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The Inquiring Mind: Buying Building with Separate Heating Plant

By Adam Leitman Bailey

Q. I’m thinking of buying a building that doesn’t have a separate heating plant. Instead, each apartment has individual electric baseboards. The tenants pay for the electricty for these baseboard units. Will I be able to continue to use that system?

A. The law requires that multiple dwellings (that is, buildings with three or more apartments) have a central heating plant unless there’s a waiver from the Department of Housing Presevation and Development, says Adam Leitman Bailey of the Manhattan law firm of Adam Leitman Bailey, P.C. Before buying such a building, you should have your attorney handling the transaction research whether there are any such waivers on file or whether there are any violations against the building because of the lack of a central heating plant, he says. Most likely, there is no such waiver on file. It will then become an issue for you to raise when negotiating the price of the building or the escrow agreement, so that you can make sure the building is brought into compliance with the law on this and, of course, all other matters. The law is unclear as to whether the installation of a heating plant will qualify for major capital improvement rent increase, Bailey says.


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