New York Condo Due Diligence Checklist

Where New York due diligence deserves the most attention

Legal Framework

New York deliberately treats condos, co-ops, and HOAs as three legally distinct creatures. This is the single most important framing point for the entire brief.

Reserve Studies and Reserve Funding

Co-ops rarely hold large cash reserves; they typically rely on the underlying (building) mortgage as a borrowing tool and on maintenance increases / special assessments to fund capital work. A thin co-op reserve is *normal* and must be read alongside the underlying mortgage and the board's borrowing capacity.; Condos cannot mortgage the building as a whole (there is no single owner of the common elements), so they depend on reserves + special assessments + (sometimes) association loans.

Structural Inspections and Building Safety

There is no statewide structural-inspection mandate for condos/co-ops in New York. The action is almost entirely at the New York City level, where a dense stack of "Local Laws" imposes recurring, expensive inspection and remediation obligations. These are among the most important financial-risk drivers in the entire New York market and have no equivalent in most other states.

Insurance Requirements and Insurance-Market Risk

Condos — RPL § 339-bb: The board of managers must insure the building against fire and other hazards if required by the declaration, the bylaws, or a majority of unit owners. In practice, virtually all condo bylaws require a master property policy at replacement cost; for qualified leasehold condominiums the statute makes full-replacement-cost insurance mandatory and annually updated. Each unit owner retains the right to insure their own unit (the HO-6 / unit-owner policy).

Resale Disclosures and Buyer Cancellation Rights

New York's disclosure regime is bifurcated and, for *resales*, surprisingly light on statutory mandates — most buyer protection comes at the initial offering stage (Martin Act) and from contractual/contingency practice, not a statutory resale-certificate law.

Assessments, Special Assessments, and Borrowing

Condos: The board adopts an annual budget and levies common charges allocated by each unit's common-interest percentage (RPL § 339-m). There is no statutory cap on common-charge increases; the limits are whatever the bylaws impose. Most bylaws empower the board to set the budget and raise common charges without an owner vote.; Co-ops: The board sets maintenance (allocated per shares) to cover operating costs including underlying-mortgage debt service, real estate taxes, payroll, and reserves. Again, no statutory cap; the proprietary lease/bylaws govern.