We discovered several problems on the final walk-through of our co-op: The kitchen floor is visibly damaged, the dishwasher needs to be replaced, and a window was broken. We are worried about water damage and pests getting in due to the broken window. The seller offered me a credit of $1,000 and is replacing the dishwasher and having a new window made. But I no longer feel comfortable buying this place and would like to know how I can get out of my contract.
"Most contracts for co-op sales provide for the apartment to be delivered in the same condition as existed at the time of the contract, and that all appliances will be in working order at the closing," says Kevin McConnell, a partner with Himmelstein, McConnell, Gribben, Donoghue & Joseph (a Brick sponsor.) "It is imperative, therefore, that prior to entering into the contract, a purchaser carefully inspect the unit to see what problems exist."
If the problems you identified on your walk-through were present when you signed the contract, you won't be able to easily back out of it now. You are entitled to a credit for the repair of the broken dishwasher and window, however, and you can put the closing on pause until these issues are addressed.
"If the appliances were supposed to be in working order and they are not, then you’re supposed to get compensation and have an escrow that is sufficient to repair or potentially replace them," says Deanna Kory, a broker with Corcoran. "You can refuse to close until those items are rectified because they were not like that at the time of signing, and you can refuse to move forward until the seller concedes to whatever monetary amount you deem appropriate."
Note that standard New York City co-op contracts allow for closings to be postponed by 30 days. However, you'll likely find it very difficult to back out of the deal entirely. If both parties have signed a contract and you decided to back out, you would be considered in default; the seller could opt to sue you, and you could lose your deposit.
Instead, speak to your real estate attorney about how to proceed in this thorny situation, and ask for their help in negotiating with the seller about the costs of repairs. This can also pose challenges, though: "The credit generally would not be for a brand new stove, but rather the value of the stove that is in the unit," McConnell explains. "Once that amount is agreed upon and the sale closes, typically the deal is over and there are no further negotiations or claims the purchaser would have against the seller."
You do have some negotiating power when it comes to timing: Keep in mind that it's in the seller's interest to close quickly. You might mention why the $1,000 credit is insufficient, and point out the amount of time it could take to replace the dishwasher, given the current supply chain delays.
"When most sellers see a buyer is not going to close right away, they will give in to a certain degree. I always say ask for more money than you want, so that you can negotiate down to the level where you’re satisfied," Kory says.
You should also mention the possible costs involved in pest prevention, due to the broken window.
"Especially given the increased pest pressure from outside, pest exclusion is more important than ever," says pest control expert Gil Bloom, president of Standard Pest Management. "This holds true with incoming lines for things like dishwashers and ovens. Be sure they are properly pest proofed before sealing up."
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