Danziger Legal PLLC

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Danziger Legal PLLC

Buying real estate is a complicated legal process in New York and an experienced and attentive attorney should advise you about local practices, answer your questions, provide recommendations, and guide you through the entire process from the Contract of Sale to the closing. The vast majority of Purchasers rely on an attorney to advise and guide them through the process in New York State and real estate transactions are often negotiated and processed with the assistance of attorney representing both the Buyer and the Seller. Each party hires an attorney, whose job it is to explain the process, answer your questions, and protect your interests. Depending on whether you are buying or selling, your interests and the process itself will vary.

Real Estate is truly a local industry, and this is true from a legal perspective. Each state has its own laws and processes governing real estate transactions, and even within a state, local cities and counties may adhere to their own customs. If you are planning to relocate, it is important to familiarize yourself with your target area and we recommend that seek professional guidance from a local attorney who is familiar with local rules and practices before signing the Contract of Sale or any other legal documents.

If you are purchasing a new home or investment property, your real estate attorney’s first order of business will be to review and negotiate the terms of the Contract of Sale. Your attorney should explain and summarize the Contract of Sale but it is recommended that you read it carefully so you understand the terms and your obligations since you will be legally bound once the contract is fully executed. Your real estate attorney should also explain the legal process to you and be available to answer your questions and address your concerns. You should be made aware of important deadlines that are contained in the Contract of Sale such as the deadline to obtain a firm mortgage commitment from your lender.

After the Contract of Sale is finalized and signed, your attorney will order a title search from a title insurance company. This is a crucial step in the process of purchasing real estate. The title search should identify potential legal issues pertaining to the property itself. Most of these issues can be addressed and resolved prior to or at closing. For example, if there is a money judgment or open mortgage that constitutes a lien on the property, the Seller will likely be permitted to payoff this lien at the closing. Consequently, you will receive the property with insurance that the lien will be paid off and satisfied of record. The insurance policy will protect you should something go wrong and the mortgage is not satisfied or released properly. When you are purchasing real estate, one of your attorney’s main duties is to carefully review the title report and assist you to obtain clean and marketable title to the property and that the title insurance policy will protect your ownership interests.

As you approach the day of the closing, your attorney will advise you on the final adjustments and should assist you as you prepare for the closing and advise you what checks to bring to the closing or wire transfers to initiate on the day of the closing. Your attorney should also attend the closing and be at your side to ensure everything goes smoothly and as planned. Post-closing, your attorney should sort, organize, and scan your closing documents and provide you with a closing packet in paper and/or PDF format, which is an organized and comprehensive collection of your real estate closing documents.

Why Do I Need An Attorney When Selling New York Real Estate?

If you are selling a new home or investment property in New York, you will likely require the services of a real estate attorney to represent you in the sale. Your attorney should draft and negotiate the terms of the Contract of Sale and go over the terms with you so that you understand your obligations under the contract as well as important dates and deadlines.

Your attorney will also draft the Deed of Sale and other important closing documents for you to sign at closing in exchange for the proceeds. In addition, when you are selling real estate, your attorney will review the title report from the Purchaser’s title company and let you know what steps need to be taken prior to closing. For example, often the Seller of real estate will need to order a payoff statement from their lender and this open mortgage is often paid off in full at the closing. As the Seller, besides paying off any open mortgages or other liens, you may need to take a variety of other actions to provide clean title to the Buyer.

Finally, your attorney should calculate the final tax and other adjustments and present you with a closing statement showing your closing costs, how they will be paid, and your net proceeds from the sale after you pay your closing costs. Your attorney should go over the Closing Statement with you to make sure you understand the final numbers. Finally, it is important that your attorney attend the closing to be by your side and help ensure that the deal closes and to address any last-minute issues should they arise.

In summary, when you are selling real estate in New York, your attorney will draft and negotiate the terms of the Contract of Sale, assist you to clear any title and municipal defects, help you prepare for the closing, and attend the closing to ensure a smooth process.

