Q&A: Buyer’s Remorse

Q&A: Buyer’s Remorse
Image: izkes/iStock Photo

Q. I signed a contract at the end of November 2020. There was an increase in the maintenance in February 2021, so it’s likely they got notice of this in December. Unfortunately I wasn’t given notice of this $55 increase per month until three business days before my closing. When I was considering apartments I didn’t want to go over a certain sum in maintenance, and the increase takes me past that limit. Do I have any recourse since they did not inform me about this change?

                                       —Seeking Redress

A. “When purchasing a cooperative apartment,” says Cathleen Hung, attorney at the New York office of law firm Anderson Kill, “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.  

“Since you signed your contract in November 2020 and the maintenance increase was implemented in February 2021, 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. 

“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.”

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  • I live in a bldg that says it's a coop resident, but there are several rentals. In may 2020 in the height of the Pandemic, we were given a 5% maintenance increase twice the normal increase. The President of the board has resigned, a new person was added in, and no one on the board has posted any of these changes. Of course we have not had a shareholders meeting since Nov. 2019, pre Covid. This board has a REAL Problem with Communication with the shareholders. This is nothing new. I have lived here 20 years and have not seen such a mess within the board. I have called texted the President, before she resigned to no availe. Just found out the property mgr. is Harry Legha. Now that we have new management starting May 2021, we have been given a special assessment June 2, 2021 and another increase of 8% effective Aug 1, 2021. The new management sent a letter detailing the transition left 185,000 in payables and that the 5% increase had not made a change in the unpaid invoices. What the HELL! is going on? 13% increase in less than 2 years? totally UNBELIEVEABLE! There was a zoom meeting for 1 1/2 hour and we were only allowed 1 question. I did not attend that meeting. Isn't the board suppose to make the Shareholders aware of what happened in that meeting? There are many of us who do not do zoom. The question I need answered is where do we go from here? This will continue! Because of the lack of communication that this board has had in the past. It's like they can do as they please. Thank God I was able to continue paying my maintenance during Covid, but I can't afford to continue with these increases . I do not know who the board members are to try to speak to them, as nothing is ever posted. What is my position as a shareholder to discuss my concerns? How did we get so behind? I know we can't evict, those who are not able to pay during Covid. If this were a temporary increase then maybe I would understand. But no communication is very concerning to me. Hope to hear from you soon on which direction I can go in.
  • Sanadra, there are a number of steps you can take to approach these issues: Doubtless, the by-laws of your building provide that a special meeting of the shareholders may be called, usually by a number considerably less than a majority, often by notice to the Secretary. The call for the meeting is mandatory. It can be virtual, during COVID. The meeting can specify an agenda to include such issues as recall of board members, managing agents and disclosure of financial information. After all, with the changes in the law regarding elevators and environmental protection, there may by unreserved expenses that confront the Board. The by-laws may provide caps on increases in charges beyond a certain level each year, without approval of the shareholders. You or other concerned shareholders may stand for election to the Board. You may ask your managing agent to meet with the a group of shareholders to explain the financial issues confronting the building. Property managers generally want to accommodate legitimate concerns of the shareholders and avoid issues in their buildings. The New York City Bar Association has a Coop & Condominium Resident Dispute Mediation Project designed to help parties mediate disputes before they reach a point of litigation. This program provided trained neutral expert in cooperation and condominium dispute resolution to nip issues in the bud and avoid litigation. We, on that panel, daily work to solve such issues as you described.
  • If you and Two thirds of the Shareholders Request a Special Meeting to see what's going on then maybe you can get to the bottom of this.. Will need to organize and get Signatures from Fellow Shareholders. Thus will be very difficult but thru my experience in living in a Coop 32 years and unless the BOD'S and Management changes this will be a Huge Task.. Have to have Board Members that are Owners of Shares of Your Coop and Live there that should help.. This will be a very difficult and take alot of time. if you Straighten this Mess up Like we did in MY Coop got Rid of Sponsors and took control of Board this can be Done.. 👍🤔