What are HDFC Buildings?
HDFCs (Housing Development Fund Corporations) are essentially income-restricted cooperatives; they limit a potential purchaser’s ability to buy in based on whether their annual salary falls below the calculated income cap. The establishment of HDFCs were geared toward purchasers looking for a residential home to keep for a substantial period of time, with the possibility of passing it on to family members. They compose much of New York City’s affordable housing. HDFCs are further classified by the way in which the low income cap is calculated, either through a regulatory agreement with the city or without one.
If the building does have a regulatory agreement, then the income cap is based on a percentage of the median income within the surrounding neighborhood. If the building does not have a regulatory agreement, then the income cap is generated by a formula based on the building’s maintenance charges and utilities fees. Usually, the standard is to bracket the income at about seven times the annual maintenance charge. Further, the income cap will mimic the economics of the surrounding area and increase when the area becomes more affluent. For instance, as a maintenance charge increases within an HDFC building, the income cap will follow suit and allow for a greater annual salary. While HDFCs require a purchaser to fall within the low income cap, there is no requirement as per the resale price. Thus, a seller has full discretion in determining the market price of the HDFC. Nonetheless, the resale price is often regulated by the high flip tax that HDFC buildings impose (often about 30% of the profit) and the relatively limited supply of potential buyers that fit the income requirements to purchase.
The HDFC market is aimed to benefit purchasers, since a potential purchaser is able to acquire a high-profile residence at a price that is substantially lower than the market rate. The ideal purchaser is someone that has acquired a large trust or inheritance but has a low income. However, a purchaser trying to obtain funding may run into issues as banks tend to look less favorably on HDFC loans. This arises from the fact that HDFCs are seen as riskier investments, and thus have higher rates. Moreover, where a purchaser is unable to obtain bank financing, the HDFC is likely to require an all cash transaction. We would urge any HDFC purchasers to consult with a banker that has a proven track record of closing loans on HDFC projects, as the financing component of the transaction is often the piece of the transaction that has the most associated risk.
For further information on HDFCs please check out the following links:
NYC Real Estate Attorney’s Closing Report: July 2016
Just a few of our recent closings. If you are also looking to buy or sell at these property addresses, you might want to give us a call.
| Property | Value | Transaction |
| 305 West 16th Street, NY, NY | $771,000 | Coop Purchase |
| 22 Avon Road, New Rochelle, NY | $737,000 | House Purchase |
| 139-141 West 126th Street, NY, NY | $1,129,000 | Condo Purchase |
| 47 Dean Street, BK, NY | $1,850,000 | Condo Purchase |
| 25 West 54th Street, NY, NY | $1,425,000 | Coop Purchase |
| 105 Ashland Place, BK, NY | $387,000 | Coop Purchase |
| 201 East 21st Street, NY, NY | $1,100,000 | Coop Purchase |
| 361 Sterling Place, BK, NY | $318,000 | Coop Purchase |
| 47-28 11th Street, LIC, NY | $1,130,000 | Condo Purchase |
| 233 East 69th Street, NY, NY | $1,270,000 | Coop Purchase |
NYC Amnesty Program Now in Effect
From September 12 to December 12th of this year, the City will be taking part in an Amnesty Program meant to reduce or forgive certain fines and penalties from ECB (Environmental Control Board) violations. To be affected by the program, the fines must have gone into judgment before June 12 of this year. For more information, please see this announcement on the City website.
FinCen Targeting Orders Extended Through 2017
The Financial Crimes Enforcement Network (FinCen), a division of the US Treasury Department, recently extended targeting orders that went into effect earlier this year. The orders were intended to combat money laundering schemes by identifying individuals behind companies and other entities purchasing real estate. The Targeting Orders will now remain in effect until February 23, 2017 unless further amended in the future.
Beginning August 28, 2016, these Orders were also extended beyond Manhattan and into the other Boroughs of New York City, as well as some counties in California, Florida, and Texas. To find out more, see this announcement from the FinCen website.
WHFirm Attorney Speaks at Financial Fitness Workshop
Congratulations to Weidenbaum & Harari’s own Caroline Malapero, who was selected to speak at the 14th Annual Financial Fitness workshop, organized by the Financial Planning Association of New York, on October 1. Caroline took part in a panel to discuss the financial merits of buying and renting Real Estate property in New York. For further information, please see the FPANY website.
