Maintenance Increased After Contract! What now?

What are you hoping for? Whatever the maintenance is, you have to pay. And actually, $550K reserve for 80 units isn't all that great -- it's actually on the low side.

Did your attorney review Board minutes? What did your due diligence reveal in this area?

My understanding (as a layman, not an attorney) is that you're probably out of luck in any case. If the minutes include a discussion of the maintenance increase, you had the opportunity to find the information and adjust your offer before signing. If there's no evidence that an increase was in the works, then the seller (and everyone representing the seller) can plausibly claim ignorance - not that they particularly need to, given that New York puts most of the burden on the buyer.

Unless the increase causes the bank to reject your loan (financial contingency), you have little recourse

you are out of luck unless the person was on the board and you can prove he/she knew this was in the works.

throwmeaway, for some perspective, when were you expecting an increase in maintenance to occur and by what percentage? How did you come to that expectation? While the answers likely does not change your ability to get any concessions, it would quantify the amount you're really looking for and might conclude that it's not worth the trouble.

You can ask for whatever concessions you want but you won't get anything. Maintenance increases are part of owning an apartment. As long as the seller didn't know about this and withhold the information from you (should be a clause in your contract stating as much), you are sh*t out of luck.

Put another way: imagine the maintenance increase was passed right after you closed rather than right after you signed the contract. What sort of concessions do you think you would be looking for in that scenario? Why do you think it should be any different in this case?

Bottom line: this has no impact on the contract or sale. None. You get no "concession." Maintenance increases are part of owning a coop. As an aside, just amazes me how little knowledge of coop ownership many people have who sign contracts to make the largest purchase of their lives. This is such a fundamental issue that having signed without understanding this is kind of astounding. Makes one wonder if sufficient questions were asked about:
History of capital assessments.
Anticipated upcoming assessments.
Capital improvements and mainenance that is upcoming.
Status of Local Law 11 compliance and expected expenses the coop will have to lay out for this.
History of maintenance increases to reveal trends at the building.
Understanding and expectation that maintenance will increase to adjust for rising NYS RE taxes.

I could go on. I think a lot of people spend more time researching car purchases than coop purchases despite the fact that most coops will cost well more than 10x an average car.

Agree that there is probably no recourse here.

BUT I would check the date on the contract v. the date of the maintenance increase. If the maintenance increase pre-dated the contract and you were only notified after you signed the contract, maybe there's some recourse. I'm 90% sure our contract contained a provision where the seller warranted that the maintenance was X on the date of the contract.

Usually, though, a good attorney will be able to tell you about the likelihood of a maintenance increase based on the due diligence. Actually, even a bad attorney will usually be able to tell you. We had a terrible attorney, but and he was able to tell us that the building was running on fumes, hadn't had a maintenance increase in years, and would need to increase maintenance shortly.

Kyle in defense of some people, myself included, hindsight is 20 /20. depending if this is your first purchase and how experienced your lawyer is, mot everyone will know to look for board minutes, etc etc. The minutes may not have even been kept properly so I think there is always going to be something unknown. Thats whats great about this site is that you can learn stuff. I never would have thought to take a measuring tape to an open houses.

agree with kyle. That research could have been done by any buyer. The minutes are usually read by the buyers' lawyer. Nobody read the minutes it seems.

Did the sellers lawyer wait until you signed and then said: By the way, there's a maint. increase that is being charged to shareholders as of today?
Even if so it is being charged to all shareholders.

It wasn't "hindsight" it was an oversight. It could have been done but it wasn't.

Kyle is 100% correct. Maintenance will increase. Assessments will occur. In most cases maintenance increases happen at the beginning of the calendar year, but not always. Even if the planned maintenance increase had been discovered during your due diligence, would that have scuttled the deal? If so, then you shouldn't be purchasing a co-op in the first place. Because maintenance will only go up.

It most likely won't scuttle a deal but it would likely result in a lower offer.

Welcome to the wonderful world of Co-op "investment".
You've just learned lesson number one:
You'll know what they want you to know and pay what they tell you to pay.
Usually you don't learn that lesson till after you've moved in.

