Frequently Asked Questions Pertaining to Real Estate Matters
Do you charge your standard hourly fee or a flat rate for real estate transactions?
We offer a flat rate fee for our residential real estate clients. When purchasing a home or cooperative/condominium apartment, clients need to be able to accurately budget all expenses pertaining to the transaction. Offering a flat rate to clients purchasing residential real estate is one way a buyer can tabulate all costs and evaluate whether the property is affordable. Likewise, those selling residential real estate benefit from our flat fee, as they can calculate the net proceeds that they will be likely to obtain from the transaction, so that they can plan their next housing selection.
How are real estate taxes adjusted at the closing if a seller has already paid real estate taxes?
In New York City, only one type of real estate tax is due, payable to the City of New York. In Westchester County, it is typical for taxes to be due to at least two jurisdictions, payable to the County and to the school district where the property is located. Sometimes, there may also be an additional tax collected for a village in Westchester County. Taxes are due and collected on different dates, depending on the type of tax and the jurisdiction. For instance, the tax year in New York City begins on July 1 and the taxes are due quarterly, on July 1, October 1, January 1 and April 1. Westchester County taxes are attributable to the calendar year (January 1-December 31), but are due on April 1. School taxes in Westchester County are attributable to the period beginning July 1 and are due on September 1 and January 1. The title company involved in the transaction completes a tax search and determines which real estate taxes are due, the amount, the due date, and date of last payment. With this information, our attorneys calculate the taxes with the actual closing date in mind. For instance, if the seller paid Westchester County real estate taxes in the amount of $1,460.00 for the period of time from January 1 through December 31 ($1,460.00 divided by 365 days in the year equals a per diem amount of $4.00) and the closing is being held on August 31, the seller will be compensated $4.00 for each day between August 31 and December 31 (which number is 122), making the compensation due to seller $488.00. In any event, our attorneys insure that the seller is compensated for all taxes paid for periods of time after the closing and the buyer is credited for taxes paid for periods of time prior to the closing.
When do I pay off my mortgage if I am selling my house?
When the title company searches the property records, it will locate the recorded mortgage. The title company will only insure the transaction if its representative delivers the check to pay the mortgage in full directly to the lender. When representing the seller, we order the loan payoff letter from your lender and inform the buyer’s attorney of the amount to be paid, the name of the payee and the type of check required (official, certified, cashier’s or attorney trust). We also deliver the loan payoff letter to the title company for verification.
What is the Property Disclosure Statement?
The property disclosure statement is a questionnaire that may be completed by a seller of residential property. If the seller is an estate, it is exempt from the requirement. The questionnaire contains approximately forty questions pertaining to the condition of the home, characteristics of the home and potentially hazardous conditions. Customarily, sellers downstate do not complete the form, while sellers upstate do complete the form. If the completed form is not provided to the buyer, a $500.00 credit to the buyer is applied to the purchase price at closing.
Can the closing be coordinated with the school district schedule?
It is not uncommon for sellers to request a closing date that allows for their children to complete the school year in their school district or for purchasers to request a closing date prior to the start of school so that their children can enter a new school district at the beginning of the school year. We do our best to accommodate the school schedules of the parties. In the event that a closing needs to occur earlier than ideal (a loan rate lock is expiring requiring a closing prior to its expiration) or later than projected because the buyer’s loan is not clear to close, we make efforts to negotiate pre or post closing occupancy agreements. If a pre-closing occupancy agreement is used, a purchaser can establish residency in order to begin school. For a post-closing occupancy agreement, the purchaser can close when needed, but the seller can remain in the property for a set period of time. Upon request, we will also notify the applicable school district and provide requested documentation if it would be of assistance to the parties.
When do I owe a commission to a real estate broker?
The commission terms are dictated by the listing agreement with the broker. When representing a seller, we recommend that the commission not be due and payable until title passes to the buyers. Other standards for earning a commission include introducing the parties to each other during a period of time established by the listing agreement or being the procuring cause of the sale. Our attorneys interpret such agreements and advise their clients accordingly.
What is a HUD Settlement Statement?
The HUD Settlement Statement is the form developed for the use of lenders on residential property. It is intended to detail all costs in a transaction to both parties. Not all costs are included, such as the attorneys fees of the parties. Lenders rely upon the HUD in order to confirm that the buyer is not using more of his own funds besides the loan proceeds than the lender found economically viable from a credit standpoint. As of October, 2015, the HUD has been replaced by the Closing Disclosure and the Seller's Closing Disclosure.
What is a title report or lien search?
Title reports and lien searches accomplish the same thing, they confirm that the seller owns the property to be sold, whether there is a mortgage or a share loan encumbering the property, whether there are judgments against either party or liens against the property. In a lien search, the cooperative or condominium building is also searched to confirm that nothing is of record that is of concern. The title report or lien search is ordered by our attorneys after the contract is signed by all parties.
What is a survey?
A survey looks like a map. The surveyor visits the property and identifies such items as anything built on the property (like a house or shed) or anything that crosses the property (like electrical lines). These items are noted in their relation to the property lines and their proximity to adjoining properties or the street. A drawing is completed by the surveyor identifying all aspects noted. Then the survey is used to create the property description, which is often known as Schedule A and attached to the Deed and Mortgage. At times the surveyor may discover an improvement such as a deck, which may not have been on a prior survey. This leads our attorneys to inquire and confirm that the proper permit and certificate of completion were issued with respect to such improvement.
What is due diligence and how does it relate to my cooperative or condominium purchase?
Buyers consider the building itself and especially the apartment when making an offer to purchase a cooperative or condominium apartment. However, as attorneys it is prudent to complete our due diligence on the building, making sure that the purchase is a sound financial investment. In our due diligence review, we review cooperative or condominium’s financial statements for the past two years, review minutes of board meetings, read the Offering Plan and any Amendments and interview the managing agent.