PURCHASES:
The procedure to purchase can be broken down into various stages; ie:
a) Due Diligence
b) Contract
c) Mortgage (where applicable)
d) Title Search (or Lien search for Coops)
e) Coop approval (where applicable)
f) Closing
The time line for the above is generally about 90 days from contract to closing.
Due Diligence.
This is the "pre-contract" investigation into the purchase. For coops or condos, this would generally include review of the coop or condo documents, which include the offering plan, the amendments to the plan and the last 2 years financial statements. When possible a review of coop board "minutes" is of value. For houses (and coops or condos, when practical) an "engineer's" inspection is strongly advised to assess the physical integrity of the building. After the due diligence is done, it is time to sign the contracts, which will be prepared by the seller's attorney and sent to the buyer's attorney.
Contract.
Typically, the buyer(s) will meet with their attorney and review the contract. The contract will contain contingencies such as mortgage and coop approval (where applicable). Of course, each contract is unique. The buyer will sign the contract and deposit 10% of the purchase price which is held in escrow by the seller's attorney until closing. The contracts will be sent to the seller's attorney for counter-signature by the sellers and returned to the buyer's attorney. At this stage, the mortgage application (where applicable) is submitted.
Mortgage.
The buyer(s) is obligated to submit a timely application for their mortgage upon receipt of the fully signed contracts. I URGE buyers to utilize the sevices of a licensed mortgage broker. It often takes between 45 & 60 days to obtain the mortgage commitment.
Title (or Lien) Search.
Most attorneys wait for the mortgage commitment to arrive before ordering the title search (Lien searches are used for coops). The search will disclose liens or judgments or encumbrances against the seller or the property, which must be "cleared" for closing.
Coop approval (only necessary for "non-sponsor" coop purchases; when a coop is purchased from a "sponsor" the "plan" usually dispenses with the need for coop approval.)
Since most coops require the inclusion of the mortgage commitment as part of the coop application, the buyer generally has to wait until the mortgage has been approved before applying to the coop. In this respect, the "typical" form of the coop contract should be amended to allow the buyer to wait until loan approval to apply to the coop.
Closing.
When all of the above has been accomplished &/or obtained, and all "pre-closing" documents have been filed (eg. UCC1 form to be pre-filed in coop deals) and the bank has "cleared" the file to close, a closing can be scheduled. This involves bringing all the various parties and attorneys together which can present scheduling dilemmas and takes at least a week to accomplish.
SALES
Of course, the procedures for sales are the same as purchases, above. However the parties responsibilities differ. The seller(s) of a house, coop or condo must provide the attorney with the documents and information needed to prepare the contract of sale. This may include the deed (for houses and condos), existing mortgage or loan information, tax info, purchase price, timing peculiarities, etc., all of which vary from deal to deal. For coops, it will also include specifics about the coop corporation, managing agent, maintenance, share allocation, flip taxes, etc.