Do I Need Both A Real Estate Agent And A Real Estate Attorney To Buy Or Sell A Property?

In New York State, Buyers and Sellers sometimes close on properties without the involvement of a real estate agent. Therefore, utilizing a real estate agent is not always required. If you are selling a property, you may want to lower your closing costs and eliminate a real estate commission, which is usually around 5 percent of the purchase price but negotiated on a case-by-case basis. On the other hand, an experienced local agent can be an invaluable resource for both Sellers and Buyers.

For Sellers, a knowledgeable real estate broker can provide advice to you on when to list, how to market your property, give you recommendations on how to price the property and how to stage or display the property to potential Buyers. The goal of an experienced real estate agent should be to get you top dollar for your home from a Buyer that is well-qualified, so the deal is likely to close promptly at top dollar. A good real estate agent has experience in the specifics of the local market, comparable properties, and customary items that should be agreed on in principle before the attorneys become involved.

For Buyers, a good real estate agent can assist you to find the property that you are looking for and advise you on details regarding towns, cities, neighborhoods, and school districts. This will help you narrow your search and can save you time so you can jump on the right opportunity. They can help you analyze the pros and cons of various properties and find you a property and community with the features for which you are searching. This type of advice and guidance can be valuable to Buyers.

When it comes to purchasing or selling properties in New York State, having a real estate attorney represent you is not mandatory, but it is strongly advised. The process of negotiating and understanding the nuances of a real estate Contract of Sale is complex. And similarly, the process of reviewing the title report and preparing for the closing is also complicated and often falls well outside the life expertise of the average Buyer or Seller. Having an experienced lawyer represent you is the best way to ensure you are legally protected and well-advised during this important transaction.

What Does My Real Estate Attorney Need To Do To Prepare For A Closing After A Contract Is Signed?

For Buyers:

You have found your perfect home and signed a Contract of Sale to purchase it. What is the next step? You will be pursuing your mortgage and getting your lender several financial documents and records that it will require to process the loan. Your attorney will deliver the fully executed Contract of Sale to the Seller’s attorney and you will officially be in contract.

In the greater New York City area, including Westchester County and Long Island, the Seller’s attorney drafts the Contract of Sale. However, in upstate New York and large areas of Connecticut, often the real estate agents will present a contract and the buyer and seller sign before the attorneys are involved. These contracts, sometimes referred to as binders, are usually contingent on attorney review and gives either party a deadline to cancel the contract to provide each party an opportunity to review with an attorney of his or her choosing. It is suggested that you do not sign any legal contract without having your attorney review the terms. However, if you do sign a contract that is subject to attorney review, you should consult with an attorney without delay as these deadlines are often tight. After the Contract of Sale is finalized, your attorney will order a Title Report on the property and will carefully review to identify any title defects and discuss any issues with you. Ordering a Title Report is like ordering a Background Check on a potential employee or vendor. You want to find out as much information as possible about the property before committing to the transaction.

Beyond the Title Report, your attorney should also explain your options regarding surveys. Surveys are particularly important and often overlooked by Purchasers. You will have the choice to obtain a survey, have the title company order a survey inspection, or neither. In essence, a survey is a map of the property drawn to scale and should show the structures and conditions on the property in detail and how these conditions relate to the boundary lines of the property.

A new survey is the most accurate way to get a professional opinion regarding the boundary line of the property and to identify any encroachments or other issues. A new survey should provide clear information on boundary lines, identify encroachments, and discover disputable areas of ownership. For example, a fence could lie a few feet off the property line, which could be an issue that needs to be addressed. The price for a new survey for a residential 1-3 family house is approximately $900 in Westchester County, Long Island, and the surrounding counties but does vary from property to property.

If the Seller has an existing title survey, you can opt to have that survey inspected instead of ordering a new survey. The title company will send someone out to the property to conduct an inspection and compare the current state of the property to what is depicted on the existing survey. A survey inspection will show any differences between the existing survey and the current condition of the property. For example, it can show that a deck, shed, or above ground oil tank now exists on the property that are not reflected on the existing survey and, therefore, were most likely added since this date. A survey inspection is better than nothing but is not as detailed and complete as a new survey.

