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Can I back out of a sale if the apartment has an illegal dryer?

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Q: I was about to schedule the closing date for a co-op in Queens with a washer and dryer, but learned from the seller's broker that the dryer is gas, and therefore illegal (though it's board approved, and other board members have similar illegal setups). The seller won't compensate me for a conversion to electric because she claims the DOB [Department of Buildings] would never approve it, and even though she's offered to drop the price of the apartment, I'd never have gone into contract on a place without a washer and dryer. Am I within my legal rights to break the contract? Do I have any other options?

Your options will depend on the specific terms of your contract, and it'd behoove you right now to do a little investigating (and speak with your attorney) before moving forward, say our experts.

"Whether you would be entitled to terminate the contract or to receive compensation could turn on the terms of the contract," says attorney Jeff Reich. Many standard contracts stipulate that the seller has not made any alterations with board consent, and if they put in this illegal dryer without running it by the board, you'll have a strong case to terminate, says Reich.

You'll also have a good case if the dryer is specifically mentioned in your contract. "Assuming the washer and dryer is included in the Contract of Sale, the seller is obligated to deliver the property at closing with working, legal, appliances that are properly installed and approved by the building's Board," says Sotheby's International Realty Broker Gordon Roberts, who adds that "it's curious that none of this came up during due diligence, and disturbing that the seller's broker waited until the last minute to inform you of this problem. If the dryer isn't vented to the outside, it would represent a major safety issue. I'd want that fully investigated before closing."

But since you say these illegal gas dryers are a building-wide problem, you may also run into issues with the board if they don't want the DOB catching wind of the situation when you apply to get yours changed. "It's likely [your proposed] transfer that's bringing the legality of the gas hook-up into such scrutiny," says Thomas Usztoke of Elliman Property Management. "This is a position the other units will probably equally have to face, as DOB code and rules trump anything the board may or may not have 'approved'."

If your contract doesn't provide a strong enough basis for you to terminate the deal, Compass broker Shirley Hackel sees two scenarios for you. The first is accepting the seller's offer of a price reduction, and then applying to the co-op to install a new, legal washer and dryer setup. (Admittedly, a roll of the dice if the building has a vested interest in keeping the status quo with everyone else's illegal dryers.) The second option is to look for another way out of the deal. 

"The co-op board may make your approval conditional on the removal of the gas dryer, in which case, you can walk away from this deal since the contract obligates you to close on the apartment once you have unconditional approval from the co-op board," says Hackel.


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