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NYC Real Estate Law Blog

Monday, April 1, 2013

Apartment Combinations and Renovations – Be Prepared !

Steven Matz – Katz and Matz, PC

As New Yorkers, we are all looking for more space.  And one way to get that space may be to combine an apartment with the one next door.  Or above. Or below.  For a NY apartment dweller lucky enough to have the opportunity, it is a wonderful way to increase square footage and enhance value, but only if the combination was done correctly and legally.  The same goes for an apartment renovation.  That “gut” renovation of the kitchen, which replaced what was gorgeous in 1966 with a state of the art granite, marble and stainless masterpiece is only worth the money put into it, if approvals by the coop or condo were granted, AND the New York City Department of Buildings have signed off.  One moral of this story is that if you are contemplating a unit combination or a renovation, make sure that your architects and contractors are filing all of the appropriate paperwork with the City, so that upon selling your unit, you have the proof in your hands that it is up to code, in compliance with regulations and has been fully approved.

But what happens if you are looking to buy an apartment that may be designated as “Apartment 4AB”, (tells you immediately that they combined with the unit next door), or “Apartment 9/10 A”, (tells you that the owners “duplexed” the unit)?  What happens if you are looking at a unit in a gorgeous pre-war building, and the kitchen and bathrooms are brand new?  A little bit of due diligence on your part will go a very long way, and not only prevent headaches down the road, but also preserve the deal.

It is usually quite simple to ascertain whether or not the coop/condo has granted permission for the work, and more importantly, if the City of NY Department of Buildings has given its blessing.  Your attorney, during his or her own due diligence, can quickly discover if the owner submitted an “alterations agreement”, normally required by most buildings before work can commence, as well as find out if a “Letter of Completion” has issued by the City, which “legalizes” the work.  It is now very rare that a change of the Certificate of Occupancy is required for unit combinations or significant renovations, and permits are filed for an Alteration, and upon satisfactory review, the Letter of Completion is issued.

If you are a buyer and discover that the apartment you’re interested in does not have the requisite paperwork for the alterations done, do not be discouraged – there are contractual terms that can be negotiated, to ensure the Seller will take steps to “legalize” the work and preserve the deal.  Sellers, the “legalization” process is not as onerous as one might assume.  Whether you did the work/combination or it was done by a previous resident, you may find yourself in a position to have to remedy the situation.  Again, your attorney can assist in engaging an Expediter, (individuals who assist in the filing of permits and in navigating through the City’s departments).    The prudent Seller will try and ascertain the legal status of the combination or renovation prior to listing their apartment for sale, and thus get a head start on any work that may be required to render the apartment “legal.”  Very few Purchaser’s attorneys will allow their clients to go to contract where a Letter of Completion was needed, but not acquired.

            Some of the common misconceptions about unit combinations or renovations include:

  • There is only one entry door and only one kitchen so the apartment is legally combined.

FALSE – yes, in order to be considered one unit, there must be only one main point of ingress/egress and one kitchen but this does not mean the City has issued its approval.

  • The coop or condo Board gave me permission to do the work so I am covered.

FALSE – generally, cosmetic work (painting, tiling, sanding floors) may be sufficiently approved by the Board, but anything beyond that, particularly involving the moving, demolition or construction of walls, and the moving of plumbing or electricity) will require City consent as well.

  • The building is “Landmarked” by the City but I’m not touching the façade, so no special consent for the work is needed.

FALSE – in cases where a building has been designated as a special historic Landmark by the City, normally any work done will require the Landmarks Commission to sign off as well.

Whether you are buying or selling an apartment, your Broker and Attorney can work together to ascertain the legal status of an apartment that has been altered, and with a little homework, in most cases keep a deal on track.  While every apartment and alteration has a unique set of circumstances, generally speaking any seller can be better prepared to address this issue when it is inevitably posed by Purchaser’s counsel; conversely, any buyer will know what to look for, and understand that if their “dream apartment” may need a Letter of Completion, the parties may be able to reach an agreement through the contract negotiations.  The more prepared you are in this market, invariably the smoother the transaction will be.

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