When looking to buy or sell a unit in a condominium or cooperative, the layman may be forgiven for feeling overwhelmed. In the cutthroat world of New York City real estate, stakes are high, and to expect anyone who is undergoing a move to be an expert therein is asking way too much.
Enter the broker, an ostensible professional with their fingers on the pulse of the market, armed with ample knowledge and a heart filled with your best interests, guiding you through the process of a purchase or sale.
But here is the thing about brokers: they're not infallible. And as with all people, they are liable to make mistakes, and occasionally will do so in violation of the rules of an association, or even in a manner that might rub a board the wrong way. Knowledge of what conduct is or is not appropriate is helpful to anyone going through a residential real estate transaction.
“Brokers will occasionally advertise for a two-bedroom that is really a converted one-bedroom, or will not properly relay the rules for subletting or pets or smoking,” says Mark Anker, president of Anker Management Corp. in Hartsdale. Now this does not necessarily stem from malice by any means but more likely from the fluid nature of rules in any given property.
“Many things change in buildings even monthly, and sometimes we, as property managers, do not update the requisite information as quickly as possible; at this point, a sale may be in progress, and brokers, rather than ask further questions about any changes, simply proceed,” Anker continues.
This is why both buyer and seller are advised to actively participate in these transactions; they can see to it that the broker is equipped with all the relevant information.
Occasionally, a broker may act in a way that, while not necessarily a rule violation, may present varying degrees of nuisance, be that through excessive passing of fliers or other tangible collateral, or opting not to respect an association's guidelines as to when or how a property may be shown. None of these are objectively severe, but an association would be advised to watch out, lest they become increasingly more obtrusive over time.
“The biggest problem we deal with is when brokers run open houses in buildings that do not permit them,” offers David J. Amster, president of Prime Locations Inc., a property management company in Yonkers. “But, once informed that a co-op or condo does not allow this type of conduct, they usually stop willingly.”
T. Austin Brown, principal of the Manhattan-based Austin Brown Law Firm, notes that most of his co-ops have regular brokers that do business on the premises, and will occasionally send postcards of listings or sales, but never terribly aggressively. Of course, the excessive dissemination of collateral could prove oppressive, and a board is well within its rights to intervene should it feel that this is the case.
When broker influence goes unnoticed, that may be due to the secure, 'get what you pay for' nature of Manhattan high-end residential in general. “You might see brokers behaving aggressively in more middle-market type units, but my world is a little more high-end, and I don't encounter this,” says Thomas Kearns, a partner with the Manhattan-based law firm of Olshan Frome Wolosky LLP. “The doormen and staff in Manhattan buildings are pretty tough, and they tend not to let people leave fliers in the lobby or things like that.”
While it's completely subjective as to how much advertising on behalf of brokers is too much for a specific board, there are in fact legal considerations that associations, buyers and sellers should keep in mind when engaging in a transaction.
Claudia V. Murdoch, Esq., of the Brooklyn-based Law Office of Claudia V. Murdoch, P.C., cites one such example in regard to new conversions: “Sponsors in conversions should make sure that all broker advertising is consistent with the terms of their offering plans and all pertinent Attorney General regulations. I have seen some instances wherein brokers make statements not supported by the offering plan, much to my dismay as a sponsor's attorney. The last thing a sponsor wants to do during its control period is anger the new unit owners with unsightly or overzealous advertising.”
Jack Lepper, a managing partner with the New York-based law firm of Kagan Lubic Lepper Finkelstein & Gold, LLP, stresses that the responsibility of a purchaser does not alleviate once they've hired a broker on their behalf. “It's incumbent upon a purchaser to do appropriate due diligence when buying a co-op or condo,” he says. “When they engage a representative, it's important that they not only do the standard contract, but they engage someone who is qualified to make a diagnostic review of the association/corporation into which they're looking to buy. This requires reviewing of board minutes, financial statements, the offering plan and amendments among other things. If they're unwilling to do that work, they may well buy into a problem.”
This is where soliciting a qualified attorney can prove necessary. “Regardless of what a broker tells you about a building, you need to engage an attorney who will exercise the necessary due diligence such that you don't solely rely on the broker,” says Lepper. “Because, at the end of the day, after you close, the broker is gone, and you've bought whatever you've bought under contract.”
When considering a broker, the buyer should discuss the process with potential representatives, and, should that process not include engaging an attorney who will do a thorough review of the requisite documents, as Lepper puts it, “it's concerning.”
“It's not going to be the broker who's going to read through meeting minutes, bylaws, proprietary leases, etc....it's likely going to be the buyer's attorney,” Lepper warns. “And if the broker is not including that part of the process in their entire approach, that could be problematic.”
Mike Odenthal is a staff writer for The Cooperator and other publications.