Introduction to Condominium Offering Plans
The condominium offering plan is a prerequisite for the public offering or sales of condominiums under section 352-e of the General Business Law and must be filed with and approved by the Department of Law. The Department of Law is authorized to issue and enforce rules and regulations pertaining to the offering process.
The first in a series that will explore the new residential condominium offering process in New York, this article serves as a general introduction to condominium offering plans.
Sponsor Role and Offering Plan Purpose
The sponsor, who is responsible for offering interests in the condominium development, assumes a pivotal role in the entire process, from condominium development to management. The purpose of the offering plan is to ensure that sponsors provide vital information to safeguard the interests of prospective buyers in their decision-making process.
Condominium Ownership Structure
As compared to more traditional forms of real estate properties, where an owner owns the entire building and its land parcel, owners of condominiums have a specific unit within the building and share common areas with fellow unit owners. Granted, because this unique arrangement involves multiple stakeholders, it can potentially lead to disputes if terms are not delineated. Additionally, issues may also surface between unit owners and sponsors, even after closing, due to ongoing sponsor obligations. These dynamics highlight the importance of the offering plan.
Rights & Obligations of Unit Owners
Within the framework of the offering plan, each unit owner shares rights and obligations according to their allocated percentage of common interest. In this case, the rights dictate usage parameters — whether exclusive or shared with others — while obligations include monthly common charges for one’s unit and maintenance fees for shared spaces. Additional information on rights and obligations are outlined in the declaration, bylaws, and rules and regulations of the condominium.
Offering Plan as Blueprint for Development
Beyond disclosure requirements, the offering plan provides a blueprint for the entire condominium development, including the material specifications of the building and each individual unit. Other important information may include projections based on professional opinions of anticipated monthly expenses, as well as financial details for the first-year operating budget of the condominium, which help determine the common charges an owner must pay based on their ownership percentage of the common interest.
Understanding Condominium Offering Plans
While the condominium offering plan may seem daunting at first, understanding its overall purpose and sections assists immensely in the review process. The offering plan contains two parts, which will be discussed in the next article, to be released in early June 2024.
