As described in 5 Essentials Steps to Buying Property in New York, I will be writing a series of more detailed articles about each of the 5 essential steps.
The first in this series will cover reviewing your real estate contract.
As a homebuyer, once your seller has accepted your offer it’s time to finalize the terms of the real estate transaction. This is done in a real estate contract.
A real estate contract is a legal document that describes the agreements, terms, and conditions for both you, as a buyer, and the seller. The contract will contain each party’s respective rights and obligations throughout the real estate buying/selling process.
Reviewing this contract with qualified legal representation is very important. Here, an experienced New York real estate attorney will help ensure that the contract contains all the necessary language so that your best interests are covered, so that you are given a fair deal, and so that the contract contains appropriate contingency provisions to protect you, should something not go as planned.
Here is a general idea of the New York real estate contract process:
We recommend conducting an inspection of the physical property. Should you want to negotiate a different offering price as a result of issues found in your inspection, or should you want to request repairs be made prior to your purchase, your real estate representative will help you in brokering the additional terms. Thereafter, the agreed-upon repairs, if any, will be implemented into a Repair Rider and attached to the original contract of sale.
One of the most important parts of the contract will be the closing date. Usually, for a residential property an “on or about” clause is used which means you will have a chance to finalize the closing date 30 days after the date that is set in the contract.
Once all due diligence is completed, your real estate attorney will request the proposed contract from the seller’s attorney. Upon receipt, the contract in its entirety should be reviewed by you and your attorney, who will help negotiate any revisions with the seller’s attorney to ensure your rights, investment, and interests are protected.
Once the seller’s attorney verifies and confirms that the seller has approved the contract and any revisions, you will now have a chance to review the final contract and sign it. After both the buyer and seller execute the contract then you are officially “in the contract”. As most contracts specify a specific amount in down payment, you will need to provide the down payment at contract upon signing the contract and, usually, this is an agreed-upon portion of the total down payment.
It is important to ensure any and all questions are fully answered prior to you signing the contract, therefore, we sometimes suggest that you make a list of these questions and bring them to your contract signing so that none are forgotten.
Once the contract is signed, your real estate attorney will send the partially executed contract to the seller’s attorney for them and the seller to review and sign. Here it is important to note that until both parties sign the contract, neither party is bound by the contract.
Once the contract has been signed by both parties, your down payment check will be deposited by the seller’s attorney in a non-interest-bearing escrow account and will be held until the close.
When buying a home in New York, and if you are financing then you will be required to pay a mortgage filing tax to the county. These taxes are not covered in the price of the property and are not covered in the contract. It is important that you prepare for these payments and do the necessary due diligence to verify these amounts. Prior to entering into contract, you should speak with your loan officer to verify the closing costs, which includes the mortgage filing tax.
At Piccinnini Law, we have successfully helped hundreds of clients buy and sell property in New York and offer legal advice and counsel should you need assistance.
In our next article, we will discuss the importance of a title search and the general process for that.