_How to buy a condo in a new development in New York

Engaging a Lawyer

Employing a property lawyer who knows the New York market is crucial. There are numerous ownership structures available depending on the purchaser’s needs and priorities. A lawyer can explain each ownership structure in detail and help the purchaser choose the most appropriate one for their specific needs.

Submitting the Offer

In New York City, offers are made orally by an agent direct to the seller or to the seller’s agent. The offer should include all relevant terms: i.e. price; whether you intend to close cash or with financing and any additional requests such as parking spaces and storage.

Offer Accepted

The agent will let you know when an offer has been accepted and the final terms.

Due Diligence

Once an offer has been accepted, the purchase agreement is delivered to the appointed attorney, along with the condominium offering plan. The due diligence period then begins and is usually 5-7 days. During this period, the attorney reviews both sets of documents on the purchaser’s behalf to ensure there is no undue risk.

All questions / concerns can be addressed during this period of review. In some cases, the agent may be able to negotiate a 14-day due diligence period for foreign nationals, however, this is on a case-by-case basis.

Most developers will refrain from entertaining any other offers during the due-diligence period.

Signing the Purchase Agreement

The signed purchase agreement and initial deposit (typically 10% of the purchase price) need to be received during the due diligence period. If the purchaser fails to submit both within this time, the developer may rescind the accepted offer and consider others.

Executed Purchase Agreement

Under New York law, neither party in a real estate transaction is bound until both parties sign the contract and the initial deposit is delivered. The deposit is held in the developer’s attorney’s escrow until closing, providing an additional layer of protection. The escrow account details are disclosed in the purchase contract.

Additional Deposits & Financing

In new developments, an ‘additional deposit’ (typically an additional 5-15% of the purchase price) will be required some months after the signing of the purchase agreement.

The attorney will advise on specific payment terms from the outset. If financing is required, it should be sought out at this stage.

Receiving the Closing Notice

The attorney will advise when confirmation is received that closings are likely to commence.

At this stage, the attorney will coordinate a title search and arrange the purchase of title insurance, as well as provide closing costs estimate, indicating the total sum required to close, including a breakdown of transfer taxes, recording fees etc., and request a transfer of funds to the attorney’s escrow account. 

If financing, the lender will provide a HUD1 settlement statement, which outlines the final cost to close and certified checks required. In addition, the lender will advise if any final documents are needed to clear the loan for closing.

The attorney will receive a formal closing notice; giving  approximately 30 days advance notice of the scheduled closing date.

The agent will then schedule a walk through. If the purchaser does not plan to physically attend the closing, the attorney will provide a Power of Attorney documentation to sign, allowing the attorney to close on behalf of the purchaser. 

The Closing

Documentation is signed and exchanged, the purchaser will receive title, becoming the formal, legal owner of the apartment.

Closing Costs

• Mansion tax: 1%
• Transfer tax: approx. 1.825%
• Mortgage recording tax: 1.925% (applied only to mortgaged amount)
• Buyers attorney fees: estimated US$2,500 - US$4,000
• Sponsors attorney fees: estimated US$3,500 - US$3,750

Additional Real Estate Expenses

Common charge adjustment: Pro-rated for the month of closing

Real estate tax adjustment: Pro-rated depending on when the tax is collected

Working capital contribution charges: (usually) 1-2 months of common charges into the building so they can accumulate capital for when operations commence. This amount is not credited towards any future common charge payment and is paid at closing to the building

Miscellaneous condominium charges: vary by building.

Short term interest: equal to interest for balance of month in which you close. Consult your NY attorney

Title insurance: consult your local NY attorney

Miscellaneous costs: estimate US$1,500 in misc. fees throughout the transaction process.

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