What Are The Down Payment Requirements For Buying A Condominium?
The down payment requirements are the same for a condominium as for any other piece of property. You can negotiate the amount of the down payment with the seller before the contract is signed and often, the real estate agents can assist you with this negotiation. Most of the time, the customary down payment in the New York City and Westchester County area is 10 percent of the purchase price. However, many transactions and contracts call for less than a 10 percent down payment and some deals have more than a 10 percent down payment. The amount of the down payment or contract deposit is subject to negotiation between the buyer and the seller. However, a good rule of thumb is to expect to put 10 percent down when the contract is signed.
When buying a condominium, most condominium boards do not conduct an in-depth application review for potential buyers. If you can close on the deal, the condo board usually does not review the potential buyer’s assets, debts, and income before providing approval. The Condominium’s approval is often in the form of a waiver of the condo’s right of first refusal. In simple terms, the Condo is waiving their right to buy the unit and providing approval for the sale to a third party instead. It is very rare for a condo to exercise this right. Co-op boards, on the other hand, do conduct a thorough financial evaluation of prospective buyers. One of the advantages of purchasing a condo is that the chances of the board rejecting you at the end of the purchase process is much smaller than with the purchase of a cooperative apartment.
What Are The Differences Between Mortgage Contingency And Funding Contingency Clauses When Buying a Condominium?
The contract terms and conditions regarding a mortgage contingency are usually very similar for all types of property in the greater New York City area regardless of whether the property is a co-op, a condominium, or a one-family or multi-family house.
The standard condominium contract has a mortgage commitment contingency. This means that your obligation to move forward with the purchase is conditioned on you being able to get a mortgage commitment from a lender. However, it is important to keep in mind that a mortgage commitment does not mean that you are 100 percent approved for the loan. Oftentimes, commitment letters have many conditions that must be met before the lender provides the “clear to close”, which is the green light to actually set up the closing. You must understand the risks associated with the mortgage commitment contingency and understand steps you can take to minimize your risk. It is suggested that you work with an experienced and knowledgeable real estate attorney, who can help protect you from these risks and safeguard your down payment.
Our law firm always attempts to adjourn the commitment deadline (referred to as the commitment date) until our purchaser clients receive a firm commitment with conditions that are within their control and can be satisfied by the purchaser-borrower. We also try to negotiate a clause in the contract where the seller must provide notice before the purchaser loses the right to cancel the contract based on a failure to accept a mortgage commitment by a certain date.
The mortgage commitment contingency is a standard contract clause in the greater New York City area. Ideally, a purchaser would like the condition for moving forward with the purchase to be funding of the loan by the lender. However, funding contingency clauses in New York are very rare. Unfortunately for purchasers in New York, the standard clause is the mortgage commitment contingency rather than a funding contingency, which is a risk for purchasers. That is why it is important for you to work with an experienced attorney who is focused on protecting your contract deposit and who will take the time to explain the mortgage contingency clause, including your obligations and how to minimize your risk.
Should I Work With Both A Real Estate Broker And My Real Estate Attorney In New York?
In New York, the real estate attorney and the real estate broker play very different roles. For purchasers, if you need assistance finding a property, a real estate agent can provide you with a valuable service by locating properties that meet your needs and showing you these properties. They can also assist you with inspections and negotiation of the terms of purchase. However, in the New York City area, real estate agents do not get involved in the legal aspects of the purchase. This is where the real estate attorney steps in and takes over the process. Our law firm will review and negotiate the contract to protect your interests and, where possible, shift the risk to the seller. In addition, we will order a title report and review the report with you to make sure that you are purchasing a property with good title which means the seller has full ownership to actually convey the property and all liens and mortgages will be paid off and satisfied at or before the closing. In addition, an experienced and knowledgeable real estate attorney will prepare for the closing to the final closing adjustments and attend the closing with you to make sure that everything goes smoothly.
From a Seller’s perspective, the real estate agent is hired to list and market your property to potential buyers, trying to get you top dollar on your sale and a qualified buyer to ensure the transaction will close. Once the Purchaser has conducted inspections of the property and all terms of the sale have been finalized, the Seller’s real estate attorney will step into the process and draft the Contract of Sale and then send it to the Purchaser’s attorney and negotiate the terms and conditions of the contract. Then, the Seller’s attorney will review the title report and assist you to clear any title defects or issues that are identified. Finally, as the Seller’s attorney, our law firm will prepare for the closing, attend the closing, and make sure that you receive certified or liquid funds after you pay off any open mortgages and liens, pay the pertinent transfer tax, and other closing expenses.
What Are Some Essential Questions To Ask About The Condominium Itself Before Buying?
It is important to ask what the monthly common charges are and, if possible, you should find out the historical common charges for your unit, so you can see how often and how much these expenses increase over time. You should also find out if there are any current assessments, which are extra expenses billed to all unit owners for a certain improvement or renovation. For example, if the elevator breaks and there is not enough money in the normal condominium budget to do the repairs, the board might impose an assessment on all the unit owners for a certain period of time to cover the repairs and maintenance. These periodic assessment payments will need to be paid on top of the monthly common charges and you should find out whether there are any current assessments or any planned assessments in the future.
You also should review the financial statements to determine the financial health of the building and the condominium. You should have an accountant, or a financial professional analyze these statements. Buying a condominium is a huge investment for most people. You should be detailed and diligent before you purchase. You should also review the rules and regulations carefully because you will need to adhere to these rules.
For more information on Down Payment Requirements For Condos, a consultation is your next best step. Get the information and legal answers you are seeking by calling (800) 619-3570 today.
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