I purchased a condo in a new building six months ago. Recently, I received notices (separately) from NYC Finance and the developer stating that the unit's annual taxes and monthly maintenance will be raised--a combined increase of almost 40%. At the open house and subsequent visits, the sales agent assured me that the monthlies should remain the same for at least 2 years, since they accounted for... [more]
I purchased a condo in a new building six months ago. Recently, I received notices (separately) from NYC Finance and the developer stating that the unit's annual taxes and monthly maintenance will be raised--a combined increase of almost 40%. At the open house and subsequent visits, the sales agent assured me that the monthlies should remain the same for at least 2 years, since they accounted for increased costs in the coming years. Obviously, sales agents cannot be held accountable for their promises. And most of us did not foresee the economic nosedive that surely plays a part in these increases. However, the developer priced the units at a premium, largely in part to the low monthlies. (And they continue to advertise low monthlies for remaining unsold units).
My question is, is it common for tax and maintenance to increase rapidly in the first year? And is it fraudulent for the developer to advertise low monthlies to bait prospective buyers?
Not that it makes a big difference, but this is a very reputable developer (no lawsuits to date) and a well regarded building. Which makes these circumstances even more surprising.
Any words of advice are much appreciated.
Chris
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Response by projects_suck
almost 17 years ago
Posts: 72
Member since: Jan 2009
40% seems excessive - what were the reasons given?
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Response by bugelrex
almost 17 years ago
Posts: 499
Member since: Apr 2007
Did you get a reason for the tax increase? Was there a tax abatement in place? It is a bit odd that the taxes have gone up so soon, unless its a VERY small increase?
Are you sure the monthly maintaince is not an assesment for X number of years? The assessments are expected if the developer screwed up the cost analysis(they expected more closed units by now and cannot meet the total monthly maintaince for the entire building) or there are quality issue in the building that need fixing...
If its quality issues... a lawyer may be able to help
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Response by chrisb
almost 17 years ago
Posts: 9
Member since: Feb 2008
For the common charges, the notice states increased operating costs. And Dept of Finance indicates an increase in market and taxable value due to structural changes to the property ("new construction" and "alteration").
Bugelrex-your second paragraph is likely. However, the notice is definitely not a temporary assessment. If your cost analysis assumption is correct, can I possibly expect a lower maintenance when the building is fully sold?
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Response by bugelrex
almost 17 years ago
Posts: 499
Member since: Apr 2007
chrisb...
"can I possibly expect a lower maintenance when the building is fully sold?"
.. you better hope the condo board are not liberal democrats! They'll find a way to spend the extra money.
Confirm if its a temporary assesment, if not there really is no expectation if coming down unless the condo board start cutting ammeneties. If there only 10's of units and everyone is pissed at the assesment you may be able to organize everyone to petition ammentiy (spelling!) cuts.
Find out exactly what the increases are for to make sure the developer didn't pull a fast one... Hopefully there are laws protecting prospective buyers?? Let us know!
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Response by chrisb
almost 17 years ago
Posts: 9
Member since: Feb 2008
Good point. There are 150 units, half of which have closed.
And I'm curious as well if it's legal for the developer to have used (and still use) low monthlies to encourage higher unit prices.
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Response by KeithBurkhardt
almost 17 years ago
Posts: 2985
Member since: Aug 2008
Did the building loose it's tax abatement? When buying new construction it is very important to make sure the estimated budget to run the building makes sense. Remember that the CC charges(new construction) are based on assumptions and a couple of buildings come to mind that assumed wrong.
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Response by manhattanfox
almost 17 years ago
Posts: 1275
Member since: Sep 2007
I moved into a building in the 1990s and there were no maint. increases for 7 years. then, there were increases year after year after year. The city seems to raise taxes on property in waves -- i believe bloomberg tried to bring real estate taxes current to increased prop values but they were still low...
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Response by KeithBurkhardt
almost 17 years ago
Posts: 2985
Member since: Aug 2008
sorry meant "lose"
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Response by chrisb
almost 17 years ago
Posts: 9
Member since: Feb 2008
Just called the sales office inquiring about the J51 abatement, since that seems plausible. Waiting to hear back.
theburkhardtgroup--out of curiosity, how off were those buildings that came to mind?