If the OP had performed his own due diligence he probably would not have bought into a Coop at all. But like so many other victims, he trusted a real estate lawyer who undoubtedly has friendly "affiliations" with the building admin and/or brokers and never had any interest in looking out for his financial well being.

But just for kicks, give your lawyer a call and ask him point-blank if he thoroughly reviewed the building finances and minutes (not that there would be anything in the minutes that they don't want you to see).
And if he claims that he did, ask him point-blank why this information was not disclosed in the buildings documents. Just for fun.
That might be lesson number two.

My advice would be to learn the names of your elected officials and take every opportunity to pressure them to create new legislation that protects the rights of coop shareholders and regulates coops for what they are, a persons home, the most personal and substantial asset that most people will ever…. ehem, "own".

Then maybe after you're gone you'll be able to leave your home to your children without getting approval.

best of luck

The maintenance is likely to increase every single year for as long as you will own the apartment, so I do not see any point in asking for a concession. Doing so may likely send up a flag to the board that you are a difficult and argumentative person, so it could impact your chances of passing the board.

A ten percent increase is a bit high, but you should expect an increase in the mid single digits each year. The doorman's union just got an increase, taxes have gone up, the cost of oil and water have increased.... all of which lead to maintenance increases.

throwmeaway, please explain why the seller should owe you anything, especially if the maintenance increase was due to real estate taxes which are totally beyond the control of the seller and co-op? Contracts typically address maintenance at the time of signing, not closing, and most contracts include riders requiring the seller to verify maintenance on their own (and striking the seller's obligation to provide accurate information). And why would you expect (or even want) the co-op board to use a reserve fund to subsidize tax increases? That is absurd...

Your recourse is pretty simple, you can forfeit your deposit and walk away...

give me a break!
welcome to N.Y. young buyer.
boo-hoo

The letter was sent out on 5/7 and the contract was signed on 5/8. I feel like this is information I should have been given prior to signing. I would have definitely lowered my offer had I known this information. My lawyer says he's going to be able to get me out if need be. I will keep you guys updated on how things turn out.

Thanks for all the responses!

"give me a break!
welcome to N.Y. young buyer.
boo-hoo"

Yes yes this is most true. Guess I learned my lesson the hard way. I trusted my lawyer to do good diligence and did not seek out all the answers by myself.

" And why would you expect (or even want) the co-op board to use a reserve fund to subsidize tax increases? That is absurd..."

Sorry I was not clear with my original post. I don't expect the board to do anything about this.

"The maintenance is likely to increase every single year for as long as you will own the apartment, so I do not see any point in asking for a concession. Doing so may likely send up a flag to the board that you are a difficult and argumentative person, so it could impact your chances of passing the board."

Haha maybe that will be my out. jk jk

"It most likely won't scuttle a deal but it would likely result in a lower offer."

I think so too. It's just sad my lawyer did not find out about this. But ultimately I blame myself. Small price to pay for some valuable experience.

>>I would have definitely lowered my offer had I known this information. My lawyer says he's going to be able to get me out if need be. I will keep you guys updated on how things turn out.<<

Why?? Does an extra c-note (or whatever) a month really warrant a 'lowered offer'? If so, your margins are way too slim to be buying in the first place. Is there something I am missing here? Was there a MAJOR bump in the maintenance (because of a land lease or the like)? Because if we're talking only a standard increase, which was going to happen soon enough anyway, there really is no recourse.

Good on your lawyer if he thinks he can use this to 'get you out' but honestly I think he's blowing smoke up your tookus. Because no sales contract can guarantee your maintenance won't increase, because it WILL INCREASE. Of course, that is my non-lawyer opinion.

As an aside, I am often amazed at how hung up buyers/sellers can get on relatively small details when executing several-hundreds-of-dollars or a multi-million-dollar deal). I've heard of skirmishes over light fixtures, minor appliances, built-ins... and now this. What true impact does a standard maintenance hike really have overall??

^^^last graph should read 'several-hundreds-of-THOUSANDS-of-dollars'... wish this board had an edit button.

