New York City property owners bracing for changes

Six New York City bills passed as part of the Climate Mobilization Act could affect real estate sales. That's because property owners must make fixes to increase energy efficiency and cut carbon emissions or be fined.

Owners of buildings of more than 25,000 square feet must do things such as install insulation and new windows or upgrade boilers in an effort to cut greenhouse gas emissions by 40 percent by 2030 or by 80 percent by 2050.

Owners of the largely multi-tenant buildings who haven't made the necessary changes by 2024 will be fined if they exceed their annual emissions limit. The amount of the fine will depend on emissions usage.

Some buildings will be exempt if they meet certain conditions.

According to Forbes, leaders in the real estate industry fear that the cost of retrofitting buildings will be so hight that it will harm the real estate market by making property too expensive to sell. They say it could force people who can't afford to make the changes to leave their homes and leave it for someone else to pay for it.

"The cost for these is usually through assessments," one New York City broker said. "When selling a condo or co-op, assessments are a huge hurdle to overcome. It is usually solved by having the seller pay the assessment in full at the closing, so the buyer doesn't have to deal with it.

Real estate values are not going to increase because of this, so the seller will ultimately receive less money in a sale. Another possibility is some property owners will not be able to afford the assessments and will have to sell.

"These are anxious times," one city official said. "The need to dramatically mitigate our emissions is based on risk. So that has to be part of the conversation on how the city can position itself against global warming."

Building owners undoubtedly will have a number of questions about these bills as they go into effect. An attorney with experience in real estate in New York City can help.