On Friday, PriceChopper spotlighted a seemingly attractive one-bedroom Chelsea apartment at 101 West 23rd Street that had been shaved from $550k down to $499k. Why no deal? Two Curbed readers knew something about the place that we didn't—something so crucial that, as one puts it, "As soon as I mentioned the address to my real estate lawyer, he told me to run away." Why? To our inbox:
1) "I went to the open house for that Chelsea apartment you featured last week in PriceChopper. The thing is freaking huge, and in spite of needing a little work (random mirrored wall, even randomer lattice adorning three walls, outdated kitchen), we were still stunned at how affordable the place was ($499k). Until we asked the broker why the maintenance (more than $1700 month) was so high. It turns out, the co-op doesn't actually own the land upon which the building sits—they pay rent to a landlord who owns the land, which is why it's so much money. The sketchy part is that...
... while there's a lease in place until 2040, the landlord might be able to revoke the lease whenever he feels like it and sell the land, and thus screw over everyone in the building if, say, the new landlord wanted to tear down the building and build a luxury high-rise. He didn't even know all the logistics, so he referred us to a real estate attorney. The broker, who was refreshingly honest by the way, then said that there had been a deal in place, but if fell through because the buyer's bank wouldn't provide a mortgage for such a shady situation (perfectly understandable). And I'm guessing that a lot of brokers must know about this, because in spite of exposure on Curbed and in last week's New York magazine, we were there for a good 20 minutes and we were the only ones there the entire time. Yeah."
2) "Just as an FYI, I looked at a very large two bedroom apartment at 101 West 23rd street earlier this year. The place was listed at $519,000, which seemed like a bargain even with the high maintenance, yet it had been on the market for way too long. What the listings don’t tell you is that the coop doesn’t own the land the building is on. It’s on a 99-year land-lease, and if I remember correctly, there were a little over 50 years left on the lease (the building is definitely post-war). The maintenance is high to account for the land lease payments. I toyed with the idea of placing an offer, but as soon as I mentioned the address to my real estate lawyer, he told me to run away. Apparently, there are no provisions for the coop to buy the land once the lease expires. Also, maintenance payments are “hostage” to what the land owner decides to charge in any given period. Finally, banks are less
and less likely to give a mortgage to a buyer the closer we get to the lease expiration. To make things worse, the building is right on the corner of Sixth Avenue and 23rd Street, one of the noisiest intersections in the city, and right above a subway and PATH station. The open house was on a chilly spring day, yet all the A/C units in the apartment were turned on. When I cracked open a window, I found out why. All that glitters is not gold, and 101 West 23rd St. is a prime example." · Curbed PriceChopper: Shedding Weight on 23rd [Curbed]