Ahead of the NY Times - New Dev Sizing
A: Thanks to an UrbanDigs reader turned buyer client for pointing this one out to me! On March 25th, the NY Times published a story titled, "The Danger in Fine Print" that discusses the dangers of estimates and approximations listed in the 2-inch thick offering plans of new developments. As the project completed and began occupancy, past buyers found that their units were smaller than what they expected, appliances aren't delivered as told, and the view is not quite what they imagined them to be. Well, New York is a buyer beware state!
In my post titled, "New Dev Sizing: Double Counting", I discussed the trend that some developers take in adding the common elements to the marketed square footage of specific units. I published this post back on January 19th, 2007 as I observed the practice in real time with my buyer clients. The next step for me is to bring it to light for my readers!
In my post, I mentioned:
When it comes to the quoted size of a new development condominium property, some developers include the portions of all common areas such as hallways, elevators, lobby's, roofdecks, etc. that are allocated to an individual unit; also known as 'common elements'.Be sure to ask the sales team if the new development you are thinking of buying into has included the allocated common elements into the unit you are considering. Your attorney could explain this in more detail especially when the offering plan is reviewed before you sign any contract of sale!
And dont forget Jonathan Miller's (Matrix) statement verifying this:
The % of common elements is based on the total square feet of the unit / total square feet of all units in the building. This percentage is then used to allocate expenses. Lately we have been reading about developers who have been taking liberties with including common area in the square feet calculation, (double counting), so it makes the square feet look larger, driving down the ppsf.
Even Christine Toes got in on the act reporting on new developments that have been leaving out furnishings! Check out her post titled, "$900K & No Shower Door: What Gives?".
The recent NY Times article states:
Rooms are often smaller than advertised. The Viking stove isn’t there, but a stove described as being of “similar quality” is. The view is not at all what the buyers imagined.So what to do about it? Well, one buyer found a way out. As stated in the article, one unsatisfied pre-construction customer did the following:Were they deceived?
Not necessarily. In many cases, neither they nor their lawyers read the offering plan carefully.
As soon as they could, they took advantage of an escape clause that allowed them to walk away from the deal and get their deposit back because the building was not ready for occupancy when it was supposed to be, by the end of 2006.Hmmm. Sound like justice to you? Perhaps, but this buyer and more importantly their attorney should have been more inquisitive earlier on in the buying process. By simply asking the sales team if 'the interior square footage being marketed includes the common elements' they could have found out before signing any contract if the unit will be smaller than the total size originally mentioned.
Other more commonly missed details include:
1. Lot-Line Windows - if neighboring lot is developed in the near future the view will be lost and the windows will have to be bricked up
2. Air Rights - did the new development buy the nearby air rights to protect views of the residents
3. Mechanical Vents - Could be installed on terraces or in view of your exposures; depending on building design and your view. Could make noise and cut outdoor space in half
4. High Ceilings Interrupted - More mechanical vents or structures might alter the ceiling height promised to you. Be sure to check if anything is planned.
UrbanDigs Says: First off, its encouraging to see that trends I report on here are later on being turned into full fledged stories on major media outlets such as the NY Times. I assure you that I will continue to report anything that I observe/learn that includes tricks, potential pitfalls, and other trends that might affect your investment! Second, please be sure to use a reputable real estate attorney who does good diligence on your behalf before you sign that contract. Having a educated real estate broker representing you is another good idea as they might ask questions in your best interests that you wouldn't normally think of. In the end, you MUST be educated about every aspect of the real estate investment you are about to make so as to limit any surprises down the road!
