Such a discovery will depend on many factors. In most cases if through ordinary due diligence the buyer is able to confirm the maintenance charges prior to the contract by verifying the amount directly with the managing agent, then it will be difficult to accuse the seller of misrepresentation, if an unintentional mistake was made by either the seller or his attorney. If in fact the maintenance is higher due to an increase that took affect subsequent to the contract signing, then the buyer will be obligated to close since the representation made by seller in the contract was in fact accurate at the time. This is another reason that the buyer’s attorney should do further due diligence in asking certain questions of the management company prior to the contract signing. Some of the important questions to ask are:
1. When was the last time the maintenance was increased?
2. Are there any major capital improvements planned?
3.What is the amount presently in the reserve fund? (amount held by co-op in the bank for emergency purposes)
4. Are there any special assessments presently imposed on shareholders?
In addition, your attorney should review the offering plan, amendments and the last 2 years financial statements.
The decision to proceed to contract should be made only after the foregoing information is reviewed by the buyer’s attorney.
The Law Office of William J. Reinhardt, Jr. is available to assist buyers as well as sellers. Call 718-377–8880 or e-mail [email protected] for additional assistance.
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