Have you been approved by the board?

No I have not submitted my board package yet. Hypothetically speaking, $100 maintenance decreases the property value by $20,000 assuming a 4% interest rate. It becomes harder to sell and harder to maintain. I am not going to lose sleep over that type of money but I would have lowered my offer. Obviously, if this maintenance increase happened after I signed the contract then I wouldn't be complaining, but my lawyer claims there was nothing in the minutes that suggested this big of an increase was looming (i know i know of course he would say that). Anyway, I appreciate your opinion.

throwmeaway,

based on your logic:
"$100 maintenance decreases the property value by $20,000 assuming a 4% interest rate"...

Your unit is going to loose 20k every 2 to 3 years!..

If you think $100 increase is a BIG increase.. are you sure you can afford the property in the first place?

Stop. Take a deep breath.... And walk away.

You (and your lawyer) are not ready to buy a co-op. Clearly.

Your mindset and priorities are skewed. And unrealistic. Owning real estate is full of surprises, from unexpected costs to unexpected repairs and more. You are going into business with your neighbors in a co-op, and as a new resident I can guarantee you will not have much of a vote. So if you are going to complain, seek "a better deal", or otherwise be irritatingly self involved... Do yourself and your potential future neighbors a great favor and back off until you are a bit more rational. I think everyone involved will breathe a sigh of relief that someone who thought a maintenance increase in a New York co-op was something that could somehow be a source for "concessions" (as you put it) is not going to put himself or anyone else through his own naive hell any longer.

I admit that the OP is being a little ridiculous -- $20k off is a bit much.

On the other hand, I don't like that a seller apparently withheld information that he or she may have been obligated to disclose. If that's the case, I would ask for some concession, like six months or one year of the maintenance increase amount, just on principle.

>>Hypothetically speaking, $100 maintenance decreases the property value by $20,000 assuming a 4% interest rate. It becomes harder to sell and harder to maintain.<<

Your logic is skewed. You would have had the standard new year increase in 7 months anyway, right? And another increase the next year, and the next year and so on and so on... Oh, and toss in a few assessments here and there for good measure as well. Are you suggesting these normal maintenance hikes will devalue your apartment? Then why bother purchase at all??

Trust me that you will very likely discover more issues lurking once you've purchased. You may find you need to upgrade electric. Replace windows or wonky appliances. Repair heretofore unnoticed water damage. Who knows. You need to be prepared for this stuff if you plan to purchase. Caveat emptor.

By the way, it does not matter whether or not you've submitted your board package or not. If you're signed a contract and the seller has countersigned and money has changed hands in the form of a deposit, you are very unlikely to be able to walk away unscathed from this deal, barring some serious and provable bad action on the seller's part. Is any of this worth losing your deposit? Because that is what will happen if you scrap the deal.

Like I keep saying I would not be complaining had this all happened after I signed but the increase was before I signed and no one on my side of the deal knew about it. Hopefully something things will come to light today. And yes I believe every time your maintenance goes up your apt becomes harder to sell esp if it's disproportionate to the rest of the market. Would you guys not have lowered your offer had you found out about a ten percent increase prior to signing? That is really the heart of the question. I mentioned the board pkg cause someone asked about it. Thx for the replies

TMA,

Not to be all "welcome-to-New-York-City," but if the maintenance increase was due to increased city real estate taxes, or an increased cost of labor, or higher utility costs -- which are three likely reasons for it -- then it's a cost of housing that you would be forced to bear if you had made an alternative decision and stayed a renter.

Does that lessen the pain a little?

throwmeaway: If you love the space and plan to be there 7-10 years, perhaps I would be annoyed but I would not walk away from a home I loved over a maintenance increase of 10%. Assuming your attorney did a thorough reading of the minutes, financials and his/her conclusion is that the building and it's future financial prospects are sound, that is what really matters.

As many have pointed out here maintenance increases are a part of co-op ownership, the big picture health of the building is what counts here. If you did your homework regarding the value of the apartment and felt confident the pricing was correct, a 10% maintenance increase will not be so detrimental to the co-ops value (assuming mnt. was not already very high).

