Buyer Beware, Seller Be Honest
An Upper West Side condominium has leaks that might require a five-figure assessment for each unit-owner. One resident, a member of the condo board, wants to sell his apartment to avoid the assessment and months of noisy construction work. What, if anything, is he required to disclose to potential buyers?
“The building could be falling down and the seller does not have to tell the buyer,” attorney Adam Leitman Bailey, head of his eponymous firm, tells the Ask Real Estate column in the New York Times. In New York, a seller is not required to disclose any adverse information to a buyer. So long as the seller does not actively conceal the defect – or, in this case, mislead a buyer about the looming assessment – there is no wrongdoing.
But it may be in the seller’s best interest to come clean, because the buyer will likely find out about the issue anyway. The board has discussed the problem, the repairs and the potential costs, so the details are in the board minutes. When the buyer’s lawyer reads the minutes as part of the due-diligence process, those discussions will turn up. This is where there might be a gap between the seller’s legal obligations and a smart sales strategy.
“Things like this have a way of coming to light,” says [associate broker] with [firm]. “It’s much better to be honest and find a way to work it out.”
The seller should be upfront and discuss the issue with his broker, who could disclose the possibility of an assessment to potential buyers so they can make a sound, educated decision. The news may scare off some shoppers, but better to lose them before they make an offer than to have the deal fall apart during attorney review. In New York real estate, as in so many other things in life, there’s nothing worse than getting your hopes up – and then having them dashed.