Real Estate Law
Residential and Commercial Real Estate Transactions
The firm represents clients in all aspects of residential, commercial, and lender real estate transactions, including cases arising from divorce. We strive to inform and counsel our clients on the sale, purchase, leasing, financing, use, and development of residential and commercial property. We assist our clients to obtain land use approvals and permits from local, state, or federal government agencies in connection with the use and development of their residential or commercial property.
The most common question I am asked by prospective Buyers and Sellers of Real Property is "When should I see an attorney about buying or selling a home?" It probably is not a bad idea for the first time Buyer to consult an attorney experienced in real estate transactions when beginning their search for a home. If you are a Buyer, you probably will want your attorney to enter the process when you are ready to make an offer and, certainly before you sign an offer to purchase or even a "binder". Likewise, if you are a Seller, you probably will want to consult an attorney early in the process and before signing a listing agreement with a real estate agent.
Real Estate Binder
The procedures involved in a residential real estate deal, although fairly standard, can become complex. Without the advice and assistance of a skilled real estate attorney to explain the procedures involved, a prospective Buyer can miss out on an opportunity to buy their dream house. Buying and selling real estate almost always entails a contract. Keep in mind that a typed or handwritten "letter of agreement" or "letter of understanding" signed by the parties will be binding if it meets the legal requirements of a contract. Do not sign something assuming it is not a contract of sale and, therefore, not important. If something goes wrong, you do not want to discover too late that you have signed away important rights, failed to include important protections, or failed to receive what you expected. Legal advice will be much more helpful and less expensive before rather than after, signing a purchase contract.
For example, Buyers are frequently asked to sign a broker's commission fee agreement. We advise our clients never to sign anything unless it has first been reviewed by an experienced real estate attorney. We want to ensure that the broker's fee agreement has language that clearly states that the commission, ranging from 3-5% and always negotiable, is due only upon closing of title. The problem is not all agreements are written that way. Some agreements require payment of the broker's commission whether or not the sale takes place, regardless of the reason. Other agreement may state that if the Buyer changes his or her mind and decides not to go forward with the sale, the Buyer is still contractually obligated to pay the broker's fee. Before you sign any broker agreement, have it reviewed by a competent real estate attorney.
In addition, prior to signing a contract, the property should be inspected by a licensed engineer, architect or related professional. Contracts signed before the specialty inspections should include contingency clauses permitting the contract to be cancelled if there are any negative findings by the inspectors.
Prior to signing a contract, the house should be inspected by a licensed engineer, architect or related professional. Savvy home buyers go one step further and have specialty inspections by professionals licensed in specific areas; environmental, termite, lead, radon, etc. Oil tanks buried underground and lead paint in homes built before 1978, are just two of many potential problem areas. Read any and all reports carefully and ask questions. The results may help you negotiate a lower closing price, as certain repairs can be a costly investment. Contracts signed before the specialty inspections must include contingency clauses permitting the contract to be cancelled if there are any negative findings by the inspectors. Standard contract riders contain termite contingency clauses, allowing for an inspection within 15 days of execution of the contract. Additional such clauses for various other concerns may be added as needed.
On March 1, 2001, a new law went into effect wherein the Seller must provide the Purchaser with a completed questionnaire describing the condition of various aspects of the house. This Real Property Condition Disclosure Statement must be provided to the Purchaser before the Purchaser signs the contract, or the Seller will suffer a $500.00 penalty by way of a credit to the Purchaser at closing. However, most attorneys feel that completing the Real Property Condition Disclosure Statement could expose the Seller to future liability, and Sellers are typically advised to simply give the $500.00 credit at closing instead of providing the Purchaser with the Real Property Condition Disclosure Statement.
Contract of Sale
Whether you are a seller or buyer, you should understand the contract terms and how they affect you. The Purchase Agreement may be called a Sales Contract, Real Estate Contract, Sales Agreement, Purchase and Sale Agreement or Preliminary Agreement. Whatever it is called, it is a legal document that, when signed by both parties, is a legal contract that will govern the entire transaction. The Purchase Agreement is usually prepared by the Seller's attorney and sent to the Buyer's attorney for review and modifications that the Buyer's attorney determines are necessary to protect the interests of the Buyer. It is important to note that returning the Purchase Agreement to the Seller's attorney has to be done relatively quickly. Remember, the contract is not effective until signed by both parties and just because a Purchase Agreement was sent to a prospective Buyer does not signify that it is a "Contract" or that the house is theirs.
Once the Purchase Agreement is signed by the Buyer and returned to the Seller's attorney with the down payment check and the Seller executes the contract, a binding contract is formed. Now, both parties have certain obligations, which must be completed within a certain amount of time as outlined in the Purchase Agreement., i.e. the Buyer has to obtain a mortgage commitment. When all of this is said and done, and when all the reports are satisfactory to the Buyer and the title is free and clear of any and all liens and encumbrances, a closing date is set between the respective parties and the lending institution's attorney.
