Purchasing in New York

Parties generally include the Title Insurance Company, Seller’s attorney, Purchaser’s attorney, Lender’s attorney, Lender, along with a Real Estate Brokers(s) and possibly Mortgage Banker/Broker on most transactions. To say the least, without proper guidance, confusion and costly errors can occur.

Therefore, it is imperative that you have a proper team in place and that you understand the general concepts involved. This will most likely insure a smooth and most advantageous transaction for you.

RULE #1 

Retain an attorney who specializes in real estate transactions, someone who will educate you in transactional issues and will allow you to make informed decisions.

RULE #2

Surround yourself with a team of seasoned experts – a real estate broker, a mortgage professional who can educate you so that you can make the right choices.

FINANCIAL & PERSONAL CONSIDERATIONS

As you think about buying versus renting a home, you’ll want to consider various pros and cons and what they mean to you, your budget and your plans for the future.

Both owning and renting can have their advantages. The better choice for you depends on your circumstances. Here are some of the things to keep in mind when you weigh the benefits of renting against the benefits of owning, both from a financial and a personal perspective.

FINANCIAL CONSIDERATIONS

Renting has both advantages and disadvantages. For example, renting may provide you with more leftover cash each month, if your rent is less than a mortgage payment, and renters get to call the landlord to fix the leaky faucet. On the other hand, renters may not be allowed to make any changes to their living space and are often subjected to rent increases over time.

Owning a home may provide you with income tax benefits (though it’s important to check with your tax advisor to see how owning would impact your personal situation). Owning a home also offers you the chance to increase your personal wealth as you pay off on your loan over time and build what is known as equity. Of course, home values can rise or fall over time, so building equity is not guaranteed. There are significant upfront costs associated with buying, including down payment and closing costs.

PERSONAL CONSIDERATIONS

Owning a home is a financial commitment that requires you to plan ahead, reflecting on where your life is headed and what you want to accomplish along the way. Ask yourself: What additional financial goals would I like to accomplish as I make payments on a home loan? What’s more important to me: the opportunity to build equity over time or to perhaps have more cash available now?

Renting is usually less than a mortgage payment, renting could allow you to contribute more toward specific savings goals, such as retirement, college, future travel, investments or even putting away money for a down payment for a home in the future.

Owning a home could make sense for you if you want to put your monthly living costs toward something you could eventually pay off and own outright. In addition, it also makes sense if you plan to stay in the area and prefer to feel settled in a home that reflects your personal tastes.

Only you can decide whether owning a home fits your life.

CHOICES WHEN IT COMES TO BUYING, YOU HAVE A FEW CHOICES

A. Private House: Ownership is in FEE SIMPLE through a Deed, (which means you actually own the property), can be either your private residence or an investment, mortgage interest and real estate taxes normally deductible (PLEASE CONSULT YOUR TAX ACCOUNTANT), and you can either live there yourself or rent at your option.

B. Condominium: Ownership is in FEE SIMPLE again through a Deed, (which means you actually own the property), but now there is also common elements which you share with fellow owners of the Condominium, (common elements), which results in additional monthly fee, Maintenance. Similar to a private house but most times a Condo Board has a right of First Refusal to purchase, renting may be restricted, and normally bylaws that need to be followed.

C. Co-Operative Units: Different then A & B in many ways. Do not actually own the Real Estate but rather own shares of stock in the corporation that owns the property and receive a proprietary lease to live in the particular apartment. Pay a monthly common charge fee, which includes the real estate taxes, underlying building mortgage(s), and maintenance. Be aware that these assessments can raise common charge fees quickly if there are large capital expenses needed; re: elevators, costly repairs, etc.

D. Vacant Land. Similar to A but now must deal with zoning issues and restrictions, covenants, agreements and easements of record.

E. Mortgage: See how much money you can borrow. Remember find the mortgage professional that you can trust, to pre-qualify you. You need to know your price range.

F. Property Condition: For a private home and condominium, have a building professional examine the proposed property, for among other things, environmental concerns, structural, asbestos, pest inspection, and radon/water. For Cooperatives, the due diligences should disclose any concerns of this nature.

C. Form of Ownership: If you are purchasing with other parties, i.e., spouse, friend, partner, etc. it can be done as follows:

• Joint Tenants with the Right of Survivorship, (in short, if one party dies, the other party becomes the full owner of the property by operation of Law)
• Tenants in Common (equal interest, or a % with property going to individual heirs)
• Tenant by the Entirety (husband and wife similar to Joint Tenants with Right of Survivorship)
• Partnership;
• Corporation; and
• LLP

 

 

“OKAY, HOW MUCH ARE MY CLOSING COSTS GOING TO BE?”

Remember, Rule ONE and TWO, rely on your experts, not your friend, the mailman, FED-EX guy. Every purchase is different and thus fees vary from closing to closing, your attorney can give you an estimate of the Title Expenses and related fees, Condo and/or cooperative fees and his or her legal fees and your mortgage broker/bank can estimate their fees to you in advance. Please pick your team wisely and rely on them.

 

“WHAT IS THE CONTRACT ALL ABOUT?”

Well it memorializes your agreement in writing. Please remember, until a legal contract is executed and signed by both buyer and seller, you normally do not have a DEAL. All issues must be dealt with in this contract in order for it to be legally binding. Be open and clear with your attorney so that all issues are dealt with in writing.

A.  Common Elements include legal description of the property, address, personal property included and excluded, title clearance, condition, price, down-payment, any contingencies including Mortgage, and closing date and location.

B.  Normally prepared by sellers’ attorney, reviewed and modified by Buyer’s attorney.

C.  Once contract agreed upon, buyer executes along with down payment made to seller’s attorney escrow account and sent to seller’s attorney for signature by seller.

 

“CONTRACTS SIGNED, NOW WHAT?”

Time to get moving. Buyer applies formally for a mortgage. Buyer’s attorney orders preliminary Title Report, which will be turned into a Title Policy at closing and works with Seller’s attorney and Title Company to insure clean title at closing.

 

“WHAT’S CLEAN TITLE AND HOW DO I GET IT?”

In a nutshell, it is good and marketable title, which will allow you to freely transfer the property without title exceptions or encumbrances.

A. Title Insurance: assuming all items have been cleared, you will close and receive a title insurance policy that will insure you against any title claims made against the property as long as you own the property.

B. Marketable Title: free and clear of all encumbrances or material defects.

C. Costs: One-time fee based on purchase price and mortgage amount

 

“WHAT SHOULD I EXPECT AT THE CLOSING?”

Remember, Rule 1 & 2. As long as you have you’re a team in place, you will be fine. Remember, we can’t choose the other side’s team, but as long as your team is in place you will be protected.

A. Parties Involved: Purchaser(s). Sellers(s), Title Company Representative, Seller’s Attorney, Buyer’s Attorney, Lender Attorney/Representative, and any real estate broker.

B. Closing Location: At the office of the Lender’s Attorney, management agent, or Seller’s Attorney if no financing.

C. Documents to be Signed by Purchaser: Loan documents, including note and mortgage, transfer tax forms, property equalization forms, title affidavits, and if condo/coop documents pertaining to same.

D. Adjustments: Adjustments for taxes, insurance, fuel, occupancies and the like will be calculated and made at closing.

E. What to bring: The needed amount of money for the purchase in bank funds (your attorney will advise you of this prior), two formed of identification, original insurance with paid receipt and any required information requested by your lender such as, recent pay stub, proof of prior sale, etc.