What is Your Attorney Looking for in an Offering Plan?

Anyone who knows the New York real estate market will tell you: read the offering plan. Even the Attorney General of New York recommends that perspective homebuyers in NYC have a lawyer carefully read the apartment’s offering plan (or OP) before making any purchases. Sounds important, right? But many New Yorkers do not even know what an OP is, much less what to look for (and what to avoid).

On this page, we will give you a brief run down of offering plans–what they are, how to find one, and what kinds of things real estate attorneys look for as they advise you through buying an apartment in NYC. Together, we will help you understand how to decode the offering plan to get the best possible deal on your new home.

What Is an Offering Plan?

An offering plan is a document that details all kinds of important information on an apartment unit in NYC. Whether you are buying a new development, a co-op, or a condo, your unit should already have an offering plan out there, ready for your perusal.

These documents are usually pretty long, so set aside some time to read through it yourself in addition to giving it to your lawyer for review.

What is Included in an Offering Plan?

The information included in your offering plan will vary based on the specific unit and building, but in general, you can expect to find the following information:

The Price

The offering price on your apartment is listed as “Schedule A” on most offering plans. However, the total cost of your unit includes not only the official purchase price, but also the ongoing carrying costs you can expect once you move into your new home. For co-ops, these are called maintenance fees, while in condos they are called common charges.

While some of these fees are set in stone, others (like month-to-month upkeep for amenities) can potentially be negotiated after reviewing the offering plan. A lot of this information will be in the “Schedule B” portion of the OP, where the budget for the first year’s operating costs is described.

The Purchase Procedures

This portion of the offering plan will outline the ways in which you go about buying the unit. This will include things like closing timelines, required paperwork, and the distribution of the tax burden.

Oftentimes, if you are purchasing a new development, you will be buying a sponsor unit. In most NYC real estate transactions, the seller pays the transfer tax, while the buyer takes on the mansion tax. For sponsor units (which have never been sold before) the buyer usually has to pay both.

This stipulation will be laid out in your offering plan, so be sure to read carefully if you are buying a new development. With the help of your lawyer and real estate agent, you may be able to renegotiate who pays taxes, as well as the other purchase procedures.

The Bylaws

Every building has rules.

If you are moving into a co-op, this part of the offering plan will tell you about the bylaws by which all residents must abide. This can include things like limits on subleasing, renovations, etc.

It is especially important to make sure you read and understand the bylaws of your co-op before you buy, since there are typically more limitations than if you were to buy a condo. This is because when you buy a co-op, you are not buying the actual apartment, but instead you are buying shares in the corporation that is the building.

For condo buyers, your offering plan will list all of the general rules and regulations of the building. When you buy a condo, you are purchasing the real property–the actual space of the apartment unit. This tends to give condo owners greater flexibility about what they can do with their home compared to co-op owners. However, that does not mean there are no limitations. Condo buyers should still carefully review the building rules outlined in the offering plan to make sure the condo’s policies work for them and their family.

The Building’s Organizational Structure

This portion of the OP will outline how the building will be run. If you are moving into a co-op, this should tell you everything you need to know about the board, its members, its financials, and its policies. If you are moving into a condo, then it will let you know about its managing body.

The Building’s Financials

Your lawyer will be paying particular attention to this portion of the OP. The building’s financials may be a bit complicated for the average buyer to parse through, but for a real estate lawyer, this is their time to shine.

Here, the offering plan will detail the money behind the building, as well as any potential or ongoing litigation or liabilities. While the offering plan will include a host of “special risks,” many of these are boilerplate and expected when purchasing any property in NYC. It is your lawyer’s job to look out for the risks that are unreasonable, and to help you negotiate accordingly.

The Rest of the Narrative

Other things you will find in the narrative sections of the offering plan include things like the type of building and the amenities on offer. For example, will the building have full time staff? Who, and how much will they be paid? What about gyms, swimming pools, etc.?

Additionally, your OP should let you know if your building is purely residential, or if it is zoned for mixed-use, meaning there will be businesses in some portion of the building. Many new developments in NYC are mixed use, often with businesses and/or office spaces on the lower floors. If this is an important consideration for you, then pay close attention to this part of the offering plan.

The Floorplans

This part of the OP is a bit more straightforward. The floor plans show a bird’s eye view of the apartment unit on offer, and include each room’s dimensions, as well as the locations of windows, doors, and included appliances.

While you look through the floorplans, take a moment to note the location of your windows. Are any of them lot line windows? If so, you may be able to use this information in negotiations. These windows are typically less valuable than standard windows, since they may be eventually have to be bricked up by the building owner. Losing a window could mean losing a whole “bedroom” in your apartment, so be sure to check for this feature when reading your OP.

Red Flags in Offering Plans

In addition to what we have already discussed in the above sections, you should also watch out for a few other red flags when looking through your offering plan.

Missing Information

If anything seems to be missing, then you may have a problem. All offering plans should include some degree of the information outlined on this page, and if they refuse to provide that information or answer your questions, then hold off on closing a deal until you speak with a lawyer.

New Construction Inspections

If you are buying a new development, then the building sponsor should have preformed inspections not only to make sure there are no construction defects, but also to ensure that appliances, plumbing, and electricity are in working order before you move in. If this information is not provided to you, but sure to schedule a final walkthrough so that you can check it out for yourself before you finalize the purchase.

Your Lawyer’s Concerns

Ultimately, listen to your real estate attorney. They are experts in their field with plenty of experience looking at offering plans from all over NYC. If they think something seems off about your OP, it is worth hearing their advice and reacting accordingly.

Where to Find Your Building’s Offering Plan

Legally, building owners have to file offering plans before they sell any units. You can search for your apartment’s OP on the Real Estate Finance Bureau’s database. Search for your building using its plan ID, name, or address, or by searching the sponsor or principal’s name.

If you are having difficulty finding your offering plan this way, contact the seller, the building manager, or your real estate agent for help locating it.

How to Find an Attorney to Look at Your Offering Plan

Once you have found your offering plan, it is a good idea to take it to a real estate lawyer to review. If you do not already have an attorney you trust, then consider asking your real estate agent for recommendations.

Your agent is there to help you in all aspects of this process, so do not hesitate to reach out to them with your questions; when they cannot answer, they will do their best to put you in contact with someone who can.