Protecting Condominiums From Undesirable Purchasers

Since the 2008 recession, foreign entities have played a significant role in New York real estate. In the early years of the recession, when the U.S. real estate market was stagnant and the dollar was relatively weak, foreign investors jumped at the opportunity to buy up New York City residential real estate, paying cash. This trend continues today, despite the economic recovery and stronger dollar, and has been a boon to developers who are happy to turn a quick profit. However, condominium boards are concerned about the often-mysterious owners flooding their buildings.

Just this year, The New York Times published an exposé highlighting one luxury building in Manhattan whose units are largely owned by foreign limited liability corporations with unknown financial backers and occupied by undisclosed individuals. The Times article raises a difficult question for condominium boards: How can they protect themselves from cash purchasers who cannot provide sufficiently detailed financials or from occupants who may be undesirable? See “Towers of Secrecy” series, N.Y. Times, beginning Feb. 7, 2015.