An offering plan is a comprehensive legal document prepared by a sponsor or developer when converting a rental building into a cooperative (co-op) or condominium or when constructing a new co-op or condominium building. The offering plan provides detailed information about the property, its financial structure, the rights and obligations of the owners, and the terms of the sale. It is required by law in many jurisdictions, such as New York, to protect the interests of potential buyers and ensure transparency.
An offering plan generally covers the following aspects:
- Property description: Information about the building’s location, size, age, construction materials, and any unique features or amenities, such as a doorman, gym, or rooftop deck.
- Sponsor information: Details about the sponsor or developer, including their background, experience, and any other relevant projects they have completed.
- Unit details: Descriptions of individual units, including floor plans, square footage, number of rooms, and any special features or finishes.
- Financial information: A detailed breakdown of the project’s financial structure, including the purchase price for each unit, projected operating expenses, and any underlying mortgage or loans.
- Bylaws and governing documents: A copy of the co-op or condominium’s bylaws, proprietary lease, declaration, or other governing documents, which outline the rights and responsibilities of unit owners, board members, and the sponsor.
- Management structure: Information about the management company responsible for the day-to-day operations of the building, including their experience, fees, and services provided.
- Closing costs and fees: A breakdown of the various fees and costs associated with purchasing a unit, such as transfer taxes, attorney fees, and mortgage-related expenses.
- Escrow arrangements: Details on any escrow arrangements, which are used to protect the interests of the buyers during the sales process.
- Warranty information: Information about warranties provided by the sponsor or developer, covering items such as construction defects, appliances, or other aspects of the property.
- Risk factors: A disclosure of potential risks or issues that may affect the property, such as pending litigation, zoning changes, or environmental concerns.
Prospective buyers should carefully review the offering plan before purchasing a co-op or condominium unit, as it contains crucial information about their potential investment. Buyers may also want to consult with an attorney experienced in real estate transactions to help them understand and navigate the offering plan.