Deal or no deal: Buying protection against future assessments
Say you've fallen in love with a co-op apartment, but there's some approaching thunder in the form of undetermined assessments coming down the pike. Is it possible, or even advisable, to negotiate some protection?
That's the question under debate in a StreetEasy.com discussion. Opinions vary about whether protection is possible or even advisable:
- "Anything is possible. The issue is that you will have to put money into escrow and draw from it. Another issue is for how long should the money remain in escrow before being released to the seller. A reasonable thing to do is to provide an offer that already estimates the assessment and subtracts it from the offering price."
- "If your seller will agree to be liable for future undetermined assessments, I'd bet their accommodation indicates you are seriously overpaying for the property. I would have laughed at a buyer who proposed this....Any seller not desperate to preserve a deal with you (which means you are overpaying) would tell you to get a good lawyer, do your due dilly, and bid accordingly."
- "[A] relative bought a coop and had this contingency put in. The amount was capped. Seems to be much about nothing since the price could've been adjusted just as easily...."
- "When we bought this place, we got our seller to pay the remainder of a declared assessment even though the work for the assessment wouldn't begin until after our closing. The key for is that it had been declared. Had the board not settled on an amount (which turned out to be insufficient, but we knew that going in), we would have been SOL."
BrickUnderground checked in with a closing attorney to see if we could settle the matter.
"I think the idea is laughable," says Manhattan real estate attorney Rachel Mulcahy. "One might be able to negotiate a provision for a known assessment with a short time frame immediately following closing. But generally if I represented the seller I would say no to even considering agreeing to such a provision. It's the equivalent of a selling homeowner offering to pay for a new driveway at some later unknown date."
Also, she says, "keeping deals 'live' with escrow money ad infinitum because there might be an assessment three years down the line is not beneficial to anyone involved. And finally, if the buyer is that worried about an assessment, it means the building is short cash to cover whatever the issue might be. In that case, don't buy into the building."
(StreetEasy.com)
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A few things every buyer should know
BrickUnderground's Buyer's Survival Kit
