to be the most fraught aspect of the negotiations
The post Understanding the Post-Closing Possession in NYC appeared first on | ELIKA Real Estate.
April 23, 2018
Expert Tips for Beginning Real Estate Investors
Real estate investing seems so easy. In 2016, the United States had 44 billionaires that accumulated most of their wealth from real estate, according to Forbes. New York City real estate moguls are well-represented on the Forbes 400.
We don’t argue that real estate investing can be lucrative. But, it is not an easy path to riches. Like any other business, it takes hard work, intelligence, and some luck. We offer some tips for those starting out to make the path a little smoother.
Flips are not quick and easy
It is tempting to make a quick buck buying a property, fixing it up, and selling it. The reality is typically much different, though. Real estate is not the most liquid investment, and it turns more illiquid in a down market. This means your property can sit for months while you pay the carrying costs, including the mortgage, taxes, insurance, utilities, and common charges.
Even in a seller’s market, the construction needs to go smoothly – on time and within your budget. Otherwise, this eats into your profit. Do not forget to factor in closing costs, including the commission, when you sell. If you turn a profit, there are also short-term capital gain taxes.
Do your homework
You need to know all you can about the building and surrounding neighborhood. This means reading the board minutes and financials. You should also visit at different times to understand the building and neighborhood dynamics. If this is a building you would want to live in, others likely will feel the same way.
It is in your best financial interests to have a complete understanding of your major investment. While you cannot predict the future, having full knowledge provides a certain level of reassurance.
Know who to trust
Your exclusive buyer’s agent is someone you can have complete faith in. There are others you can trust to provide you with unbiased and good advice. Providing you have done your homework, your real estate attorney is another invaluable advisor. In fact, both have a fiduciary duty to you.
There are plenty of other people who will offer you advice along the way. You should take these with a grain of salt. Friends and relatives are likely to offer you unsolicited advice. Unless they have undertaken similar ventures, it is best to remember the adage “that you get what you pay for” when they try to pass their guidance along.
Think outside the box
The time to make a lot of money in hot areas may have already passed. You can consider an up-and-coming neighborhood or one adjacent to the hot area. As people consider alternatives, these places will pop up on their radar.
You do not have to live through the bumps a neighborhood endures when transitioning since you are not residing there. Your patience could be rewarded. There are two ways to make money as a real estate investor. These are capital gains that come from price appreciation and the yield, which is the amount of income received annually compared to the initial cost. Both improve based on the price you pay.
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April 22, 2018
When to Use Cash-Out Refinancing
New York City’s real estate prices have undergone a remarkable rebound over the last few years. While mortgage rates are up this year, you may consider refinancing in the future. Alternatively, perhaps you can obtain a lower rate since your credit score has improved. If you have equity in your home, you can take some cash out. We discuss when it is a good idea to use a cash-out refinancing.
What is a cash-out refinancing?
A cash-out refinancing occurs when you take out a larger loan than the existing mortgage balance. Banks allow this when you have enough equity in the property.
You pay off the existing loan and have extra cash, which you can generally use however you deem fit. For instance, you decide to refinance your $650,000 mortgage, and your home is worth $800,000. You have $150,000 in equity that you can borrow against if you choose.
Should you do it?
If you feel you are able to receive an attractive interest rate, there are a multitude of reasons to borrow the extra cash. You can do virtually anything with the money, although some things are more advisable than others. For instance, you could decide to use the funds for home improvements, which could be a very good reason, particularly if it adds value. You may also decide to pay credit card bills, which lowers your interest rate, but the borrowing is now secured, so you need discipline in paying it back, or else the bank could foreclose.
There are some cases where it is not a good idea to borrow the extra cash. For instance, spending the money on vacations or frivolously. In those cases, we advise against a cash-out refinancing.
You may receive a tax deduction for the interest on the extra borrowings. So, if you are paying off higher-cost credit card debt, whose interest is not tax deductible, you may receive the extra tax benefit from using a home mortgage. The new tax law changed many things, including the mortgage interest deduction, however. You can deduct interest on up to $1,000,000 mortgage rather than the new $750,000 limit as long as you took out the original loan prior to December 14, 2017. Remember, the new law placed limits on state and local (income and property) tax deductions, so many more people will not itemize, making it important to check your own situation.
Other options
You could also take out a home equity line of credit (HELOC) or home equity loan. A HELOC is a revolving credit facility, with a variable interest rate. This may work for you, if you need funds at various intervals, and plan to pay it off quickly. Your total interest payments could be lower than a cash-out refinancing, but remember, the rate fluctuates. Therefore, you need to know that your monthly interest payments could rise significantly, and the Federal Reserve has been raising short-term rates.
A home equity loan, which is borrowed in a lump-sum, is typically a fixed rate loan. The rate is probably higher than a cash-out refinancing. But, check the closing costs to see if this results in enough savings when factoring how long you plan on staying in the home.
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April 21, 2018
What You Need to Know about Tenants’ Rights in NYC
Being a renter in NYC can seem like a tough deal. High prices, tiny apartments and seemingly being at the mercy of your landlord can certainly make it look that way. However, you’d be wrong to think that it’s all in favor of the landlord. In fact, for the last few years, the city has begun clamping down hard on all kinds of shady practices by landlords. Tenants have rights too but unless you know about them how can you make use of them?