Title insurance is one of the greatest mysteries of home buying. The title company searches the "chain of title", a history of the legal ownership of the property, dating back sixty years to ascertain whether there are any liens on the property and whether the current owner is the legitimate owner. The title company will also insure the "metes and bounds", or the footprint of the property, by reading a survey and inspecting the land. The title company provides insurance, known as title insurance, for the purchase price of the house, guaranteeing that the Seller is the legitimate owner of the property, that no part of the property has been deeded over to someone else, that no one else has the right to enter the property, and that there are no encroachments onto the property, such as a neighbor's driveway or fence. The title company will also research the taxes and conduct municipal searches to make sure that all taxes and municipal fees are paid by the Seller at or before the closing. In simplest terms, the title company makes sure the ownership of the property is legitimate so that the property can be successfully transferred from one owner to another.
Real Estate Closing
The "real estate closing" is the final stage in the process of buying a home. The closing is a meeting at which the Buyer and Seller, accompanied by their respective lawyers and real estate agents, along with the title company and the Bank's attorney, complete the sale. Closing dates are typically set for 60 days after the execution of the contract because the mortgage contingency clause usually provides 45 days to obtain financing.
At the time of closing, the Seller and Buyer will total up various credits in order to determine how much money the Buyer must pay. The parties will make "adjustments" for such items as fuel on hand (such as oil in the home heating tank), unused insurance premiums, prepaid interest, and already-paid taxes and public utility charges such as water and sewer fees.
Additionally, the Seller's attorney must advise the Purchaser's attorney as to how to have the checks drawn, as more often than not, the Seller will require certified or official bank checks from the Purchaser. That becomes even more important when there is mortgage financing, as the Purchaser's attorney must advise the bank attorney that certified funds will be needed at closing, and this information must be communicated at least 24 hours in advance of the closing.
Closing costs for the Seller vary, but unless modified by way of the contract of sale, the Seller is required by law to pay the New York State transfer tax of four dollars per every thousand dollars of the purchase price of the property. Additionally, depending on the locale of the property, the Seller must also be required to pay a local transfer tax. In New York City, the local transfer tax rate varies depending on the purchase price.
A closing statement or settlement sheet is prepared, fully listing the financial aspects of the closing. Once the Buyer signs the mortgage and note and pays the Seller the money he or she is due after all the adjustments, the Seller gives the Buyer the title to the property in the form of a signed deed. The deed and mortgage will then be recorded in the County Clerk's Office, and the Buyer will officially be a homeowner.
Duty to Inspect
Under New York law, the buyer of a house that is not newly constructed has a duty to inspect the condition of the house and land. The buyer should carefully look over the property and is also urged to consider hiring a home inspector to perform a professional inspection, preferably prior to signing a contract of sale. Alternatively, the contract of sale should be conditioned on receipt of a satisfactory inspection. The buyer also has a duty to ask questions about any conditions observed and to inquire about other matters, such as real property taxes, zoning and the school district.
Deed to Real Property
In residential transactions, there are generally two forms of a Deed used. The first is called a "Warranty Deed", which assures the buyer that the title is good against anyone who may claim a superior title. The second form of Deed is the "Bargain and Sale Deed With Covenant Against Grantor's Acts". This deed assures the buyer that the seller has done nothing to affect the title to the property through his or her own acts or omissions. In both instances, if the title is insured by a title insurance company, the buyer will usually look to the title insurer for protection against claims even though the buyer may also make a claim against the seller.
Remember one important point. The Seller, broker and the bank in the real estate transaction each have an attorney representing each of their respective interests. It is your responsibility, if your are the buyer or seller, to seek professional advice from an attorney to protect yourself and to be sure that you get precisely what you are legally entitled to receive. Remember, do not sign something assuming it is not a contract and, therefore, not important. Real Estate purchases and sales can be standard or complex. Therefore, it is wise to have an attorney experienced in real estate transactions available and on board when you find that dream house you want to purchase or if you decide that you want to sell your home. Buying or selling a home is a complex transaction.
Some of the real estate matters we handle include:
- purchases and sales
- lease negotiation
- land use and zoning
- title examinations
- quiet title actions
- tax certiorari
Banking & Settlement Services
The Firm acts as counsel to lending institutions in connection with residential and commercial loan transactions. The speed of the real estate closing process has accelerated dramatically over the last decade. Demands of the real estate industry have changed the manner in which the closing attorney handles a transaction. Our proactive approach facilitates smooth closings in a timely manner while treating borrowers and sellers with courtesy and respect. Our real estate department understands the service-oriented nature of real estate closings for mortgage lenders and brokers. With multiple closings rooms, we have the ability and staff to accommodate closings at any time at the borrowers, sellers or lending institutions convenience.