Precautions to Take for New Development and Sponsor Deals
New York City arguably has the most complex residential real estate transactions compared to other cities in the United States. Starting with numerous types of property available and its unique contract and due diligence process, to the examination and clearance of any potential title issues, and finishing with the actual closing. Each step of the process requires extensive care and caution to ensure the buyer or seller is sufficiently protected from any risks that would occur both along the process or after the closing.
When working with new developments or Sponsor sales, often times, an additional layer of complexity is added to the transaction due to the level of uncertainty and time constraints is imposed on the buyer. These units, at the time of contract signing, commonly have yet been completed and buyers would not see the finished unit until a week before closing. Even then, it is common to have walkthrough issues with minor things such as touch ups, to bigger issues such as damaged products.
In a recent case here at Adam Leitman Bailey, P.C., we were able to secure a $20,000 credit for our clients due to damaged countertop conditions. The success in this negotiation is attributed to multiple factors within the contract and pre-closing stage of the transaction. To begin with, the damaged countertop was observed well in advance of closing which allows sufficient time to obtain accurate replacement quotes from a third party. The parties contractually were also able to adjourn the closing date to a future date which allotted additional time for negotiations. Furthermore, we were able to secure an additional walkthrough to ensure all other initial walkthrough issues had been addressed prior to closing.
In summary, while there are uncertainties in new developments outside of the buyer’s control, these risks may be minimized through different ways. While different sponsors would be willing to agree to different terms, it is still essential to advocate for additional adjournment rights, an additional walkthrough, and a time period of which all punch-list items will need to be completed by. Additionally, it is also imperative to have a legal team who would advocate for you. Here at Adam Leitman Bailey, P.C., our mission is to ensure that buyers are well protected under all circumstances even if the unexpected may arise at the time of closing.