Another benefit of obtaining a survey is that it will be certified (or guaranteed) by a licensed land surveyor. This will give you an additional level of legal protection and peace of mind. It is important to note that New York State is a “Buyer Beware” state, and a piece of real estate is not something you can return if there is suddenly an issue after closing. Therefore, it is important that you retain a lawyer that will dive into the details of your transaction and identify and discuss all survey issues or title defects.

Preparing for the closing, providing you with a final Closing Statement, and attending the closing are the next steps in the process. Once the title searches are completed, the survey or survey inspection is completed, and your mortgage lender has given you the clear to close, the closing is scheduled. The Buyer’s attorney will schedule the attorney with the Seller’s attorney, the lender’s attorney, and the title company. Your attorney should check with you before scheduling the closing to make sure the date and time are convenient for you. Before the closing, your attorney should provide you with a closing statement and make sure you understand the final numbers and what funds and bank checks you must bring to the closing table. The Seller’s attorney and the Buyer’s attorney will agree on the final closing adjustments and the Buyer’s attorney will tell the Seller’s attorney what checks should be delivered to the Buyer at the closing. You want an attorney that is experienced with real estate closings, one that will be there by your side for this important event, and that has the knowledge and experience to explain the closing documents and the process and to manage any last-minute issues that may arise at the closing.

For Sellers:

So, you have decided to list your home for sale, and you have found a qualified Buyer and accepted an offer. What are your next steps? Your attorney will draft a Contract of Sale and negotiate the terms of the Contract with the Buyer’s attorney. Many terms and conditions are standard but often attorneys add Riders (or supplements) to the Contract of Sale and the terms in these Riders are the subject of the negotiations between the attorneys. Negotiations on a residential Contract of Sale usually take two-three business days to complete but this varies from transaction to transaction. Once terms are agreed upon, the Buyer will sign the contract and send the contract deposit, sometimes referred to as the down payment, to the Seller’s attorney. The Seller’s attorney holds the down payment in the attorney’s trust account until the closing. Then, the Seller signs the Contract and once it is delivered to the Buyer’s attorney, you are now officially in contract and locked into the sale and the terms of the contract.

It is also customary for the Seller to provide the Buyer with an existing survey and an existing title insurance policy if you have these documents in your possession. Then, approximately 2 weeks after the Contract of Sale is signed, your attorney will receive the title report and survey or survey inspection from the Buyer’s attorney. Once received, your attorney should review and advise you what needs to be done to address any title defects or issues. Sometimes, this is a simple as ordering a payoff statement from your mortgage lender that will be paid at closing. Other times, there are more complicated issues identified in the survey and title report such as a boundary line issue or an older open mortgage or lien that was never satisfied in the land records. The Buyer may also insist that you obtain a Certificate of Occupancy or Completion from the local building department for any improvements that were made without the required oversight. For example, if a deck was constructed without a permit and certificate of completion, this would be a clear municipal violation. These types of building department issues can be time-consuming and costly and often the Buyer will opt to cancel the transaction rather than waiting months for the Seller to remedy these defects. It should be noted that the farther you travel from New York City, buyers and sellers are not as strict when it comes to municipal-related defects and often properties are purchased without a search and evaluation of the building department and municipal records.

Once the title issues are addressed and the Buyer, Buyer’s lender, and the Seller can close, the closing is scheduled. Your attorney should provide you with a closing statement outlining your closing costs and the disbursements that will be made at the closing. Your attorney will also prepare the Deed of Sale and other closing documents that you will sign at the closing. Your attorney should attend the closing and be at your side to explain the various documents and to ensure that you receive your sale proceeds in full and as expected. You want an attorney that is experienced with real estate closings and has the knowledge and experience to handle any last-minute issues that may arise at the closing.

What Is A Title Report And What Does It Mean To Have Clear Title?

