What is an offering plan?
Updated June 21, 2021
The offering plan is a document that discloses important information about a condo or co-op to a prospective buyer. This info includes the price, buying procedures, the building’s bylaws, floor plans, board operations, finances and more.
If the building is still under construction or not yet opened, then the offering plan would inform on what the particulars of the apartment will be, and how the building will be operated.
The New York State Office of the Attorney General manages a database of offering plans, and the Real Estate Finance Bureau reviews offering plans to ensure they comply with the regulations of the Attorney General’s office. The Attorney General’s office must accept the offering plan for filing before the sponsor unit can be advertised for sale.
The offering plan is made up of two components: narrative and exhibits.
Offering Plan Narrative
The first part of the operating plan outlines the unit’s features and buyer procedures. For the latter, that would likely include the schedule for closing, as well as who’s responsible for closing costs and taxes. If the building is not yet move-in ready, the narrative portion will also detail if there are any construction issues, whom to contact about these issues, and a course of action on how to do so. And as noted above, this section would also break down how the condo or co-op building is, or will be, run.
The offering plan is a document that discloses important information about a condo or co-op to a prospective buyer. Credit: Romain Dancre/Unsplash
Potential buyers should read the narrative section closely, as it could reveal pertinent information that could potentially dissuade them from moving forward with the transaction. Examples include learning that the buyer’s down payment will not be refunded if they are unable to secure financing to purchase a unit, or that the building is mixed-use and residents have no control over how the retail spaces would be utilized.
It is highly recommended that an attorney be consulted before purchasing a sponsor unit. Among the tasks they should undertake are examining the building’s financials, confirm that it is not under litigation and check for other unforeseen liabilities.
Offering Plan Exhibits
The second part of the offering plan are a series of exhibits for the potential buyer to review. Besides the purchase agreement, these documents can also include anything related to the physical configuration of the unit, such as the floor plan, or a set of bylaws for residents to agree to upon moving into the building.
While some aspects outlined in the offering plan for condos and co-ops will be nonnegotiable, such as monthly common charges, there will be some that can be open to discussion, such as closing costs, upgrades of appliances and fixtures and various building amenities. All of this will depend on the location of the building, the type of residential unit being purchased, whether construction is still under way or the building is move-in ready, among other factors.