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The Legal Process of Selling Your Home or Property

[Please note that local customs and practices vary location to location within New York. For the NYC and surrounding areas, including Westchester County, the following summation should be useful:]

So you have listed your home for sale and you have an accepted offer! Now what?

The next step is for you or your attorney to draft a Contract of Sale to make the buyer’s intention of purchasing your home official. Your real estate agent will gather the critical information and terms and send your attorney a brief document referred to as a “Deal Sheet” or “Memorandum of Agreement”. This will enable your real estate attorney to draft the Contract of Sale and provide the Contract to the buyers’ attorney. Other documents you should send to your attorney at the outset include: The previous Deed of Sale showing how title to the property is held; Any surveys in your possession; Your title insurance policy and if you have it a Title

Report from when you purchased the residence.

Next, the Seller’s and Buyer’s attorneys negotiate the terms of the Contract of Sale and the buyers sign the Contract and send it to the Seller’s attorney with a down payment (customarily 10% of the purchase price but this varies from transaction to transaction). Then, you, the Seller, will sign the Contract. Only when the fully executed Contract of Sale is delivered to the Buyer’s attorney does the deal become official and both parties are “locked in” to comply with the terms of the Agreement. The Seller’s attorney will then put the down payment into his escrow account and hold it there until it is dispersed – usually, at the closing when the deal is consummated.

After the contract is signed, the buyers order a Title Search and if applicable, they apply for a mortgage loan. Once the buyers receive the title report they will send the title report to the Seller’s attorney and it is the responsibility of the Sellers, with the aid of their attorney, to clear all the “title defects” that need to be cleared before the closing date. What is meant by Title Defects? Here are a few examples:

  • A common title defect is a lien on the property. The most popular liens are mortgages and HELOC’s or home equity lines of credit. These liens must be paid off at the closing. Other common liens include tax liens from municipalities, judgments, and mechanic’s liens. As a general rule, all of these liens that attach to the property must be satisfied at closing or the bank will not fund the loan and the title company will not provide insurance to the buyers or the lender.
  • Other title defects may concern the condition of the property. If there is a structure that does not contain a C of O (Certificate of Occupancy); then the buyer will most likely have to obtain the necessary C of O or permit before the buyer agrees to close (they can usually cancel the contract if their are permit issues that cannot be alleviated by the buyer). An example is a deck that was built without a permit – the seller will need to obtain a C of O in order to easily sell their home. If you are considering selling your home, it is recommended that you make sure that all of the structures on your property have valid Certificate of Occupancy and permits so you do not run into this problem.
  • Another example of a title defect is that an old mortgage is showing up as “open” – meaning that a Satisfaction of Mortgage was never filed with the County Clerk. This does not mean that the mortgage was not paid and often times the mortgage is paid but the satisfaction was never filed. Nevertheless, tracking down the financial institution and obtaining a satisfaction of mortgage for a loan that was paid off 30 years ago is not always easy. Often times, the original bank is no longer available and you must contact various financial institutions and various departments within some of the big banks in order to obtain this information. Your Attorney should assist you to obtain such paperwork so it can be presented to the title company – however, due to the time involved in chasing down an old “sat” (satisfaction of mortgage), this could increase your legal fees.

After the title defects are cured and the buyer receives a mortgage commitment from her lender, the closing is scheduled unless there are any other issues that need to be addressed for a particular transaction. Before the closing you, the Seller, have some final obligations:

  • You must order payoff information from your lender so you know exactly how much you will need to satisfy your mortgage or home equity loan at closing. You should also contact any other lien holders so you know the details on these payoffs as well.
  • You must make sure the condition of the property is “vacant and broom-clean”, which means what it sounds like – you must remove all your property and junk from the property (unless you agreed to leave specific items behind) and make sure it is in reasonably clean condition.
  • If you have oil heat on your property, you should also contact your oil company to do a final reading. This way, at closing, you will be compensated for all oil that you leave behind for the future owner’s use.
  • In addition, you should contact the city or town you live in and request a final water reading so you can pay for all of the water that you used up until the closing date. It is a good idea to call 2-3 weeks before the closing because if you call too late, the town may be unable to accommodate your request.
  • Gather all keys, garage remotes, appliance warranties, and the like to provide to the buyers at the closing.
  • Depending on the details of your particular transaction, there may be some other steps that need to be taken before closing so you are prepared to close. For example, if you live in a condominium or a coop; there are additional steps that must be taken before the board will consent to the closing taking place.

Your attorney should assist you and make sure that you are well informed and ready to close. If you are selling your property and have any questions regarding the sale, please call Danziger Legal PLLC today and ask to talk to an attorney. We will walk you through every phase of the transaction and make sure your questions are answered.

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