© 2013 All rights reserved.Chapter 6.2 Development 1
New York Real Estate for Brokers, 5th e
By Marcia Darvin SpadaCengage Learning
© 2013 All rights reserved.Chapter 6.2 Development 2
Chapter 6
Construction and Development Part II: Development
© 2013 All rights reserved.Chapter 6.2 Development 3
Chapter 6 Key TermsAmperageArea varianceArticle 9-A of the
Real Property LawBlueprintBuilding codeBuilding permitBuilding
specificationsCertificate of
occupancy (CO)Circuit breakers
Completion bondCondemnationCumulative zoningDefectDue diligenceEavesEminent domainExclusive-use zoningFlashingFooting Joist
© 2013 All rights reserved.Chapter 6.2 Development 4
Chapter 6 Key Terms (continued)
OutlotsPercolationPitch Platform constructionPolice powerProperty condition
disclosure (PCD)RaftersRegulatory takingSheathingSill plate
Slab-on-grade foundation
Special-use permitSpot zoningSteep slopeSubdivisionSubdivision
regulationsUse varianceWattsWetlandsZoning ordinance
© 2013 All rights reserved.Chapter 6.2 Development 5
Zoning Ordinances
ZoningZoning
Sale of development
credits
Sale of development
credits
Incentive zoning
Incentive zoning
Cluster zoning
Cluster zoning
ZoningpermitZoningpermit
Transfer ofdevelopment
rights
Transfer ofdevelopment
rights
Construct or alter a
building
Construct or alter a
building
Floor-to-area
ratio
Floor-to-area
ratio
Multi-use
zoning
Multi-use
zoning
© 2013 All rights reserved.Chapter 6.2 Development 6
The Subdivision
PUDs andzoning
Dedication
OutlotsImpact
fees
Local planning
board approval
Completion bond
Usable Square
footage
Acquiring thesite
© 2013 All rights reserved.Chapter 6.2 Development 7
Wetland Regulations Areas on or near a
wetland may require a permit of letter of permission
Wetlands mapped and regulated by NYS Dept. of Environmental Conservation
© 2013 All rights reserved.
LandIncludes: types of soil location of
wetlands, springs, floodplains
forest areas rocks, trees,
vegetation
A major characteristic of land is its immobility
Chapter 6.2 Development 8
© 2013 All rights reserved.
Functions of Planning BoardsFunctions
{related to real estate}
Making investigations
maps & reportsrelating to planning & developing
Recommendingamendments
to the zoning
ordinance ormap
Implementingmaster plan
Preparing and amending
master planfor
community
Chapter 6.2 Development 9
© 2013 All rights reserved.
State Environmental Quality Review Act Due diligence reviews
Environmental Impact statements
The lead agency coordinates the action
Mandates environmental assessments
Chapter 6.2 Development 10
© 2013 All rights reserved.
Zoning Board of Appeals Interprets the zoning ordinance
Grants use and area variance
May grant special use permits
Chapter 6.2 Development 11
© 2013 All rights reserved.Chapter 6.2 Development 12
Zoning ActionsZoningBoard
Of Appeals
ZoningBoard
Of Appeals
SpotzoningSpot
zoning
VarianceVariance
Special Use
Permit
Special Use
Permit
© 2013 All rights reserved.Chapter 6.2 Development 13
A Purchase Money Mortgage
© 2013 All rights reserved.Chapter 6.2 Development 14
Private Land Use Control
Easements
Subdivision regulations
Liens
Deedrestrictions
© 2013 All rights reserved.Chapter 6.2 Development 15
Condos and Coops
Condo-title transferred by deed
Coop- title transferred through sharesof stock
© 2013 All rights reserved.
Cooperatives
A cooperative corporation usually owns the land, buildings, and property rights and all interests
The title to the property, as shown on the deed, is in the name of the corporation
Chapter 6.2 Development 16
© 2013 All rights reserved.
What are Shares of Stock?
The shareholders do not own real estate, but a proportionate number of shares of stock in a cooperative corporation
As lessees, the shareholders pay a monthly maintenance fee-the rent
Chapter 6.2 Development 17
© 2013 All rights reserved.
