United States: Real Estate Newsletter - First Quarter 2000

Kane Kessler, P.C. is extraordinarily active in its representation of purchasers and sellers of co-op and condo apartments handling 20 to 30 transactions a month.

Because of the apartment shortage in Manhattan, a purchaser who wants to purchase a home may have to resort to different approaches when making a bid on an apartment. Here are some tips when multiple offers are made for the apartment you want:

• Make Your Best Offer. Sellers are naturally looking for the highest price and obviously the higher the offer, the more likely you will be the successful bidder.
• Show You Are Serious. If possible, try to offer a larger deposit (in excess of 10%) when you sign the contract.
• Cover The Seller’s Closing Costs. An offer with a lower purchase price can triumph if the purchaser agrees to pay the transfer taxes (about 1.4% to 1.8% of the sales price in NYC).
• Get Pre-Approved. Obtain a loan pre-approval letter from a lender. Sellers favor buyers who have favorable credit and sufficient income.
• Make Your Offer In Writing. Address your offer to the sellers in a letter and outline the strengths of your offer.
• Do Not Make Unusual Requests. Adding extra contingencies or special requests may delay the transaction or complicate the offer.
• Ask About Seller’s Special Conditions. Meeting the Seller’s special requirements, like a delayed closing date or post closing possession may secure the deal.
• Waive The Finance Contingency. Only if you are sure you can purchase without financing or you are sure you can obtain financing, as a last resort, purchasers can waive the finance contingency clause in the contract.

A purchaser cannot look for bargains in this market. There are lower priced apartments available but the risks associated with these buildings may not justify the low price.

Good Luck!

Kane Kessler, P.C. represents numerous cooperative corporations in New York. Because of the high volume of co-op board denials to prospective purchasers, Kane Kessler, P.C. has been providing guidance to both co-ops and managing agents alike about the illegality of discriminatory practices.

David Rothfeld, a partner in the Labor and Employment Law Department at Kane Kessler, P.C., and Eric P. Gonchar gave a series of seminars to the staff of Brown Harris Stevens to alert managers and brokers about the liability of co-ops when they use discriminatory practices.

1. At the end of 1999, Kane Kessler, P.C. represented the purchaser of one of the single most expensive condominium apartments in Manhattan. The apartment, located on Fifth Avenue in Manhattan was signed for $12 Million dollars. The closing is expected to be concluded in 2000.
2. In January, 2000, our client listed their condominium apartment on Mercer Street in SoHo for $3.2 million. Three purchasers placed bids on the apartment driving the sales price to over $4 million. Rather than accepting any more verbal bids, Kane Kessler P.C. arranged for a "sealed bid transaction." Purchasers were provided with non-negotiable (but fair) contracts of sale and were asked to insert their highest bid in the contract, sign the contract and return them to Kane Kessler, P.C. with a certified or official bank check representing the 10% down payment. The purchasers were given 24 hours to complete their due diligence about the building and return their bids. The contracts were not contingent upon the purchaser obtaining financing. The envelopes were opened at Kane Kessler, P.C. in the presence of the proposed purchasers, their respective attorneys, the real estate brokers, the seller and Eric P. Gonchar and Ronald Nurnberg of Kane Kessler, P.C. The highest offer: $4,755,000.
3. In December 1999, Kane Kessler, P.C. represented a purchaser in connection with the negotiation of a contract of sale of a five unit brownstone located on West 9th Street in Greenwich Village for $2.65 million. The sit down signing of the contract took over seven hours after very lengthy negotiations.
4. Over the last several months, Kane Kessler, P.C. was instrumental in reversing two decisions by co-op boards denying our clients the right to purchase a cooperative apartment without having to litigate the matter. We engaged in good faith negotiations with the boards seeking reconsideration if the purchaser would either obtain a guaranty from a family member, deposit certain moneys in escrow or even add a relative to the stock and the lease.

Kane Kessler, P.C. has been working with real estate brokers and purchasers in connection with the purchase of apartments in active Manhattan condominium projects such as the Ansonia, the Chelsea Mercantile, the Eagle Building, the Millennium Buildings and the Textile Building. We have found that once we have become familiar with a building and represent several purchasers in the same building, our ability to negotiate better terms for our clients increase substantially.

The retail leasing market remains very strong. Kane Kessler, P.C. has represented a variety of tenants in prime Manhattan space: Internet start-up companies, restaurants, professional doctor suites; large chains and boutique stores.

Ronald Nurnberg, a partner specializing in representation of both landlords and tenants, advises clients to satisfy certain basic business concerns and questions before becoming too involved with particular lease negotiations. Threshold issues to resolve at the initial stage of the transaction include the following:

1. Does the certificate of occupancy for the space meet the client’s use?
2. What is the real, as opposed to rentable, square footage of the premises?
3. Is there sufficient electrical power for the tenant’s needs?
4. Confirm the landlord’s consent for tenant’s intended alterations.
5. Will the landlord’s lender provide a non-disturbance agreement?
6. What are the additional rent charges above base rent and/or percentage rent figures?
7. If the tenant’s business requires unusual lease provisions based upon the nature of their business, these requirements should be established and accepted by the landlord as part of the initial lease term sheet.