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Response by nyc212
almost 17 years ago
Posts: 484
Member since: Jul 2008
chrisb, sorry to hear about your situation. It's a risk one takes when purchasing a new construction--especially a smaller one like yours. Probably the developer counted on having sold significantly more units by now, which would have greatly reduced the per-residence cost for paying for the amenities, common-area utilities, the doormen, etc. This is probably the reason for the CC increase. Unfortunately, I am sure the offering plan clearly stated that the numbers were based on the assumption of XX% sold and closed, and your developer most likely grossly overestimated this number. I am sure these problems will occur in places like 20 Pine, Oro, One Hansen, 99 John, any new construction that hasn't sold and closed @ at least the 75-80% line (check the offering plan for more details).
The tax increase is another story. The developer has no control, and it is up to the city (as it is clearly stated in the offering plan, I am sure). The developer can only "guesstimate."
You needed a better real estate attorney to explain all of this to you, chrisb. These are crucial matters in purchasing new constructions, and I am really sad that your attorney didn't explain things more explicitly. Many potential buyers refrain from purchasing in smaller bldgs. w/ less than 80% or 90% sold, precisely for this reason.
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40% seems excessive - what were the reasons given?
Did you get a reason for the tax increase? Was there a tax abatement in place? It is a bit odd that the taxes have gone up so soon, unless its a VERY small increase?
Are you sure the monthly maintaince is not an assesment for X number of years? The assessments are expected if the developer screwed up the cost analysis(they expected more closed units by now and cannot meet the total monthly maintaince for the entire building) or there are quality issue in the building that need fixing...
If its quality issues... a lawyer may be able to help
For the common charges, the notice states increased operating costs. And Dept of Finance indicates an increase in market and taxable value due to structural changes to the property ("new construction" and "alteration").
Bugelrex-your second paragraph is likely. However, the notice is definitely not a temporary assessment. If your cost analysis assumption is correct, can I possibly expect a lower maintenance when the building is fully sold?
chrisb...
"can I possibly expect a lower maintenance when the building is fully sold?"
.. you better hope the condo board are not liberal democrats! They'll find a way to spend the extra money.
Confirm if its a temporary assesment, if not there really is no expectation if coming down unless the condo board start cutting ammeneties. If there only 10's of units and everyone is pissed at the assesment you may be able to organize everyone to petition ammentiy (spelling!) cuts.
Find out exactly what the increases are for to make sure the developer didn't pull a fast one... Hopefully there are laws protecting prospective buyers?? Let us know!
Good point. There are 150 units, half of which have closed.
And I'm curious as well if it's legal for the developer to have used (and still use) low monthlies to encourage higher unit prices.
Did the building loose it's tax abatement? When buying new construction it is very important to make sure the estimated budget to run the building makes sense. Remember that the CC charges(new construction) are based on assumptions and a couple of buildings come to mind that assumed wrong.
I moved into a building in the 1990s and there were no maint. increases for 7 years. then, there were increases year after year after year. The city seems to raise taxes on property in waves -- i believe bloomberg tried to bring real estate taxes current to increased prop values but they were still low...
sorry meant "lose"
Just called the sales office inquiring about the J51 abatement, since that seems plausible. Waiting to hear back.
theburkhardtgroup--out of curiosity, how off were those buildings that came to mind?
chrisb, sorry to hear about your situation. It's a risk one takes when purchasing a new construction--especially a smaller one like yours. Probably the developer counted on having sold significantly more units by now, which would have greatly reduced the per-residence cost for paying for the amenities, common-area utilities, the doormen, etc. This is probably the reason for the CC increase. Unfortunately, I am sure the offering plan clearly stated that the numbers were based on the assumption of XX% sold and closed, and your developer most likely grossly overestimated this number. I am sure these problems will occur in places like 20 Pine, Oro, One Hansen, 99 John, any new construction that hasn't sold and closed @ at least the 75-80% line (check the offering plan for more details).
The tax increase is another story. The developer has no control, and it is up to the city (as it is clearly stated in the offering plan, I am sure). The developer can only "guesstimate."
You needed a better real estate attorney to explain all of this to you, chrisb. These are crucial matters in purchasing new constructions, and I am really sad that your attorney didn't explain things more explicitly. Many potential buyers refrain from purchasing in smaller bldgs. w/ less than 80% or 90% sold, precisely for this reason.