Cooperative Board Application and Interview Preparation
Before SchedulingInterviewConsider
Co-opBoard
Application
Interview Prep
The Role Of Time
FamiliarizePurchaser Package forDiscussion purposes
Need for total disclosure
By purchaserDuring
Interview
Real Estate Example: Why?Dr. Leslie is a single woman who is paying cash for a cooperative. She has sizable and safe investments and no debt. The cooperative board refuses her. No reason is given.
Chapter 6.2 Development 18
© 2013 All rights reserved.
Key Issues to Review in a Co-op Board’s Minutes
Maintenance and Assessment History
Underlying Mortgage
Reserve Fund
Many cooperative reserve funds receive income from the flip tax, a charge levied when units change hands
Chapter 6.2 Development 19
© 2013 All rights reserved.
CPS1 Phase: Cooperative Policy Statement
• Sets out New York Attorney General’s rules • how a developer
may test market for a new development before filing the offering plan and before construction is completed
• The CPS1 period • lasts 120 days
from acceptance of the CPS1 statement by the Attorney General
• can be extended by request from the developer for an additional 60 days
Chapter 6.2 Development 20
© 2013 All rights reserved.
Primary Residency Versus Subletting Issues In the Cooperative
Primary resident owner of the cooperative unit
Subletting allows tenant shareholders more flexibility in
ownership board may limit the length of time a tenant
shareholder can sublet a unit
If the sponsor owns the shares allocated to the apartment, he may be permitted under bylaws or rules to sublet or rent a unit even though a unit owner cannot
Chapter 6.2 Development 21
© 2013 All rights reserved.
Documents Needed for the Sale/Purchase of Cooperatives
AlterationAgreements
House Rules
Offering Plan
Stock Certificate
Proprietary Lease
Chapter 6.2 Development 22
© 2013 All rights reserved.
Offering Plan
Size of unit
Size of unit
The floor plansThe floor plans
The constructionThe construction
The size and materialsThe size and materials
The plans of recreation buildings The plans of recreation buildings
The make and model of appliancesThe make and model of appliances
The scope of the landscaping The scope of the landscaping
The land on which condominium is locatedThe land on which condominium is located
Chapter 6.2 Development 23
© 2013 All rights reserved.
Offering Plan Amendment :New Development
o New building and after 90-day tenant’s exclusive period in a converted building
o sponsor can separately negotiate the price of a particular apartment
o The developer can sell one apartment for $200,000 and then sell another identical apartment for $175,000
Chapter 6.2 Development 24
© 2013 All rights reserved.
Offering Plan Amendment:Building Conversion
NYS lawWhen a developer files an offering plan
with the Attorney General to convert an existing building to a condo or co-op, the tenants have a 90-day exclusive right to buy their apartment
During this period sponsor cannot negotiate separate prices
Chapter 6.2 Development 25
© 2013 All rights reserved.
Difference Between a Condop, Condominium, and Cooperative Apartment
A condop isa building that includescondominium and
cooperative ownershipin the same structure
Real Estate Example: Why it is created?
Building owner Sal owns a multi-unit apartment building that includes a store on the street level. Sal records the Declaration of Condominium, dividing the property into two condominium units: Condo A (the commercial unit) and Condo B (the residential unit). Sal continues to own fee title to the commercial condominium unit and collects rent from the store. As fee title owner to Condo B, Sal deeds the residential unit to Big City Co-op Corp. in exchange for the shares of Big City Co-op Corp. Various blocks of shares are allocated to the different apartments. Sal now sells the block of shares allocated to each unit (together with a proprietary lease) to individual purchases.
Chapter 6.2 Development 26
© 2013 All rights reserved.
Condominiums A structure of two or more units Interior space is individually owned Common elements, are owned by owners of
the individual units To create, the owner/developer of the
property signs a condominium declaration
Shareholder’s rights and obligations are in the condominium’s bylaws
The sponsor is the owner or developer Chapter 6.2 Development 27
© 2013 All rights reserved.Chapter 6.2 Development 28
A Condo and Coop Closing Compared
Condominium
Cooperative
Type oftransaction
Fee simpleownership
Personal property; shares of stock
Transfer documents
Deed Proprietary lease
Taxes at closing
NYS transfer tax
NYS transfer tax; flip tax
© 2013 All rights reserved.
Closing CostsReal
EstateTax
TaxDeductions
Common Charges
Mansion Tax
MortgageRecording
Tax
Right of First
Refusal
Chapter 6.2 Development 29