A home is often the largest single purchase that people will make in their lives. For this reason it is highly recommended to retain an attorney when purchasing residential property in New York. Real estate brokers do not provide legal counsel or create legal documents under the law; therefore, it is critical to have an attorney involved to help you navigate the process. The attorney may assist you with contingencies in the contract, interpretation of the mortgage terms, negotiating, and avoiding potential difficulties involved with co-ops.
Real Estate Contract & Financing
When obtaining a mortgage to finance a home purchase you may benefit from having your attorney review the lending agreement and be sure it is compliant with the federal Real Estate Settlement Procedures Act (RESPA), the Uniform Settlement Statement and other critical issues. You want to be certain that you have a firm understanding of the many costs associated with the loan and those necessary to finalize the transaction. The attorneys for buyers and sellers are a resource for making sure the parties truly comprehend the many often complex documents.
Title Report & Insurance
Attorneys representing buyers typically order a report from the title insurer and search for potential liens that may exist on the property, as the buyer needs to be aware if any potential challenges could be made against the property to satisfy outstanding debts. It is possible that the title report may reveal violations cited by government agencies. The attorney and title insurer will analyze a property survey to identify any boundary or encroachment problems with adjacent properties. Many lenders will insist on a new survey if the most recent one is many years old.
A host of fees are involved in a residential real estate transaction. Closing costs vary based on factors including purchase price that can be significant. Closing costs tend to be higher for houses and condos compared to co-ops due to a recording tax for the mortgage that is roughly equivalent to 2% of the mortgage's value. There are costs that need to be allocated among the parties for property taxes, possible homeowner association fees, and utilities. These fees, taxes and other insurance costs must be resolved prior to taking possession of the property. In New York, when the value of the property involved is greater than $1 million, the state assesses an additional 1% tax. Generally, both parties are responsible for their own attorney fees and costs to file key documentation with the county clerk's office.
The closing is a meeting to finalize the real estate transaction which may take place at an attorney office or real estate office. All parties involved are typically present at closing, including buyer, seller, real estate agents, attorneys and possibly representation from the lender. The buyer's attorney will assist with explaining the many documents that will be signed. Key documents reviewed include the deed, documents of transfer, and the buyer may legally assume the property title at this time.