You've planned carefully so that you'll be ready to close on the apartment you're selling just as you take possession of the apartment you're buying. Even though the new place isn't yours yet, you've already begun renovating and decorating it in your mind's eye. Then you get the bad news that a higher bidder has snatched "your" home out from under you. Unfortunately, it's too late to decide not to sell the co-op you live in. There's no turning back and the likelihood of finding another great apartment seems unlikely. Even worse, you begin to worry that you and your belongings will wind up out on the street or camped out in a relative's guest room. What are your options and are there any steps that buyers who are also sellers can take to avoid this and other nightmarish scenarios?
A Delayed Closing
"I was selling to buy," says Manhattan resident Joel Sesser, who thought he had planned for every contingency in order to ensure a smooth transition. Sesser sold his two-bedroom, two-bath apartment in a 60-unit co-op on Central Park South in order to purchase a two-bedroom, two-bath condo in a 175-unit building off Columbus Avenue. "I closed on the sale of my co-op in late March 1998, and I already had the new apartment lined up. I wanted to coordinate my closing dates so that they would coincide," he explains. Saying that things didn't go as planned is an understatement. The first obstacle was when Sesser discovered that the seller of the condo was a foreign corporation and that he was going to have to deal with long distance communication; although the principals of the corporation were not in New York City very often, they insisted on handling things personally rather than through a power of attorney. This slowed the process down considerably.
"Then, during the closing, which was in mid-August, we ran into another problem," says Sesser. "The franchise taxes (a state tax levied on foreign corporations that own local real estate) had not been paid for several years to the tune of $30,000," he explains. "The seller, who was alarmed to hear this news, refused to put money in escrow to cover the amount and walked out of the closing." Since the tax problem would take a while to straighten out, the closing was adjourned and re-scheduled. Ultimately, the seller escrowed the money with the title insurance people so that in the event taxes were outstanding, money would be available to resolve the debt.
The Apartment I Want
Then, when Sesser finally closed on the property in late August, a whole new set of problems began. "We had taken our designer to see the new apartment before we owned it and he had drawn up renovation plans; however, the managing agent of the condo would not entertain these plans until we owned the apartment." Unfortunately, what Sesser's designer had seen as cosmetic changes, the managing agent viewed as a substantial renovation requiring the building architect's sign-off as well as Department of Buildings authorization. These developments set back the renovation schedule.
Sesser, who has been living in a furnished rental since mid-March, finally got the green light at the end of September. "I've been living in a small, one-bedroom without my things. I'm paying lots of money for storage and the rental plus meeting all the expenses for the new apartment. "I thought we would sell, buy and renovate in three to four months. This apartment is the apartment I want, but I underestimated the aggravation. It makes me feel foolish. I've done this before, and I should have known better."