Whether to purchase a commercial condominium for your business, as opposed to buying a fee simple parcel of land or building, is a business decision rather than a legal one. But, if you are considering purchasing a commercial condominium for your New York business, some legal issues should be considered. In this article provided by the top-tier and talented New York business lawyers here at Wright Law Firm NYC, we briefly discuss a few of the more important legal issues to evaluate when considering buying a commercial condominium. If you need legal assistance in purchasing an NYC business or help with buying an NYC commercial condominium, call us at (212) 619-1500.
Retail vs. Commercial condominiums
We briefly discuss a few of the more important legal issues to evaluate when considering buying a commercial condominium. Many are familiar with residential condominiums. The same features apply to a commercial condominium. The individual unit’s owner owns the unit itself, while the condominium owns the building and the common elements. The unit itself tends to “run” to the interior walls, ceiling, windows, and flooring (but can sometimes “run” beyond the surfaces to, for example, the internal electrical writing, HVAC ducts, etc.).
The specific definitions depend on how the Declaration of Condominium is written. Who bears the costs for repairs, maintenance, and upgrades depends on whether the item needing repair, maintenance, or upgrade is “in” the unit or is part of the “common elements.” The unit owner pays for the former, and the condominium pays for the latter. (Although, in truth, the unit owners pay for common element repairs, upkeep, and upgrades through their monthly assessments.)
In any event, this is the first legal consideration when considering purchasing an NYC commercial condominium. Commercial condominiums often have different definitions of what is considered “in” the condominium as opposed to how a residential condominium is defined. This can be both good and bad. On the one hand, as a commercial business owner, you want as much freedom as possible to modify the space and add improvements as needed for your business (including removal and change of wall, flooring, and ceiling interiors). Likewise, most businesses want control over separate HVAC, electrical, and other utilities. On the other hand, what is “in” your condominium is what you are responsible for repairing, maintaining, and upgrading at your own cost. Careful attention must be paid to these issues concerning the type of business you are operating and potential future changes.
Navigating the Rules and Boards when Buying a Commercial Condominium
The Condominium Rules and Regulations will also require careful consideration as you contemplate the purchase. Do the Rules allow for your type of business operation? What restrictions are imposed? For example, can you operate around the clock if you wish? Are there noise restrictions that will impede your business? What are the penalties and punishments for violations of the Rules? Another question involves whether the Rules limit your ability to lease your commercial space. Residential and commercial spaces often have distinct leasing rules, which must be confirmed before purchasing. Signage for your business is also an important consideration. What are the Rules concerning that, and are those Rules sufficient for your business operations?
Another important consideration involves the governing structure of the Condominium Association, mainly if your commercial condominium is mixed with residential units. Bluntly, the interests of residential units do not always align with those of retail units. You need to carefully consider how much influence — vote percentage — is held by the commercial units and how easy (or difficult) it is for the residential units to vote to change the rights held by the commercial units. Generally, a condominium has one Board to which the unit owners elect various board members. Questions to ask include: is there guaranteed board membership for the commercial units? Are rights for the condominium units guaranteed in the Declaration that the Board cannot change? For example, can the Board change the Rules so your business operation is no longer allowed?
Contact the NY Business and Real Estate Lawyers at Wright Law Firm NYC Today
For more information, call the experienced New York City business lawyers and litigators at Wright Law Firm NYC. We provide top-tier legal services for New York businesses. We can help get your startup off and running. To schedule a consultation, don’t hesitate to contact our office by e-mail or call us at (212) 619-1500.