Here are five important rights that every NYC tenant needs to know.
The right to protection from landlord harassment
NYS law requires that all landlords provide their tenants with a safe and livable environment. For instance, property owners in NYS are required by law to provide hot water for 365 days a year at a minimum temperature of 120 degrees Fahrenheit. If your landlord is harassing you with offers to buy-out, eviction notices and creating unlivable conditions you have the right to seek protection. You could enlist the help of a tenant lawyer or form a tenant association with your neighbors.
The right to form associations
As alluded to above, you have the right to organize and form associations with your other neighbors. By finding strength in numbers you can bring all your recourses together to stand up to a difficult landlord. If you need to hire a lawyer these unions can help in splitting the legal costs. The unions are also helpful on an individual basis for dealing with small issues.
The right to not be evicted without one day in court
Have you come home to find new padlocks on the door? As much as a landlord might try to scare you with such a scenario there are specific conditions that must first be met. To begin an eviction, the landlord must first have reasonable cause. It could be non-payment of rent, violation of the lease terms or the ending of a fixed term. Whichever one it is it has to be provided on a written notice. Even under these conditions, a landlord must still take the tenant to court, win, and receive a “Warrant of Eviction” before the tenant can be legally removed. Also, regardless of your ability to pay, recent legislation entitles all tenants to legal representation.
The right to privacy
Does your landlord often may unannounced visits or come and go when you’re not around? This sort of thing gives many tenants pause as they might imagine, as the landlord is the owner, they have a legal right to enter at any time. This is not the case. Most leases will give you the right “to quiet enjoyment of your apartment.” This has little to do with any rights to it being literally quiet (good luck finding that in NYC!) but that you have the right to enjoy the apartment to the exclusion of others.
For a landlord to enter your apartment they must give notice and have adequate reasons such as repairs or showing the home to potential renters. The only time a landlord can enter without notice is in an emergency.
The right to roommates
NYC renters who live in a privately-owned building and are the only person on the lease have a right to share the home with a roommate. You must provide your landlord with 30 days’ notice of this, so long as you’ve been a responsible tenant up until then it shouldn’t be a problem. This can be either a relative or a friend, along with their dependent children. It’s entirely up to you whether or not they pay part of the rent. However, don’t get this confused with subletting which is a different thing. Keep in mind as well that there are still laws on overcrowding so the landlord may limit the number of people you can take in.
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April 19, 2018
Making Sense of the Alteration Agreement
You’ve worked a lot for this and now, at last, you’re in the finishing stages of closing on your new co-op or condo apartment. But if you were hoping to get started on any renovations before the sale closes you’re in for a disappointment.
What is an alteration agreement?
Shared buildings such as co-ops and condos require what’s called an alteration agreement before any work can begin. It’s understandable that you’d like to start work immediately but it’s highly unusual and almost impossible to get a board to agree on renovations before the sale has closed.
Why would that be? Because you’re not a shareholder (co-op) or owner (condo), not yet anyway. Making nonstandard requests like this could jeopardize your board interview. Also, any drastic changes to a unit could cause problems for other tenants.
The alteration agreement allows the board to review your planned renovations and put certain restrictions on when, how and what you can do. Once the sale is closed you can arrange a meeting with the board members and building managers to negotiate the terms of the agreement and the renovations themselves.
What goes into an alteration agreement?
Most buildings in NYC have a generic alteration agreement that has already been prepared by their attorney. This can be edited as needed for each individual project though, of course, the board would have to approve such changes. Every alterations agreement should, at a minimum, include the following.
Indemnification – the person performing the alteration agrees to indemnify the building and its shareholders/owners from any claims that may arise from the alteration.
Security deposit – a deposit will need to be made to the board to cover any potential problems that require the services of an architect or engineer. The deposit ensures that the resident can pay back the charge for this immediately.
Certificate of insurance (COI)– there will be an insurance coverage minimum that any contractors hired for the project will need to cover. How high this will be varies depending on the building and the size of the project.
Working hours – there must be considerations for the other tenants so there will be restrictions on when work can be done. A good benchmark would be limiting noisy work from 10 am to 4:30 pm, non-noisy work from 8:30 am to 5:00 pm and on weekends only.
Time Limit – if work is expected to carry on for at least six months that’s not fair on the other residents. Most agreements limit construction time to 120 calendar days with high charges for each day you exceed the limit. You may be able to ask for an extension but it will have to first pass board approval.
Right to Stop – if the board has reason to suspect that something may be amiss they will have the right to stop the work at any time without incurring any liability.
Gas Line No-touch Policy – for a gas line to be moved it has to be shut off and go through a pressure test before it can be put back on. If a leak is found it must be kept shut down until it is found and repaired, impacting on every other resident. As such, expect the agreement to have a gas line no-touch policy.
‘Wet over Dry’ Renovations – expect to see a probation on moving or expanding wet areas like bathrooms and kitchens over dry areas like bedrooms or living rooms.
Future maintenance and repair obligations – both the resident and any future owners must be liable for any repairs or maintenance if necessary.
Guidelines on hazardous material removal – there will be guidelines stating how any hazardous materials such as lead paint and asbestos is to be removed.
Conformance to plans – the finished project must match the approved plans and blueprints.
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