If location is the key to success in real estate, then red tape is one of the biggest barriers. Anyone involved in the real estate business in New York has a list of regulations they say makes their work more difficult, even as some concede that some of the paperwork exists to strengthen consumer protection or avert legal troubles that could derail a new project. Melissa Dehncke-McGill talks to industry figures to find out what sets them off, and what they’d like to do about it.
What is the most irritating piece of red tape you run into on the job?
Barbara Fox, president, Fox Residential
Co-op boards the detailed work that goes into presenting a board package is unbelievable. It will never get too much easier than it is now. The more expensive things get, the more complicated it is to collect the information for the board package, such as detailed, lengthy reference letters and every penny in a personal financial statement.
Richard Ferrari, broker, Prudential Douglas Elliman
The condo board package. Most condo boards do not understand the reasoning behind the application process. A co-op has the legal right to refuse someone but a condo cannot legally refuse someone because of their financial position.
They can request whatever they want, they can stall, but they have to face the fact that the individual can still purchase the apartment or the condo board will have to purchase the apartment at the contract price. Most condo boards will still take two to four weeks before the signed waiver of the right of first refusal is given.
So why do they request tax returns, reference letters and bank statements, when it is not an issue of how much money the buyer has? Fifteen years ago they didn’t.
Kathryn Steinberg, vice president, Edward Lee Cave
To me some of the superfluous and unnecessary documents in the board packages, like lead paint disclosure. Everybody paints. That to me is the only red tape.
Cory Zelnik, president, Winick Realty
We deal with retail tenants. Store leasing brokers in general don’t encounter red tape, but the closest we come is when our tenants encounter landlord issues as it relates to facades, storefronts, and signage and in the extreme case, interior design. It puts a time constraint on the completion of the deal, subject to landmark approvals, which can take months.
David Sturner, principal and construction
project manager, Murray Hill Properties
New York City is filled with red tape. In construction, there is a permit for everything and every permit that has to be pulled goes to the Department of Transportation. There is a moratorium between Thanksgiving and the New Year on construction where you cannot use a crane, and they will not allow you to pull a permit even if you have one. If you need a sidewalk bridge, you had better have it up before that date even though you have a permit to use it.
The Buildings Department has become a lot better because it is more computerized. They don’t lose files anymore, but because it is computerized there is a lot more paperwork.
So what is your solution to the problem?
Hire a good expeditor; expeditors should have connections in these agencies. There are two or three companies in the city that are really well attuned. They know the process and they seem able to streamline it better than most.
Mika Sakamoto, broker, Sotheby’s
Getting condo board package approval is getting more difficult every year. Ten years ago, the Trump Organization had a one-page application form, no check, nothing. Every year from that point there has been more money, more fees and more documents. More than half is waste; it is not efficient, it is not for the owner’s benefit. It’s hurting owners because there are so many buyers fees that they shy away. It’s becoming like a co-op; it has lost the good part of being a condo and has become a headache for all the brokers.
So what is your solution to the problem?
You have to be very careful with the management company. If you make them mad they may put that file on the side; so we have to be nice. The majority of owners who hire a management company have no idea what it is like. The more they ask for, the more they feel secure. If that red tape was simplified it could be more efficient and cost-effective to benefit the owner.
Jeff Appel, senior vice president,
Preferred Empire Mortgage Company
The entire mortgage process is a conundrum of red tape, especially in New York, where it is considered the most complicated and a very big challenge for a buyer.
I was recently at a closing with a couple who bought their first co-op in the 1970s. They signed six documents. Today it is likely that the buyer will be presented with 40 documents. Many of these documents exist because there are more protections for the consumer; the government has mandated that these documents be signed. The conundrum is there is more information out there, but we live in a world where people have no time to read it. That leads to more insecurity and, in the buyer’s mind, more hassle to get the transaction done.
So what is your solution to the problem?
The mortgage business is still a paper business. Don’t throw anything out. Banks have upgraded so that we can transmit electronically without ever giving them one piece of paper, but ultimately it won’t close without the paper package. The way to make it easier is to be very organized and to know how to serve the client by getting them the answers they need immediately and still prepare the paperwork.
Stephen Lefkowitz, partner,
Fried, Frank, Harris, Shriver & Jacobson
There is a detailed and complex set of regulations, starting with zoning, extending to the landmarks law, the City Charter, with land-use review provisions it’s a complicated, high-stakes game in this city. The complexities of development in New York are inherent in the city itself, with its regulatory structure and the complex transactional structures that we use. So my answer is that I think the system works reasonably well. Given its complexity, I’m not sure that there is anything that can be done on a macro level.