CooperatorNews Q&A: Buyer’s Remorse
Herrick associate Cathleen Hung was featured in a column in Cooperator News responding to a reader who asked if she must pay for an increase in the maintenance fees for her apartment since she claims she was not informed of the increase ahead of time. Cathleen says, "When purchasing a cooperative apartment, one of the things you will see listed on the first page of your contract is the amount of monthly maintenance you are expected to pay for the apartment. However, there is a period of time between when you sign the contract and when you actually close on the apartment. Any maintenance amount set forth in the contract is based on the current number as of the date you execute the contract, and there is no guarantee that it will be the same amount by the time you get to closing. And there is little to no recourse even if the Seller failed to notify you of the new maintenance increase, especially since the accuracy of the maintenance amount can be verified by pre-contract due diligence."
She continues, "Since you signed your contract in November 2021 and the maintenance increase was implemented in February 2022, there must have been some indication that a maintenance increase was on the horizon. Before you signed your contract, your attorney would have done his/her due diligence on the cooperative. That would involve reviewing the board minutes and/or having the managing agent answer a questionnaire that includes whether any future maintenance increase was under discussion. Either option would have provided you with notice that a maintenance increase was in the works."
The article concludes with Cathleen noting, "Unless your contract specifically includes a provision that gives you the right to terminate the contract if the maintenance is increased above a certain amount prior to closing, there is not much you can do other than back out of the deal and lose your contract deposit. To the contrary, most contracts I have seen include a rider that states that the Seller will notify the Purchaser if the Seller receives notice of a maintenance increase, but this is done only as a courtesy and shall have no effect on the Purchaser’s obligation to close on the apartment."