What should I consider before I list my property with a broker?
What documents do I need to give my attorney?
Once an offer has been accepted, what is the next step?
What title issues can arise?
Can I stay in my house for a few days after closing?
What does “as is” mean?
Do I need to have an Engineer’s Inspection?
What else should I do before I sign a Contract:
Will I need to have a survey done?
What needs to be done to get ready for the closing?
What can I expect at the closing?
What happens after the closing?
What should I consider before I list my property with a broker?
• The amount of commission payable to the broker is often negotiable. Your broker should allow your attorney to review any documents you are asked to sign, including a listing agreement and commission agreement, because these documents are legally binding documents.
• You should inquire as to whether your broker intends to list your property on the Multiple Listing Service (MLS), or whether the broker will be acting as your exclusive agent. If your property is not listed on the MLS, it will potentially limit the number of buyers who will be exposed to your property.
• The broker may suggest that you use his or her attorney to handle your sale or purchase. We strongly recommend that you retain your own independent attorney so that you can be sure the attorney’s loyalty lies with you and not the referring broker. A broker may also attempt to refer a Purchaser to a specific engineer and/or mortgage broker, but we discourage you from doing so and suggest that you seek a recommendation from friends or colleagues.
What documents do I need to give my attorney?
• As a seller, you should provide your attorney with a copy of your recorded deed, a copy of your latest tax bill, your survey, and, if available, your title report or title policy. If you have a mortgage and/or equity line, your attorney will request a copy of a recent statement(s), so that they may request a pay-off statement(s) for the closing.
Once an offer has been accepted, what is the next step?
• If a real estate broker is involved in the sale, he or she will generally provide the attorneys with a “deal sheet” or binder, and the attorneys will communicate. In New York, unlike other states, the engineer’s inspection is generally performed prior to entering into a Contract. Once the engineer’s report has been obtained and the parties agree to any price reductions or repairs to be made by the Seller, the Seller’s attorney will then prepare the contract of sale for the purchaser's attorney to review. The terms of the contract will be negotiated and once agreement on all terms has been reached, both parties will sign, and the down payment will be deposited in the Seller’s attorney’s escrow account until closing or termination of the Contract. Unless it is a “cash deal,” the Contract will usually contain a mortgage contingency clause pursuant to which the Purchaser is given a specified period of time such as 45 days to obtain a written mortgage commitment for the amount the wish to finance. If the Purchaser is unable to obtain a mortgage commitment within the specified time period, the Purchaser may request an extension of time to obtain his financing. If the Seller does not agree to an extension or if the Purchaser is declined on his mortgage application, the down payment will be returned to the Purchaser, and the transaction will be cancelled. Once the Purchaser has obtained his mortgage commitment and all conditions on the loan have been satisfied, the parties can proceed to closing. On average, it takes approximately 2-1/2 to 3 months from Contract to Closing if financing is involved.
• Prior to closing, the Purchaser’s attorney will order a title report, which will be reviewed by the Seller’s, Purchaser’s and lender’s attorneys. Any title issues must be addressed and resolved by the Seller’s attorney prior to closing.
What title issues can arise?
• Most real estate Contracts obligate the Seller to provide a Certificate of Occupancy for the dwelling and Certificate(s) of Occupancy/Completion/Compliance for any other improvements and structures added to the premises, such as a detached garage, raised deck, extension, in-ground pool, enclosed porches and dormers to name a few. If the dwelling and/or any improvements do not have the necessary Certificates, it is generally the Seller's obligation to “legalize” these improvements and to deliver any necessary Certificates prior to closing. If such Certificate(s) cannot be obtained prior to Closing, a lender may allow money to be held in escrow to ensure that they will be obtained within a specified period of time. It can take many months to obtain the necessary Certificates and we recommend that you obtain an architect or other professional to assist you in these matters as it is a tedious process and beyond the scope of legal representation.
• Other title issues that may arise include old mortgages that may have been paid off years ago but which were never satisfied of record, unpaid real estate taxes and/or tax liens, outstanding judgments against one or more parties, issues regarding estates or corporations in the chain of title, violations or liens against the property. All of these issues must be addressed and resolved by the Seller’s attorney before a Closing can take place. The real estate attorneys at Mason & April, LLC have handled thousands of sales and purchase transactions and are extremely well versed in the issues that can arise and the efficient resolution of same.