What would be troubling is if the seller withheld this information purposely. But would you want to torpedo a deal to buy a home you love over the poor behavior of a seller? (of course there would be other circumstances where hiding material facts about the apartment would be cause for alarm and action, I just don't think so in this case). I am very surprised this was not brought up in the minutes, a 10% increase in maintenance would most likely have been discussed among board members? That is a bit puzzling.

Either way best of luck to you.

Keith Burkhardt
The Burkhardt Group

"I trusted my lawyer to do good diligence and did not seek out all the answers by myself."

How is a lawyer supposed to know what's in the heads of board members who make a surprise decision to raise the maintenance?

The letter was sent out on 5/7 and the contract was signed on 5/8.

There is no way the seller would have known about this increase unless they are clairvoyant. Stop whining, already.

Are you really telling me if you knew the maintenance was $1,100 per month instead of $1,000 you would've decreased your offer $20,000? Maintenance increases are normal part of business and there isn't a dollar for dollar change in the sales price unless an apartment carries an exorbitant maintenance compared to comparable properties (say $2.50 per sq foot vs. $1.5 per sq foot).

Judging by your timeline, the letter was sent on May 7th and the contract was signed on May 8th but I'm guessing you didn't sign the contract and pay a deposit the very day it was prepared. I imagine the contract was prepared at least a day before you signed it and the effective date on the contract is before May 8th.

Increase in normal operating costs of the business are par for the course and 99% of the time you don't get advance notice unless you sit on the board. You are notified by a letter stating that maintenance will increase effective XXXX, which appears to be exactly what happened here.

Why is it crazy to think that a buyer would lower his offer if the maintenance was advertised higher?

If there are 2 identical apts and one is 500K with a maintenance of 1000 and the other has a maintenance of 1100, you wouldn't offer slightly less for the 2nd?

Maintenance will always be somewhat subjective because it's a combination of charges and investments.

Would you rather buy an apartment with $1,100 maintenance and nine months of operating expenses in reserves, or an apartment with $1,000 maintenance and four months of operating expenses in reserves?

Would you rather buy an apartment with $1,100 maintenance and old hallways, or $1,000 maintenance and new hallways?

I'd argue that you want maintenance within a normal range. E.g., my maintenance now is about $1,500, about average for the size of the apartment. I'd have serious concerns about buying a comparable unit with maintenance above $2,000, but if I saw maintenance of less than $1,000, I'd start to have concerns about how the building is being run. Kind of like a Van Westendorp price meter.

My other concern with a low maintenance building is that you're paying a premium for the low maintenance that won't last because the building is eventually going to have to do whatever the buildings with higher maintenance have already done. If maintenance is low, I would want to understand if and how the low maintenance is sustainable, and whether there's really value behind it.

Sorry, second comparison should be $1,100 and new hallways v. $1,000 and old.

Obviously, $1,000 and new beats $1,100 and old.

>If there are 2 identical apts and one is 500K with a maintenance of 1000 and the other has a maintenance of 1100, you wouldn't offer slightly less for the 2nd?<

No. If the extra hundred clams per month were that make-or-break I would not be buying in the first place.

Bramstar, you are saying you would pay the exact same amount for identical apts even if the maintenance was hihger on one? Why? That doesn't make any sense. I agree that if the extra 100 a month is a make or break, then shouldn't be buying but that still doesn't mean that a buyer wouldn't want to have made a lower offer.

People negotiate concessions based on silly things for small amounts all the time. I am not saying anything was wrong about this situation just that it isn't crazy to think that someone would want to offer less if the maintenance was higher than expected/advertised. Even if it is only 5K, that is still real money.

You can't compare different apts and the maintenance. The only question is the exact same apt and different maintenance amounts.

but this whole thing isn't about two identical apartments with different maintenances. its about whether or not annual increases in maintenance lower the value of a specific apartment.

