How To Handle Problems In New Properties
In her last report, NY1's Real Estate reporter Jill Urban explained the most common defects that can be found in new constructions. Her follow-up report offers tips on how to avoid buildings with potential problems and what actions to property owners can take to get problems fixed.
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Buyers who have signed the contract on a brand new condo can think all is well, but a new property can still be far from perfect. Owners can find all kinds of issues in new construction, from a leaky roof, to buckling floors.
Teri Rogers, the founder of the web site The Brick Underground, says issues can always arise, but the best way to avoid a problem is to work with a reputable developer.
"Research the developer, research the sponsor, find out what their track record is. Have they left a lot of their building sort of like the 'walking wounded,' with water pouring in through the ceilings? You want to know this and you want to know, are they that type of developer when there's a problem. Because there will be a problem," says Rogers. "Is he going to step up and handle it, maybe with a little prodding from the building's attorney, but will reach a settlement and take care of it? Or do they need to be dragged into court?
Check with the attorney general’s office for any outstanding claims against the developer, and check online discussion forums to see what people are saying about the building and other projects the developer has worked on.
A real estate attorney can also provide insights.
Rogers also suggests having a lawyer put a clause in the contract.
"One way to protect yourself is to have your attorney include a punch-list escrow provision in the contract, where the developer has to go in and fix any defects you find within your apartment by the closing," says Rogers. "Now they have to put money aside in escrow -- maybe 125 percent of the cost -- to cover it later, and your legal costs in case you have to sue them to finish the punch-list."
Many people will have a home inspection before they close. Rogers says in new construction it may be worth the added expense to bring in a licensed engineer or architect to look for structural issues, especially if a buyer is not confident about the developer.
That inspection can happen before the buyer closes, or if problems arise later on, the condo association can do it. The tenants have three years to make a claim to the sponsor.
Lastly, Rogers says any new building will have growing pains. Buyers who want new properties but would rather avoid potential problems may want to consider nearly-new buildings that may be two or three years out of the gate.
For more tips on buying new constructions, visit brickunderground.com.