The New York Times
TitleVest's digital library of thousands of condo and coop offering plans eases burden
WHEN Richard H. Rothman moved into his two-bedroom condominium at the Centurion, a high-rise on West 56th Street designed by Pei Partnership Architects, he discovered to his dismay that the walls had been primed but not painted.
For $3.5 million, he said, he had expected a condo with fully painted walls. But he learned he didn’t have a legal leg to stand on. The developer had stated in the offering plan that nothing beyond primer would be applied to the walls.
“I was stuck having to hire a painter to paint a brand-new 1,300-square-foot apartment,” said Dr. Rothman, a surgeon and professor from Philadelphia. “The apartment wasn’t cheap, and the painter wasn’t cheap.”
Might he have avoided the situation before the purchase by skimming the hundreds of pages in the condo’s offering plan?
“I don’t think anybody in the United States reads that document,” Dr. Rothman said, “and I don’t think the lawyers read it either. Quite frankly, nobody had pointed it out to me.”
A title insurance company is now starting to make such plans more accessible — if not shorter — by digitizing them and making them available free online. The simplest option for owners or prospective buyers wishing to see plans is to request them through the building’s sponsor or managing agent. It can take several days to make a copy, and cost hundreds of dollars.
The company, TitleVest Agency Inc., began the service in October and has more than 2,000 offering plans and amendments for condos and co-ops, most of them in New York City. The online library continues to grow daily, said Brian D. Tormey, an executive vice president of TitleVest. Mr. Tormey said he expected another 2,000 to be added soon. He built the library collaboratively with Bill Baron, TitleVest’s president, and other TitleVest employees.
Mr. Tormey said he had at first thought TitleVest would have to buy the offering plans. But it turned out that law firms, managing agents, real estate brokers and others were only too thrilled to hand over the bulky plans for digitization, since they can end up filling entire storage rooms.
The offering plan for the Centurion is not yet available, but TitleVest is offering to pay $50 toward the purchase of any plan, which it would then digitize. The digitized versions are searchable by keyword. “Our functionality allows the review and the finding of key terms, in a stack of paper that’s a foot high, happen like that,” Mr. Tormey said, snapping his fingers. “It’s nearly instantaneous, and it really speeds up things.”
For instance, a lawyer, a property owner or a potential buyer can use the term “kilowatt-hour” to find the estimated power bill for an apartment, or “tax abatement” to confirm a building has a certain tax break promised by a real estate agent, Mr. Tormey said.
He said having the plans at your fingertips would be especially empowering if the New York City real estate market heated up and buyers felt pressure to speed up due diligence before a competing buyer closed the deal.
“Rather than holding up the contract signing with issues of acquiring the plan,” he said, “now within an hour of saying, ‘I need the offering plan,’ you have the offering plan in hand.”
He added, however, that recent amendments might make it take longer for TitleVest to deliver an offering plan. With each request, TitleVest checks with the managing agent to see if there have been any amendments, he said.
TitleVest charges $150, shipping included, for a hard copy of an offering plan and its amendments, but the digital version is currently free. This provides a bit of a deal for apartment sellers, who often bear the $180-to-$300 cost of distributing an offering plan to potential buyers, Mr. Tormey said.
He said that while TitleVest hopes to make money on the service, the primary motivations were industry good will and brand recognition. A handful of sponsors have asked TitleVest to handle the entire distribution of a development’s offering plan, which is usually the job of the building’s managing agent, he said.
Neil B. Garfinkel, a partner in the law firm Abrams Garfinkel Margolis Bergson who is residential counsel to the Real Estate Board of New York, said he had donated almost eight full boxes of offering plans to TitleVest for its library.
“I think it’s a pretty cool idea,” said Mr. Garfinkel, who is planning a presentation on TitleVest for the real estate board. “I had offering plans all over the place, and I was happy to send them, especially with the opportunity that if you ever needed to find something, it’s searchable.”
The New York state attorney general’s office, which maintains repositories of offering plans, has been encouraging development of the online library service, Mr. Tormey said. The office did not respond to a request for comment.
Michele Conte, a senior vice president and associate broker with the Corcoran Group, said that TitleVest’s online library sounded beneficial for the real estate industry, but that buyers should not jettison their real estate lawyers to save money and take on tasks like due diligence by themselves.
“Very few laymen are going to be able to understand what’s written in an offering plan,” Ms. Conte said. “It’s written in legalese.”
She suggested instead that buyers provide their lawyer with a list of issues they are most concerned about, so the lawyer has some guidance when reading the offering plan.
“Too many people hire a professional and then just leave it all up them,” Ms. Conte said, “and the professional gets blamed when something gets missed.”