574 WASHINGTON AVENUE

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er may mortgage his or her Unit, and thereby become individually liable for the payment of the principal and any finance charges or interest on such mortgage indebtedness. Additionally, each Unit will be a separate tax lot for purposes of New York City real estate taxes and assessments. As a result, each Unit Owner will be individually liable for the real estate taxes and assessments levied against his or her Unit. Generally, it is the opinion of Raphael and Marks that each Unit Owner will, under the present income tax laws and regulations, for Federal, New York State and New York City income tax purposes, be entitled to a limited deduction of $10,000 for: (a) the state and local taxes paid by such Unit Owner in a given year; (b) subject to certain qualifications and limitations discussed below, "qualified residence interest" paid by such Unit Owner with respect to such Unit. Qualified residence interest includes interest paid by the Unit Owner on (i) debt used

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may deduct interest paid, now limited to, pursuant to the Tax Cuts and Job Act of 2017, effective January 1, 2018, the first $750,000 of his or her mortgage indebtedness and the real estate taxes and other state and local taxes, up to an aggregate maximum of $10,000, assessed and paid on his or her interest in the property. Rev. Rul. 64-31, 1964-1 (Part I) C.B. 300. - 91 -

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.............................................................89 Tax Opinion of Counsel 339(i) Opinion of Counsel Real Estate Tax Estimate T. WORKING CAPITAL FUND ..........................................................101 U. RESERVE FUND ..............................................................................102 V. MANAGEMENT AGREEMENT AND CONTRACTS...................103 W. IDENTITY OF PARTIES..................................................................104 X. REPORTS TO UNIT OWNERS .......................................................106 Y. DOCUMENTS ON F1LE ..................................................................106 Z. GENERAL .........................................................................................106 ZZ. SPONSOR'S STATEMENT OF BUILDING CONDITION ............108 - ii -

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itution before execution of a Purchase Agreement. No representation is made by the Sponsor as to the availability or cost of such financing. 9. Working Capital Fund Contribution Purchasers of units shall, at the closing of their units, pay into the Working Capital Fund, the sum of $2,000 for each Unit purchased to the Condominium Board. At the closing of all four units, the Condominium’s Working Capital Fund will have been fully funded to the extend of $8,000. (See Part I, Section T, for further discussion.) 10. Legal fees Each Purchaser shall pay the sum of $2,500.00, payable to Raphael and Marks, Sponsor's counsel, to defray legal fees incurred in connection with the closing of title of Purchaser's Unit plus $250 for ACRIS preparation. If the Purchaser obtains financing and the lender is unwilling to close at the offices of Sponsor's counsel, the closing may be held elsewhere in New York City, provided that an additional travel fee is paid to Sponsor's c

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emiums paid by Sponsor on behalf of the Condominium from the date of the First Unit Closing. In the event that there are not sufficient funds in the working capital fund to reimburse Sponsor, the Board shall sign a note in the amount of the adjustment for a term of one year without interest. The Plan will be amended to disclose the salient terms of any such note entered into between the Board and the Sponsor. The budget will be amended to reflect such proposed payments for which there is no item already budgeted, including interest, as a separate line of the budget with a footnote disclosing the nature and purpose of the payments. (See Part I, Section L, for further discussions.) 23. Unit 1 is a duplex on the cellar and basement level. The basement floor is legal habitable space. The cellar space is accessory space only. It may not be legally used as a bedroom, living room or kitchen, and to do so may result in a building code violation being issued for the buil

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xpenses and decrease the contingency. The contingency fund has been allocated among all Units on the basis of percentage of Common Interest. (13) Reserve Fund for Capital Repairs $1,600 This amount has been budgeted for annual future capital repairs. This estimated Budget does not include an estimate for income taxes payable by the Condominium. One hundred percent of the total square footage of all Units of the Condominium, will be used by individuals for residential purposes. Accordingly, the Condominium may be eligible to elect to be treated as a homeowners association which is not subject to Federal income tax on amounts received as membership dues, fees, or assessments from Unit Owners, for its first taxable year. Absent such election, the status of the Condominium for tax purposes is uncertain. The Condominium may be treated as a conduit for the Unit Owners, rather than a separate taxpayer. If treated as a separate entity, the Condominium may be treated

