If you’re thinking of buying or selling a co-op or condo in New York, chances are you’ve heard talk of the building’s offering plan. So, just what is an offering plan, anyway, and why do attorneys care so much about what’s in it (and, for that matter, why should you care)? Top NYC real estate attorney Sandy Schwartz, Partner at Schwartz, Levine and Kaplan, PLLC, shares his insights on the topic.
What, exactly, is an offering plan?
An offering plan — or the “prospectus” — is a document that discloses all important facts about a real estate development project. The attorney general of the state of New York oversees real estate development in New York State and oversees the publication of this to the general public.
Why should purchasers care what’s in the offering plan?
The offering plan will (or should) disclose any and all salient facts about a real estate project. It is especially important if the buyer is purchasing from the sponsor (i.e. the developer), as all “special risks,” amongst many other important items, will be laid out for all buyers to review. Notwithstanding this, regardless of whether you are buying from a sponsor or not, all buyers should ensure that their counsel has reviewed the offering plan prior to executing a contract of sale as there are many esoteric issues that may be hidden in this document that only the trained real estate attorney would be able to decipher and uncover.
What pitfalls are attorneys looking for when they review a building’s offering plan?
You want to confirm basic facts (i.e. the specifics of the apartment you are buying) but also larger issues which may be disclosed in the “special risks” section. If you, as a buyer, read anything in this voluminous document, the “special risks” section (typically 2-20 pages) will give you a good snapshot of the “major” items that are present in that specific project.