Condo Offering Plans & Co-op Prospectuses Go Digital. It's About Time
Thursday, October 28, 2010 - The building had converted to condo in 1984, back in the bright and halcyon days of middle-class cops, teachers, bakers and writers being able to afford to buy apartments. Under the non-eviction plan, the sponsor sold off the rented units as each became vacant, and put $2,000 of the sales price into a fund for the condominium. Ten years later, he sold his remaining shares to a successor sponsor, who only kicked in $1,000 for each apartment sold. And in 2010, a third sponsor took over – who plans on renting apartments and isn't kicking in anything on any sales.
The board doesn't know what its rights are. It has to look up the wording in the original offering plan and amendments - filed away over a quarter-century ago, which means 10 or 20 generations in board years. Boy, if only these public records were digitized, online and word-searchable….
Welcome to (almost) 2011, where this stuff does indeed exist. This wasn't true even just (almost) three years ago, when The New York Times went searching for such a service. Now, however, the title-insurance agent TitleVest has branched out to put this data, long overdue, online in the form of searchable PDFs.
Pro(s pectus) and Con( cerns )
As any co-op or condo board member knows, condo offering plans and co-op prospectuses are required to be filed with the state attorney general's Law Department. This helps ensure that under New York State's General Business Law, co-op and condo sales are made under the terms of what is on file. The law also requires that people planning to buy, including those already residing in a building that's going co-op or condo, receive a "true copy" of the plan.
"Providing these materials online could result in unintentional alterations through programming mistakes or deliberate alterations by hackers," Manhattan co-op and condo attorney Alfred M. Taffae, of Racht & Taffae, told the Times in January 2008. "To date the attorney general's office has not approved the idea, and until it does, it won't happen."
"I suppose it's theoretically possible a hacker could hack in and change documents," concedes TitleVest's executive vice president, Brian Tormey — though in fairness, that's true even of banks, brokerages and other financial institutions. "We happen to use some pretty extensive and fairly expensive PDF protection software from Protected PDF, one of the leaders in encrypting and protection technology," Tormey says. "We store the files on our server behind a firewall -- not on our website. When a client asks for [a plan], it's hosted temporarily on the website only until they download it," generally immediately.
It compares with a library: The card catalog, anyone can look at. The research volume itself? You fill out a slip, and the librarian brings it out from the back.
TitleVest - which says straight away that its database is starting out and as such is not comprehensive - has aggregated what Tormey estimates as thousands of plans so far. "We've acquired them through a number of different means," he says. "Some are from the AG's office. Some come from clients that donate offering plan to us." The company collects not just the plans themselves "but also amendments and everything else that goes with them."
Like a Library
They way it works is: You go to the TitleVest home page. You register for free and then go to the "Place New Order" box. On the pulldown menu, choose "Coop/Condo Offering Plans" and then hit GO. On the next page that comes up, choose your county, type (co-op or condo) and address, then hit SEARCH.
When your results come up, choose the "Copy: FREE" option under "Place Order." Scroll down the boilerplate box just below it in order to check the "I agree to the terms and conditions" box, and, finally, hit SUBMIT.
Having ready access to such important documents "is beneficial to co-op and condo boards, which can make them available to prospective buyers for a quick and compete reviews and analysis," Tormey says.
Even for boards who have dead-tree copies readily available, the TitleVest treatment can help since in addition to scanning the documents, the company puts them through the time consuming OCR (optical character recognition) process – meaning that every word is searchable. With documents that can be hundreds of pages long, that's an enormous advantage: Find the word you need, see the page number, turn directly to that page amid the mountains of paper.
As well, says Tormey, "We're taking the table of contents and making them hyperlinked. So you see the section you want, you click, and it takes you right. You don't have to keep scrolling to page 600," or even go to the trouble of typing the page number in the PDF search form.
The currently free database will get refined, as co-op and condo boards and real estate professionals try it out online and see what works and what doesn’t, in the time-honored tradition of Beta-testing.
"The exact business model isn't finalized yet," Tormey says. "But we're looking forward to taking it out of Beta and moving on to whatever shape it's going to take. A free service for the digital version is still in consideration as one of our options," he notes, adding that the company can't provide hard copies for free, given the costs of printing, collating and securely shipping 500- to 1,000-page plans.
Given the sorry state of the attorney general's office's record-keeping — just try to find offering plans from 1984 — and given the fact that we don't drive horseless carriages, listen to the Victrola and dial rotary telephones, it seems reasonable to assume that the AG's office will go digital in the near future, as many government entities, such as the New York City Department of Buildings, already have.
Until then, TitleVest is at the admirable vanguard. Digital offering plans and prospectuses are coming — tollbooths use EZPass, Metrocards replaced tokens and we do have this thing called the "Internet" — and someday the AG's office will make these public documents available for us in digital form. In the meantime, co-op boards and condo associations now can have a, shall we say, TitleVested interest.