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- 47 - of their unit, to the Condominium Board for its initial Working Capital Fund. Said contributions shall constitute the Working Capital Fund of the Condominium. The following schedule illustrates the projected amounts of the costs set forth in this section of the Offering Plan for a Unit purchased by a Purchaser in the amount of $1,750,000 and a mortgage in the amount of $1,400,000 (80% of the purchase price): Fee title insurance $ 6,891 Fees for Recording Deed and Unit Power of attorney: $ 300 Mortgage Loan Closing Costs: Recording Mortgage $ 200 Purchaser’s mortgage recording tax $18,017 (a portion of which will be paid directly to Sponsor as part of a mortgage tax credit) Mortgage title insurance $ 1,421 Endorsements $ 150 Other Bank charges $ 1,000 New York City and New York State Real Property Transfer tax $32,520 Mansion Tax $17,819 Title Search Fees $ 560 Working Capit

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emiums paid by Sponsor on behalf of the Condominium from the date of the First Unit Closing. In the event that there are not sufficient funds in the working capital fund to reimburse Sponsor, the Board shall sign a note in the amount of the adjustment for a term of one year without interest. The Plan will be amended to disclose the salient terms of any such note entered into between the Board and the Sponsor. The budget will be amended to reflect such proposed payments for which there is no item already budgeted, including interest, as a separate line of the budget with a footnote disclosing the nature and purpose of the payments. - 56 -

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made, the Condominium will remain liable for Federal income tax on any taxable income it may have from other sources such as interest earned on any reserve funds (less expenses directly connected with the production of such income). To qualify as a homeowners association, the Condominium must meet all of the following conditions: (1) it must be organized and operated to provide for the acquisition, construction, management, maintenance and care of association property, (2) at least 60% of its gross income for each taxable yea must consist solely of amounts received as membership dues, fees or assessments from Unit Owners, (3) 90% or more of its expenditures for each taxable year must be made for the acquisition, construction, management, maintenance and care of association property, (4) no part of its net earnings can inure to the benefit of any private shareholder or individual (other than by acquiring, constructing or providing management, maintenance, and care of asso

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- 86 - T. WORKING CAPITAL FUND Each Purchaser under this Plan will be required to pay to the Condominium Board, at the closing of title to his or her Unit(s), an amount equal to $2,000 for each Unit purchased in order to establish the initial Working Capital Fund. The Working Capital Fund may be held or used for working capital, to make repairs and/or for such other appropriate purposes permitted under the Declaration and the By-Laws as will be determined by the Board, in its sole discretion. However, while Sponsor controls the Board, the Working Capital Fund will not be used to reduce estimated Common Charges, and in no event shall any portion of the Working Capital Fund be used to pay any Common Charges. No representation is made that the Working Capital Fund, together with the Common Charges, will be, or is intended to be, adequate to cover expenses for the first or any subsequent year of condominium operation, including, without limitation, the cost of

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- 87 - U. RESERVE FUND A Reserve Fund will be established for the Condominium as a line item in the Budget in the amount of $1,600 for the first year of Condominium operation. (See Part I, Section E, Schedule B, Note 12 and is funded from the common charges payable by the owners of the units, including Sponsor during the period that he continues to own any of the units. The Reserve Fund is to be used only for capital replacements or repairs. While Sponsor controls the Board, the Reserve Fund will not be used to reduce estimated Common Charges, and in no event shall any portion of the Reserve Fund be used to pay any Common Charges attributable to Unsold Units. If additional funds are required over and above the Reserve Fund, it may be necessary to increase the Common Charges or to impose special assessments on Unit Owners. The Reserve Fund will be available as it is funded by the unit holders’ monthly contribution. The Sponsor makes no representation that the Reserv

