A Better Buyer-Seller Contract

Good news. The city and state bar associations have hammered out a new sales contract that should smooth the transfer of co-op apartments. The revised form (available at nycbar.org) incorporates many provisions typically included in seller and purchaser riders, and it also addresses issues that have proved problematic for boards after approving apartment sales.

The previous Contract of Sale, in use since 2001, “hadn’t kept up with changing times, and the goal was to bring it current,” says Margery N. Weinstein, a partner at the law firm Schwartz Sladkus Reich Greenberg Atlas who chaired the New York City Bar Association’s Cooperative and Condominium Law Committee during the redrafting process. For example, the updated contract clarifies that service animals are not classified as pets and has a placeholder for the seller to attach a copy of the co-op’s smoking policy. It also provides for wire transfers of funds and allows emailing contracts instead of requiring hard copies.

Seller requirements. The contract specifically references a few seller disclosures, including any alterations or sublease agreements. “Sellers must also disclose any complaints they’ve made to the board, affirm that they are not aware of any problems like leaks and cure any outstanding issues,” says Christopher Tumulty, a partner at the law firm Fox Rothschild and current committee chair. In addition, Weinstein says, “the new form makes sellers responsible for closing any open permits for seller alterations, which could become a future nuisance and headache for the co-op.” 

Buyer requirements. The revised contract also includes provisions that will more fully inform boards about prospective purchasers by requiring disclosure of who will occupy the apartment as the primary resident and which of the proposed occupants smoke. More importantly, it clarifies that buyers cannot require boards to approve any alterations they are planning to make prior to the sale.

While the new Contract of Sale was revised primarily to assist buyers and sellers, “it will also assist co-op corporations by streamlining the closing process,” Weinstein says. 

Tumulty adds: “The contract will help boards and agents manage buildings more effectively because it forces a paper trail and disclosures for transfers of each apartment, avoiding any excuse by new owners that they were not made aware of any obligations or use restrictions. Now the goal is to make it the industry standard.”