WHFirm Client Profiled in New York Times
Congratulations go out to Anthony Morena, a client of Weidenbaum & Harari, who was recently profiled in the New York Times for his condominium development projects in Brooklyn.
His recent piece in the New York Times highlights how condos in Brooklyn are proliferating, and how he is remaking his old Brooklyn neighborhood of East Williamsburg one building at a time. See the article here to see how Mr. Morena is using a “vinyl revival” approach.
NYC Real Estate Attorney’s Closing Report: June 2016
Just a few of our recent closings. If you are also looking to buy or sell at these property addresses, you might want to give us a call.
| Property | Value | Transaction |
| 180 West 58th Street, NY, NY | $1,100,000 | Coop Purchase |
| 88-17 51st Avenue, Elmhurst, NY | $459,000 | Condo Purchase |
| 44 June Road, North Salem, NY | $699,000 | House Refinance |
| 185 Withers Street, BK, NY | $1,800,000 | House Sale |
| 235 West 75th Street, NY, NY | $7,200,000 | Condo Purchase |
| 56 Jane Street, NY, NY | $505,000 | Coop Sale |
| 313 Adelphi Street, BK, NY | $600,000 | House CEMA Refinance |
| 160 West 87th Street, NY, NY | $1,360,000 | Coop Purchase |
| 200 East 94th Street, NY, NY | $1,250,000 | Condo Purchase |
| 106 Central Park South, NY, NY | $1,125,000 | Condo Sale |
Understanding Contracts: the Statute of Frauds
Contracts are at the heart of buying and selling real estate. This is because, by law, no real property can legally change hands (with the exception of a lease lasting less than one year) except through a written contract. This law is called the “Statute of Frauds.”
In order to be legally binding, a contract must contain certain basic information. First, it must explicitly name the parties involved in the deal. Failure to do this may make the contract impossible to enforce. Secondly, the specific boundaries of the subject property must be listed accurately, and with enough exactitude as to be easily identified. “By the long rock wall with a big oak tree at the north end,” unfortunately isn’t sufficient for the contract to be binding. Third, the purchase price for the property in question must also be listed and decided upon before the contract is signed, not after. Depending on the contract, it may also need to include such facts as closing date, the terms of the mortgage (if applicable), and information about the title of the property (amongst others).
Provided that a contract has all of the necessary information, the form that the contract takes contains a great deal of leeway. The contract could be many documents pieced together, some terms legibly scribbled on a napkin, or even an email chain (provided, of course, that they are sufficiently connected and that the required signatures can be proven genuine—a subject of no small amount of controversy). There is even one exception to the Statute of Frauds: in some cases an oral recitation of the contract may pass muster, provided that is obvious that all parties’ actions explicitly refer to the deal.
Hopefully, this tidbit of legal theory will help put the contract process into context. With any more specific questions, we would always recommend contacting a legal professional.
NYTimes: The Stuff We Leave Behind
What happens when sellers leave behind unwanted possessions after a closing? Whether an armoire or an armadillo, sometimes old property is left for the new homeowner to deal with, despite promises and guarantees to the contrary. In most New York contracts of sale, there will be specific language that attempts to grapple with what personal property will be taken or left behind. The attached article from the New York Times, entitled “You’re Taking that with You, Right?” approaches this question with humor, including anecdotes of situations both horrifying and heartwarming.
NYC Real Estate Attorney’s Closing Report: May 2016
Just a few of our recent closings. If you are also looking to buy or sell at these property addresses, you might want to give us a call.
| Property | Value | Transaction |
| 845 West 181st Street, NY, NY | $286,000 | Coop Refinance |
| 900 West 19th Street, NY, NY | $1,275,000 | Coop Purchase |
| 234 East 23rd Street, NY, NY | $1,130,000 | Condo Purchase |
| 919 Mayfield Road, Woodmere, NY | $730,000 | House Purchase |
| 29 Tiffany Place, BK, NY | $2,440,000 | Condo Sale |
| 10 Tanner’s Neck Lane, Westhampton, NY | $3,265,000 | House Sale |
| 415 Main Street, NY, NY | $1,175,000 | Condo Purchase |
| 211 East 35th Street, NY, NY | $306,000 | Coop Purchase |
| 93 Worth Street, NY, NY | $1,100,000 | Condo Purchase |
| 195 Prospect Place, BK, NY | $465,000 | Coop Purchase |