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ing apportionments. 9.5 Purchaser shall pay to the Condominium Board the sum of $2,000 for each Unit purchased hereunder as part of its initial Working Capital Fund. 9.6 Purchaser shall pay the Real Estate Transfer Tax due to the State of New York (the so-called "deed stamps"), the Real Property Transfer Tax due to the City of New York and any other real property transfer tax due to the City or State of New York. 9.7 Purchaser shall pay the Mansion Tax due to the State of New York. 10. Transfer Tax Returns. At the closing, Purchaser shall duly complete and sign before a notary public the real property transfer tax return required to be filed with The City of New York ("RPT Form") and Purchaser shall duly complete and sign the Combined Real Estate Transfer Tax Return and Credit Line Mortgage Certificate ("Combined Tax Form") required to be filed with the Department of Taxation and Finance of the State of New York (the "Tax Department"), or such other form

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scussion.) 4. No Bond or Other Security No bond or other security has been posted by Sponsor to secure its obligation to pay Common Charges, special assessments or real estate taxes with respect to Unsold Units. Sponsor represents that it has the financial resources to pay such amounts with respect to the Unsold Units and agrees to pay such amounts. (See Part I, Section M, for further discussion.) 5. Transfer Taxes Purchasers shall be obligated to pay the New York City Real Property Transfer Tax and New York State Real Property Transfer Tax (Deed Stamps) which by law are the primary obligation of the Seller. For the purposes of computation of the aforementioned taxes, the consideration is calculated by adding the amount of tax as additional consideration to the purchase price. The taxes are then paid on said higher consideration. (See Part I, Section L, for further discussion.) 6. Restrictions of Banks Regarding Number of Sold Units Purchasers shou

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ings to the Condominium Board. (j) Payment of Common Charges and Real Estate Taxes Sponsor will pay all Common Charges, real estate taxes and special assessments attributable to the Unsold Units in accordance with the provisions of the By-Laws. Sponsor represents that is has the financial resources to meet the aforesaid obligations with respect to Unsold Units and fund same from income from projected sales, the rental or leasing of Unsold Units and Sponsor's other financial resources. (k) Insurance Sponsor will initially procure on behalf of the Board, to take effect on or before the date of the First Closing, the insurance relating to the Condominium which is required to be maintained by the Board in accordance with the provisions of the By-Laws (see "Rights and Obligations of the Unit Owners and the Board of Managers" in Part I, Section Q.), the cost - 62 -

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cements. If additional funds are required over and above the Working Capital Fund, it may be necessary to increase the Common Charges or to impose special assessments on Unit Owners. Adjustments for prepaid expenses will be paid from the Working Capital Fund. If the Working Capital Fund is not sufficient, such balance shall be assed pro rata to the unit holders. Within 60 days of the First Unit Closing, Sponsor will adjust with the Board for insurance premiums paid by Sponsor on behalf of the Condominium from the date of the First Unit Closing. In the event that there are not sufficient funds in the working capital fund to reimburse Sponsor, the Board shall sign a note in the amount of the adjustment for a term of one year without interest. The Plan will be amended to disclose the salient terms of any such note entered into between the Board and the Sponsor. The budget will be amended to reflect such proposed payments for which there is no item already budgeted, includ

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or to the date of such new determination. However, a prior period's deficit may be included in Common Charges for a subsequent period or paid from a Special Assessment levied against all Unit Owners. 6.1.3 The failure or delay of the Board to prepare or adopt a budget or to determine the Common Expenses for any fiscal year or portion thereof shall not be deemed a waiver or modification in any respect of the covenants and provisions hereof or a release of any Unit Owner from the obligation to pay Common Charges. In such event, the Common Charges that were computed on the basis of the Common Expenses last determined for any fiscal year or portion thereof shall continue thereafter to be the Common Charges payable by the Unit Owners until a new determination of the Common Expenses shall be made. 6.1.4 In addition to the foregoing duty to determine the amount of and assess Common Charges, the Board shall have the right to levy special assessments to meet the Common Exp