Can I stay in my house for a few days after closing?
• While attorneys generally discourage the use of “holdover provisions,” sometimes it is unavoidable, particularly when you are trying to coordinate the sale of your home with the purchase of a new one. In these circumstances, the Contract of Sale may contain a clause that allows the Seller to remain in the premises for several days beyond the closing date, subject to certain conditions. In such event, a sum of money is held in escrow by the Seller’s attorney to ensure that the premises is delivered to the Purchaser in a timely fashion and in the condition required by the Contract of Sale. If the Seller remains in possession of the premises beyond closing, adjustments for prepaid items such as real estate taxes and mortgage interest are made as of the date possession is delivered to the Purchaser. Holdovers can be problematic, however, as they afford a Purchaser additional time to inspect the home once possession is delivered and it is not uncommon for post-closing disputes to arise in such circumstances. For this reason, most attorneys encourage their Seller clients to deliver possession of the premises at Closing.
What does “as is” mean?
• We find that there is often confusion as to what the term “as is” means in the context of a real estate Contract. Generally speaking, even if a house is being sold “as is,” the plumbing, heating and electrical systems and all appliances included in the sale need to be in working order and the roof free of leaks at closing. These are sometimes referred to as standard Seller’s representations. On occasion, often in the context of a sale by an Estate or a foreclosure, a house may be sold “strictly as is,” in which case these standard representations may not be made.
Do I need to have an Engineer’s Inspection?
• The attorneys at Mason & April, LLC strongly recommend that all purchasers obtain a thorough inspection by a licensed Engineer prior to executing a Contract. In addition to confirming that the house is structurally sound, it may also disclose upcoming repairs and expenses that may not be readily visible to a layperson. We strongly recommend, however, that you do not obtain a referral to an engineer from your real estate broker.
What else should I do before I sign a Contract:
• You should meet with a lender or mortgage broker to verify that you should qualify for a mortgage and that you will have sufficient funds for the balance of the purchase price and your closing costs, which can be significant. Closing costs generally include the cost of a title search, title insurance, survey fees, recording fees, mortgage tax, lender origination charges and other bank fees including an appraisal fee, application fee, bank attorney fee, and other miscellaneous fees the bank will deduct from your mortgage.
Will I need to have a survey done?
• Unless there is a fairly recent survey of the premises as it presently exists, we recommend that a new survey be ordered. A new survey generally costs between $500-700 and will disclose whether there are any encroachments affecting the property such as fences and structures.
What needs to be done to get ready for the closing?
• Your attorney will advise you on the bank or certified checks you will need for the closing, as well as any other items you will need to bring. Most lenders generally do not provide a breakdown of closing costs until the day before closing, so you should plan to go to the bank the afternoon before or the morning of the closing. It is unlikely that your attorney will be able to provide you with this information in advance.
• A walk-through of the premises is done by the buyer within 24-48 hours prior to the closing. The premises should be in essentially the same condition as when the Contract was signed, subject to normal wear and tear. During the walk-through, all of the appliances should be tested to ensure they are in working order. In addition, the ceilings and walls should be inspected for any active water leaks and the plumbing, heating, air-conditioning and electrical systems should be checked to verify they are in working order. Any problems should be reported to your attorney as soon as possible because once the closing takes place and you are given possession of the home, there is generally little that can be done.
• The utility companies servicing the premises should be contacted to arrange for service to be transferred into the buyer’s name as of the date of closing (or delivery of possession, if later).
What can I expect at the closing?
• The buyer’s attorney will review the mortgage documents with the buyer and they will then be signed. The attorneys will agree on their adjustments for prepaid items such as real estate taxes and fuel, if any, and the Deed and transfer documents will be signed by the parties. The buyer will be given keys to the premises, unless the seller is remaining in possession of the premises, in which event a possession agreement will be signed. In the event there were any problems on the walk-through, these will be addressed at the closing and an appropriate credit will be given or an escrow established. The closing generally takes approximately 1-1/2 to 2 hours.
What happens after the closing?
• After the closing, your attorney will send you a closing statement containing a summary of the transaction, along with a copy of pertinent closing documents. You will also receive your recorded Deed and a title policy from the title company.
| 
