What disclosures and clauses should go in the contract when you're buying an apartment in NYC?

I’m buying my first apartment. What sort of disclosures should I make sure the seller puts in the contract?

In addition to disclosures that are standard to most New York City sales contracts, there are certain extras it's wise to have your attorney add into your paperwork before the closing, says Steven Wagner, a co-op and condo attorney with Wagner Berkow LLP who's been advising buyers and negotiating contracts for more than 30 years in New York City.

"One of the first priorities is to make sure that the form of contract being used is the standard form that's been approved by the New York City Bar Association, and that it's up to date," says Wagner. (For reference, the New York City bar has a standard contract available on their website.)

A standard sales contract should include information about any alterations the seller made to the apartment. However, Wagner adds, you should also ask for written confirmation that the alterations were done legally, with the proper city permits and go-ahead from the building's management.

"I like to include a clause that the alterations have all been approved by the board, performed in accordance with the law, and given all necessary signoffs—for instance a letter of completion from the city or Department of Buildings," Wagner explains. "Be careful that when there's been a Certificate of Occupancy change, things were done correctly. You want to make sure everything’s been signed off on, so that on day one in your new apartment, everyone in the building isn't angry at you because the person before you did something wrong."

Another common clause is one stating that all the home's appliances and utilities are in good working order at the time of the sale, says Wagner, though for certain deals like estate sales, sellers may not wish to confirm that in writing, as they might not be sure themselves.

"You see that one getting negotiated, but the standard is that everything is in good working order on the day of contract on the day of closing," says Wagner.  (Though still be sure to do a careful walk-through and check small things like electrical sockets.)

Below, a few more clauses the savvy buyer should look into adding to the contract before signing on the dotted line:

• The condition of the apartment: If the seller has fixtures and furniture to remove from the apartment, Wagner advises a clause guaranteeing the quality of the walls and countertops. (For instance, that there be no nicks or holes larger than the size of a dime.) "If they're yanking things off the wall, maybe they need to do some spackling and painting," says Wagner. Either that, or you can agree to do the work, and then use that as leverage in negotiations. Similarly, the contract should include confirmation that the seller has not received notice from the building that they're obligated to perform outstanding repairs or maintenance in the apartment.
• Quality of life: To ensure that the seller isn't ditching an unlivable apartment and leaving you holding the bag, Wagner suggests a clause in the contract confirming that in the past year, the seller (or someone representing the seller) hasn't made any complaints to the management about noise, odors, "offensive conduct," heat or hot water problems, "Or any other disturbance or adverse condition affecting the unit."
• No surprise tenants: For obvious reasons, it's always good to have a clause in place confirming that there are no leases, tenancies, sub-leases, or sub-tenancies currently in the possession of (or claiming right to occupy) the apartment you're about to buy. 
• No surprise brokers: On a similar note, while it seems obvious, both you and the seller can protect yourselves by specifically naming your respective brokers as the sole brokers on the deal. "Brokers sometimes show up out of the woodwork afterwards claiming they had a part in the sale," Wagner explains. "So if you list the parties on the deal, then you and the seller can cross-indemnify each other against these kinds of claims."
• What actually comes with the apartment: "Another thing that gets negotiated sometimes is what goes with the apartment and what doesn't," says Wagner. "It usually isn't that big of a deal with light fixtures, but what about the 55-inch-wide flatscreen attached to the wall?" These kinds of details can often trip up the proceedings at a closing, so it's wise to hammer them out ahead of time.
• Who's paying the taxes. If there's a flip tax on the property, you'll want it clarified in writing that the seller will be covering these costs, or if they want you to pay it. This way you'll know in advance so you can use this as a point of negotiation. Similarly, says Wagner, your contract should specify who on the deal will be paying the transfer tax, a 1% to 1.425% tax levied on all real estate sales.
• The contract has stayed intact: For another clause that will protect you against foul play (or even innocent copy-and-paste errors), Wagner suggests adding in language confirming that between the date of signing the contract and rider and the date of closing, nothing about the paperwork has been altered. (In other words, no one snuck anything in at the last minute that you're unwittingly signing onto.)
• What happens if the board rejects you: Similar to mortgage contingencies, where you can lose your down payment if your financing falls through, Wagner recommends having your attorney scour the contract for language about the nature of your financial assets and liabilities. Some buildings have specific requirements about your financial information written into the contract. "Make sure if you have one of these clauses in the contract that all your financial information is accurate, and that when you put in your application to the board, it conforms with representation," Wagner explains. "Because if you get turned down, then you could get into a big dispute over the deposit." 
• All these clauses will still be true post-closing. One last add-on to keep in mind: a provision that the conditions laid out in the contract "survive the closing." In other words, says Wagner, "You want to make sure things that affect the closing are actually true after the closing." While this won't apply for things like appliances being in "good working order" at the time of sale—if your dishwasher happens to break after you move in, you likely can't bother the seller about it—this is a helpful clause to have in place for other potential issues, such as finding out down the road that your apartment was combined illegally.

New York City real estate attorney Steven Wagner is a founding partner of Wagner | Berkow with more than 30 years of experience representing numerous co-ops, condos, and individual owners and shareholders.  To submit a question for this column, click here. To ask about a legal consultation, send an email or call 646-791-2083.

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