Bob420 - so you are telling me that if you liked an apartment with an advertised maintenance of $1,000 you would bid $X but if you looked at the same apartment and instead it carried a maintenance of $1,100 instead of the original $1,100 you would bid $X - $20,000? If that was the case than apartment prices would decrease every year.

throwmeaway.... is this your first home purchase? Did you just move to NYC? I ask this because I find it weird that you wouldn't think maintenance/assessment costs were going up, even if the increase occurred a year after you signed. Even if you owned a single family home, you should expect costs to go up each year.

Ladyjay is this the first time you are reading?

E24. That's exactly correct. If you looked at comparable Apts and plotted maintenance against price it'd be linear with about a 1 to 20000 ratio.

Oops 1 to 200

I am not saying it is 20K but present day higher maintenance on identical apts definitely lowers value.

Of course you can expect maintenance to increase over time. But that has nothing to do with what the maintenance is at the present time. If given the choice of 2 identical apts and one has higher maintenance, I most certainly would offer less.

20,000 is a widely accepted # agents use to price the Apts because that's how much more money you can borrow assuming 30 years at 4 percent

bottom line, "They" knew about the increase before you signed the contract and you did not. THat is the issue. Of course maintenance will go up and is expected to, but all should know. And, it will effect price.

Everyone knows that at some point every single year the maintenance will rise. When is the annual meeting? Likely sometime just before this increase went into effect. Had one looked closely at the financials it probably would be clear that the maintenance changed every year at the same time. What sort of price point are you talking about anyway for this apartment?

>but this whole thing isn't about two identical apartments with different maintenances. its about whether or not annual increases in maintenance lower the value of a specific apartment.

What an idiot. Almost all apartments have annual increases in maintenance. Maybe not up in columbia county though. Do they have co-ops in columbia county?

>Everyone knows that at some point every single year the maintenance will rise.

That's right, so basically the buyer is bitching about average 6 months times the increase in maintenance. What's that, $600 or $1200?

Not sure if huntersberg too lazy to read thread or retarded. feel free to insult me but at least get my argument straight

yes, it's me who is retarded and too lazy. You couldn't even find a lawyer to do due diligence. What an ass.

hunters burg lives to provoke.

think of him as the village fool.

in fairlyland columbiacounty, maintenance never increases.

the fool performs.

hey congratulations columbiacounty, you finally found someone on your side: an idiot who didn't expect his maintenance to increase and who had a moron as a lawyer

now the fool dances. see the fool dance.

dance, fool.

oh, pulling a little somewhereelse vs. stevejhx, nice.

the fool speaks gibberish.

the fool is a fool.

go fool.

but you understand, don't you?

more foolishness.

nice work, fool.

someone learned a new word today and is using it as often as he can.

work it fool.

work it.

still a fool.

always a fool.

tomorrow's word in columbiacounty is "outhouse"

wow.

the fool speaks.

makes no sense.

because a fool is a fool.

Sunday's word up in columbiacounty is "meth"

the fool flounders.

keep going fool.

Also on Sunday in columbiacounty, local deer look for old men with big, expensive cars

wow. just confirming your status.

fool.

keep dancing fool.

You couldn't wait, you had to post twice in a row?

can you say anything fool?

nope.

now even answering your own questions. I guess that happens during senility.

oh...poor, poor fool.

keep trying.

maybe you'll get there.

although i doubt it.

get to columbia county? Not this weekend

see the fool.

see the fool dance.
dance fool.

dance.

Do they do much recycling in columbiacounty? If not, maybe you can introduce it to the legislature.

more foolishness.

the fool needs to be a fool.

hey, have you tried to spell fool backwards?

dance fool.

dance.

still a fool.

always a fool.

Remember when you had your Hitler fetish:
http://streeteasy.com/nyc/talk/discussion/27973

columbiacounty
about 8 months ago
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mein fuhrer.

huntersburg
about 8 months ago
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Why thank you!

columbiacounty
about 8 months ago
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heil huntersburg.

more foolishness.

a fool needs to be a fool.

go for it.

go for what?

being the fool.

always.

why

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the fool being a fool.

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why

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why

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i think you've convinced us all.

you are a fool.

why