Buying Real Estate in Westchester and New York City
What does a real estate attorney do when representing a buyer?
The goal of every attorney is to protect the interests of his or her client. As it relates to buying real estate, protecting a client’s interests means mitigating the risks associated with a transaction that can involve millions of dollars or more. And to be even more specific, when we represent clients buying real estate, whether residential or commercial, we make sure the Contract of Sale is in proper form so that a buyer does not agree to anything to which they should not agree according to local custom and law, that the title to the property is marketable and/or insurable, and we make sure that all of the necessary papers are properly recorded to ensure ownership is transferred. And we answer all of your questions within 2-3 business hours, guaranteed.
Even if all of that is true, can’t I just go it alone and handle things without an attorney?
When it comes to real estate transactions in New York, you have the right to forego retaining an attorney. However, if you’re obtaining a loan to buy property, a lender may refuse to proceed unless you hire an attorney.
Even if you’re paying with cash, we recommend you retain an attorney to represent you when buying real estate. And that’s true whether you hire The Donaldson Law Firm or another real estate attorney.
Why? Because Contracts of Sale for real estate are not exactly simple forms. The same goes for title reports – they’re not exactly leisurely reading. Rather, they are packed with legal language.
More importantly, it’s likely that the seller will have an attorney protecting his/her/their interests, so why go head-to-head with an experienced real estate lawyer whose only job is to protect the interests of the person on the other side of the table?
Okay, so if I hire The Donaldson Law Firm to represent me, how much is it going to cost me in legal fees?
We offer clients affordable flat rate fees ranging from $1,500 to $3,000 for residential transactions which covers everything from drafting and reviewing the Contract of Sale, reviewing title reports, certificates of occupancy and compliance, and attending the closing to ensure you end up with the keys to your new home.
Because commercial real estate transactions can involve a lot more moving parts such as reviewing existing leases, commercial loan documents, LLC and corporate papers, etc., we typically work with commercial clients on an hourly basis.
Should I be at the property when an inspection is performed?
Absolutely. Not only is there a world of a difference between seeing the property and anything the inspector may bring to your attention with your own eyes, but spending 60+ minutes at the property while the inspector is going about their duties will also provide you with more time to thoroughly check things out compared to any previous showings you may have attended.
What happens after I sign the Contract Of Sale?
While every closing can be slightly unique, most real estate transactions progress as follows:
The buyer delivers the contract deposit to the seller’s attorney (acting as the escrow agent for the purpose of the down payment only) and the seller’s attorney keeps the down payment in his or her Interest Only Lawyer Account until closing.
The attorney for the buyer orders a title report, which is discussed in greater detail here.
The buyer will begin the loan application process if there is a mortgage contingency clause in the Contract of Sale. As that part of the process progresses, the lender will usually have the property appraised.
The attorneys for both parties and the lender will review the title report to ensure the seller is able to transfer ownership without any liens or encumbrances.
Upon approval of the title report and once the lender is ready to go, a closing date will be scheduled.
After I sign the contract of sale, can I back out of the deal?
Unless the property does not appraise for the same amount as the purchase price (if obtaining a loan), or if the seller is unable to satisfy any obligations required by the Contract of Sale then, no, you cannot back out of the deal without running the risk of losing your contract deposit.
What is the contract deposit?
A contract deposit is the money a buyer agrees to pay upon signing the contract. It is sometimes referred to as an earnest money deposit. If a buyer did not agree to provide a contract deposit, sellers would have little on which they could rely to enforce the Contract of Sale if a buyer wanted to back out of the deal.
How much should I agree to pay for the contract deposit?
In NYC and Westchester, it is customary for a buyer to provide a contract deposit of at least 5% of the total purchase price and as high as 20%. In commercial real estate transactions, buyers may agree to pay 10% upon the signing of the contract and an additional 10% at the closing.
To whom do I send the contract deposit?
The attorney for the seller usually acts as the escrow agent and hold the funds in his or her Interest Only Lawyer Account so, upon signing the Contract of Sale, a buyer mails or delivers the contract deposit check to the seller’s attorney’s office.
If the property does not appraise for the purchase price to which I agreed and I can’t get a loan, can I cancel the contract?
The short answer is “yes,” although all of the people involved in the transaction usually do what they can to avoid having to cancel the contract.
For example, an eager seller may agree to reduce the purchase price to make up the difference between the purchase price and the amount for which the property appraised.
Otherwise, if a seller refuses to reduce the purchase price, the real estate brokers may work together to potentially reduce their commission, thereby allowing the buyer to make up the difference.
Should I shop around for title insurance?
Shopping for rates for title insurance is usually unnecessary because the reputable title companies operating in New York are members of the Title Insurance Rate Service Association (TIRSA) and the rates set by TIRSA are approved by the New York Department of Financial Services. And that means you’ll likely get the same rate for title insurance regardless of the title company selected.
What happens if the seller did not obtain certificates of occupancy for renovations or additions to the property?
It depends on the nature of the renovation or addition and whether you’re obtaining a loan.
Why does it make a difference if you’re obtaining a loan? Because if you’re obtaining a loan, here’s how a bank or private lender will generally view a lack of a certificate of occupancy: “If you default on your loan and this piece of property goes into foreclosure, then we’re not going to want to have to deal with the time and cost associated with a lack of a certificate of occupancy.”
In other words, lenders will usually require that certificates of occupancy are obtained for renovations in order to protect their investments.
However, if you’re not obtaining a loan, then the decision rests with you as the buyer. What’s important to remember is that, even though you may not take issue with a lack of a certificate, the next buyer may have an issue with it when the time comes and you want to sell the property.
Will I need to have a survey performed?
If there is a recent and/or legible survey already available, then an entirely new survey is usually unnecessary and a survey “update” will likely be sufficient if required by a lender.
How long will it take before we can close and I can move into my new place?
On average, closings occur ~60 days after the Contract of Sale is fully signed. Sometimes they happen faster near ~45 days and sometimes they take a bit longer, closer to ~90 days. If you’re obtaining a loan, the lender must first clear the transaction to close before a firm closing date will be scheduled.
What actually happens at the closing?
While there will be a fair amount of paperwork to sign (all of which will be explained to you in detail prior to signature), the most important part of the closing for a buyer is that you will receive the deed to the property (or a proprietary lease and a stock certificate if buying a cooperative apartment) along with the keys to your new home. In return, you as the buyer will deliver the balance of the purchase price due to the seller, plus or minus closing adjustments.
Where will the closing take place?
If you’re obtaining a loan, then there’s a very good chance the closing will occur at the office of the lawyer who is representing the lender. Otherwise, closings usually take place at the seller’s attorney’s office.
How long does an average closing take?
Lenders will provide a stack of paper about 4” tall that you will need to review and sign, which requires some time. Overall, though, most closings require about 60-90 minutes.
When do I do the “walk-through?”
We recommend that buyers do the walk-through and make sure everything is in working order immediately before the closing because, at that point, the seller has likely vacated the home which makes a thorough walk-through possible.
Got more questions? Don’t hesitate to give us a ring or email us.