Background: We're first time home buyers, started the search around 2 months ago mostly attending open houses in BK, LIC, and upper Manhattan. Interested in a >600 sqft studio/one bedroom. Not currently using a RE Agent. Looking to stay below 420K. Ran into an apt we really liked in upper Manhattan- a rental building currently going through Condo Conversion. The RE Agent offered us some great... [more]
Background:
We're first time home buyers, started the search around 2 months ago mostly attending open houses in BK, LIC, and upper Manhattan. Interested in a >600 sqft studio/one bedroom. Not currently using a RE Agent. Looking to stay below 420K.
Ran into an apt we really liked in upper Manhattan- a rental building currently going through Condo Conversion. The RE Agent offered us some great incentives to be one of the first owners to sign a contract, because, as he explained, 15% of the units needed to be signed in order for the condo declaration to be declared effective.
I looked up condo conversion and found some info from the NY State General Atty's office (specifically the Martin Act) which seemed the indicate that at least 51% of the units needed to be purchased for the declaration to be effective. My mortgage broker confirmed my understanding and offered to speak to the RE Agent as she was concerned that I would not be able to retain my 'A Paper' with so little ownership in the building.
Has anyone seen/dealt with this before? Any advice? Who's misplacing the order of the 1 and the 5 here?
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Response by sfo
almost 18 years ago
Posts: 130
Member since: Jun 2007
our bulding is going thorugh a conversion and 15 % is needed for the plan to be effective.
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Response by poorishlady
almost 18 years ago
Posts: 417
Member since: Nov 2007
The plan is "effective" with 15%. But the building as a viable condo establishment with the mortgage establishment isn't real until there are 51% units purchased. And the prospect of being condo pioneer buyers will not entice too many other buyers. So if you buy in now, you may not have many neighbors who are owners for a long, long time . . . In other words, it's not a sure-fire good investment. You'd be safer buying into a more established coop . . . (or condo if you can find one).
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Response by starfish
almost 18 years ago
Posts: 249
Member since: Jul 2007
FWIW, we looked at an early stage condo conversion on the UWS two years ago and were told about half the tenants were being allowed to stay for awhile due to rent control. Made for a very strange vibe, as the remaining tenants were pretty pissed off that there neighbors were essentially being kicked out if they could not buy their units. RE agent said the new owners would be allowed to make all decisions regarding amenities and running the building while excluding the renters. Seemed too strange to us - plus one of the renters staying told us our quiet little baby was too loud for the building! All very strange. Bottow line, we decided not to be pioneers. Good luck though.
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Response by al14
almost 18 years ago
Posts: 4
Member since: Feb 2008
I agree with starfish. Do your research on how much of the building would be owner-occupied. I'm looking at a building that is just beginning the condo conversion, and over 60% of the tenants are rent-regulated and are not accepting buyouts. The sponsor would retain total control of the board in this case, and amenities are definitely restricted only to potential owners. Also, the regulated tenants do get harassed in order to encourage them to move--this is a fact and it was confirmed to me that it would occur in this building. So, the majority of the residents in the building would be very unhappy. Personally, I'm not too interested in paying a hefty sum of money to live in an environment that is less than ideal.
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Response by al14
almost 18 years ago
Posts: 4
Member since: Feb 2008
oh--and just to add an example of a conversion that can take decades--look at the Ansonia. The sponsor of that condo conversion is still selling units AS THEY BECOME VACANT, almost 20 years after starting the conversion process. It's a mix of luxury buyers and rent-stabilized tenants.
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our bulding is going thorugh a conversion and 15 % is needed for the plan to be effective.
The plan is "effective" with 15%. But the building as a viable condo establishment with the mortgage establishment isn't real until there are 51% units purchased. And the prospect of being condo pioneer buyers will not entice too many other buyers. So if you buy in now, you may not have many neighbors who are owners for a long, long time . . . In other words, it's not a sure-fire good investment. You'd be safer buying into a more established coop . . . (or condo if you can find one).
FWIW, we looked at an early stage condo conversion on the UWS two years ago and were told about half the tenants were being allowed to stay for awhile due to rent control. Made for a very strange vibe, as the remaining tenants were pretty pissed off that there neighbors were essentially being kicked out if they could not buy their units. RE agent said the new owners would be allowed to make all decisions regarding amenities and running the building while excluding the renters. Seemed too strange to us - plus one of the renters staying told us our quiet little baby was too loud for the building! All very strange. Bottow line, we decided not to be pioneers. Good luck though.
I agree with starfish. Do your research on how much of the building would be owner-occupied. I'm looking at a building that is just beginning the condo conversion, and over 60% of the tenants are rent-regulated and are not accepting buyouts. The sponsor would retain total control of the board in this case, and amenities are definitely restricted only to potential owners. Also, the regulated tenants do get harassed in order to encourage them to move--this is a fact and it was confirmed to me that it would occur in this building. So, the majority of the residents in the building would be very unhappy. Personally, I'm not too interested in paying a hefty sum of money to live in an environment that is less than ideal.
oh--and just to add an example of a conversion that can take decades--look at the Ansonia. The sponsor of that condo conversion is still selling units AS THEY BECOME VACANT, almost 20 years after starting the conversion process. It's a mix of luxury buyers and rent-stabilized tenants.