This brief background intends to give you an understanding of the principals that will underlie any residential real estate transaction in New York City. Our task to you is not merely legal, but also ministerial in nature. While guiding you through the stages of your transaction, we will be advocating your rights, managing the transaction and dealing with the numerous parties that will be intricately involved during the course of your transaction. This simplified description is intended to give a broad overview of the experience ahead. The purchase of a New York City apartment will come in one of two forms: a Condominium or a Co-Operative. They are distinct, and those distinctions are substantial, and so it is imperative that they be firmly grasped.
THE OFFER and ACCEPTANCE
At this initial point, you have likely viewed and considered several properties, with or without the aid of a real estate professional. As the world renowned journalist Mr. Alistair Cooke so astutely observed, New York City contains many different neighborhoods, which are all diverse and contain their own charms, benefits, and nuances. The difference of only a few blocks can mean a significant change in the demeanor of the neighborhood. By analogy, as diverse as SoHo can be from Tribeca, or Midtown can be from Battery Park City, each particular building, be it a Condominium or a Co-Operative, can be significantly diverse from another. Do not assume that because you have viewed a certain building, and have been advised as to the rules and restrictions of that building, that those rules apply throughout. Each building is diverse, in its internal bylaws, the amount of its common charges, the state of its tax abatements, etc.
THE CONTRACT OF SALE
Thanks to the arrival of the technological age, a Contract of Sale can be drafted within a relatively short period of time. This is why it becomes important to have full and complete information to transmit to the seller or seller's attorney at the time an offer is made: typically this information is transferred directly into the Contract of Sale. As a matter of timeline, after negotiations the seller's attorney will submit contracts to our offices. Once received, we will dutifully review said contracts as well as the Offering Plan, so that you have an appreciation of the transaction, as a whole. The deposit monies are also due at this time. The amount of the down payment will differ: units that are being sold "on plan" (new construction that you begin the process of buying before the unit has been built, or completed), will have a specific and set down-payment requirement, which cannot be negotiated up or down, as it is designated in the offering plan.
CONDUCTING "DUE DILIGENCE"
Once the Contract of Sale is fully signed, and returned to our office, we will certainly notify you of the good news. Also, we shall immediately begin conducting our "due diligence." To briefly analogize this concept, we are sure you have heard the phrase "buyer beware." This is also true in real estate transactions, thus, we conduct extensive and detailed investigations into the specific real property you are purchasing and even searches on the seller themselves, including bankruptcy searches and Patriot Act searches. Searches are conducted of public records, property records, Court and county clerk records and others. The results of all of these searches are compiled into what is referred to as a "title report". This report warrants the property will be conveyed free of any complications, problems with title, and is free of any judgments, liens, prior mortgages, or other encumbrances that may affect your ownership.
Many lending institutions require a fair amount of documentation from you incidental to their underwriting procedures. The application can be a lengthy process, and thus, the sooner the process is begun, the better. While the financing of your purchase is not in itself a legal matter, we can offer the following advice:
- Shop around. In this somewhat turbulent financial market, interest rates are constantly in flux, and can change daily. The variety of loans that certain lenders are issuing may change periodically. Because of changing conditions, it may sometimes be necessary to apply for loans at two or more lenders before you find one that will issue the loan that you want, under the conditions that exist for your purchase, at an agreeable rate of interest.
- If you use a Mortgage Broker, use someone that you trust, and beware of the fees that they may charge you. Customarily, a mortgage broker is paid by the lender, however, certain mortgage brokers may also charge you fees.
The closing is the final stage of the real estate transaction whence title is actually conveyed to the purchaser. It consists of an actual gathering of the parties concerned; the purchaser, the seller, their attorneys, an attorney for the lending bank, the Management Agent for the development and a title agent. At this closing, the seller will execute a deed in the purchaser's favor and, in turn, the purchaser will tender the balance of the purchase price. In addition, you will be obliged to pay your applicable "closing costs" in connection with the closing. You will pay the title insurance premium, all municipal taxes, recording charges as well as any administrative and legal fees at this time.
While required to attend the actual closing, a purchaser can arrange to attend vis-a-vis an agent in fact through a "power of attorney". This agent acts in the purchaser's stead.