A condo offering plan is similar to the prospectus for an initial bond or stock offering. It needs to be thorough and describe in detail every major aspect of a property that is being sold for the first time. The seller and listing agent are responsible for delivering the offering plan and related due diligence materials to the buyer and their attorney.
The exact contents of a New York condo offering plan will vary according to circumstances related to the property or sale, but the four elements below should be part of any solid plan.
Description of Property and Improvements
This important section describes the condo itself and indicates whether the property will be improved or upgraded. It also confirms that all units are constructed in accordance with all applicable building and zoning laws and requirements. If there are any large appliances not included in the price of the unit, they must be highlighted and included in the Special Risks section.
Budget for First Year of Operation
A condo offering plan needs to describe all anticipated income and expenses for its first year of operation. All calculations are determined from the date that operations are reasonably expected to begin and no earlier than six months after the filing of the offering plan. A budget for the carrying charges for each unit and any associated homeowner association is included. Any reserved development rights and the projected carrying costs of units yet to be built need to be disclosed.
Changes in Prices and Units
This section of the condo offering plan states that in the event there is a price change to all of the units or a price increase for an individual purchaser, the listed prices must be changed by filing an amendment to the offering plan. This particular section also indicates that the following changes will not be made except by amendment to the plan and, when necessary, the declaration:
- Change in the number or size of units and/or each one’s common interest percentages
- Material changes to the size and quality of common elements in the condo
It must also be specified that no substantial changes will be made to units or common areas unless the unit owners consent.
Terms of Sale
The terms of sale section must describe the following (among other things):
- The type of deed being granted
- The extent of the sponsor’s obligation to carry out repairs
- A temporary or permanent occupancy certificate will be provided prior to closing
- A description of the title status and any liens that will affect the units after the title is closed
- Any personal property within each unit
A solid condo offering plan needs to contain accurate information that protects both the principals and the sponsor. Assistance in obtaining a detailed plan that meets all the standards required for acceptance, contact Rosen Law, LLC. We have helped many clients deliver strong plans that deliver the results they need, so call us today at (516) 437-3400.