A Title Report is compiled by the Purchaser’s title insurance company and is customarily ordered by the Buyer’s attorney on behalf of the Buyer. The Title Report is a collection of documents that alerts the Purchaser of what the title company is willing to ensure and identifies any exceptions to title insurance coverage. The title company also reviews the chain of ownership to make sure there is no break in the chain of title or any other issues regarding prior conveyances of the property. The title report will also show the Purchaser and Buyer’s attorney any agreements or restrictions filed in the land records. For example, there could be a right-of-way, or a shared driveway agreement filed with the Clerk. These are crucial elements of the property and can sometimes affect the use and enjoyment of the property. In addition, the title report shows the current real estate taxes along with current payment status. The Purchaser’s and Seller’s attorneys will use this information for closing adjustments and to ensure that any taxes are adjusted properly and any that property taxes owed by Seller are paid up until the day of the closing. Any issues that must be addressed by Seller are referred to as title defects, title objections, or title exceptions.

If the property being purchased is in New York City or the surrounding suburbs such as Westchester County, your attorney will also likely request a municipal search. This municipal search is important as it will enable your lawyer to ensure that all improvements and renovations were done with the proper permits and certificates from the local building department. In the standard contract, it is required that to make sure that all structures and improvements were done with building department approval. The municipal search will assist the Purchaser’s attorney to make sure this is indeed the case.

Finally, the Title Report will identify any open liens of record. These liens can be an open mortgage of the current owner that can be paid off at closing, an old mortgage from a previous owner that was never satisfied, a money judgment filed against the current or prior owner, or a tax or other lien.

For a potential Buyer, the Title Report may be fascinating or mind-numbing, but it is a critical piece of the puzzle in successfully completing your purchase. The Buyer’s attorney should provide you with information regarding any issues identified on the title report and how these issues may affect your use or enjoyment of the property. You should also note that if you accept certain title issues, this could make it more difficult to sell the property in the future as your future Buyer may raise objections to these matters and you may need to resolve them before you sell even if you are willing to accept them when you buy the property. Therefore, it is always recommended that you insist on clean and marketable title so you have peace of mind that any title issues will not haunt you in the future.

Because Title Reports are drafted for lawyers, they contain legalese and can be difficult to decipher. In a situation like this, a real estate attorney with experience with title issues and knowledge of what constitutes a clean title can guide you through next steps and help you to make an informed and sound decision that makes sense for you.

What Are Some Possible Issues That May Arise In The Title Report?

The Title Report varies from transaction to transaction and every deal is unique. However, there are some common issues that are revealed in the Title Report, municipal search, and survey or survey inspection. These include the following:

  1. Open Mortgages that still encumber the property.
  2. Money Judgments in the name of a Buyer or Seller that must be addressed prior to closing.
  3. Covenants, Agreements, and Restrictions affecting the property.
  4. Easements affecting the property.
  5. Tax Arrears and Liens.
  6. Break or issue in the chain of title.
  7. Open Building Permits.
  8. Improvements done without Building Department approval (missing Certificate of Occupancy or Certificate of Completion).
  9. Boundary Line issues/Encroachments.
  10. Pending lawsuits affecting the property (the Plaintiff of the lawsuit usually files a Notice of Pendency also known as a Lis Pendens with the County Clerk or NYC Register)

A title report can be free of any issues or full of issues and it varies from property to property. Each report is unique and has the potential to reveal issues ranging anywhere from minor inconveniences to major red flags. Consequently, your transaction must be individually examined and addressed by a knowledgeable attorney. A detail-oriented and experienced real estate lawyer is an invaluable resource to review the contract and other legal documents, summarize your options as you proceed, and provide you with sound legal advice. This way, when you get to the closing table, these title-related issues will be addressed and resolved, increasing the probability for a smooth and issue-free closing.

For more information on Services Provided by Our NY Real Estate Attorneys, an initial consultation is your next best step. Get the information and legal answers you are seeking by calling (800) 619-3570 today.

Elliot Danziger, Esq.

Toll Free: (800) 619-3570
New York City: (212) 786-7950
Westchester County: (914) 719-6970

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