Below are answers to some commonly asked questions about the process of buying and selling New York real estate. Click on a question below to find out more information.
- What does a real estate transaction entail?
- How long does the transaction take?
- What is due diligence?
- What items does the contract usually contain?
- Do I need a mortgage broker?
- What is a title search?
- How does co-op approval work?
- What takes place during the closing?
- What is a seller responsible for providing?
- What items is a co-op seller responsible for providing?
Generally, the procedure to purchase can be broken down into various stages, including:
- Due Diligence
- Mortgage (where applicable)
- Title Search (or Lien search for Co-ops)
- Co-op approval (where applicable)
The time line for the above is generally about 90 days from contract to closing.
This is the "pre-contract" investigation into the purchase. For coops or condos, this would generally include review of the co-op 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 co-op board "minutes" is of value. For houses (and co-ops 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.
Typically, the buyer(s) will meet with their attorney and review the contract. The contract will contain contingencies such as mortgage and co-op approval (where applicable). 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.
The buyer(s) is obligated to submit a timely application for their mortgage upon receipt of the fully signed contracts. Buyers are strongly urged to utilize the services of a licensed mortgage broker. It often takes between 45 and 60 days to obtain the mortgage commitment.
Most attorneys wait for the mortgage commitment to arrive before ordering the title search (Lien searches are used for co-ops). The search will disclose liens or judgments or encumbrances against the seller or the property, which must be "cleared" for closing.
Co-op approval is only necessary for "non-sponsor" co-op purchases. When a co-op is purchased from a "sponsor" the "plan" usually dispenses with the need for co-op approval.
Since most co-ops 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 co-op. In this respect, the "typical" form of the co-op contract should be amended to allow the buyer to wait until loan approval to apply to the co-op.
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 co-op 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.
Of course, the procedures for sales are the same as purchases, above. However the parties responsibilities differ. The seller(s) of a house, co-op 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
For co-ops, it will also include specifics about:
- Co-op corporation
- Managing agent
- Share allocation
- Flip taxes