Frequently Asked Questions About Real Estate Law
We have compiled a small list of commonly asked questions related to the sale of real estate, both residential and commercial. If you would like further clarification regarding any of these questions, or if you would like to discuss your own particular situation, please call 518-392-2555 or email us.
In New York State, it is customary for both the seller and purchaser to have their own attorney in a real estate transaction. The responsibilities of the seller’s attorney include to prepare and negotiate the terms of a real estate contract, prepare seller transfer documents, address title issues and existing liens, prepare a closing statement and represent the seller at the closing. The purchaser’s attorney will review and negotiate the terms of the seller’s contract, order a title search and title insurance, review title matters (including easements, restrictions and rights-of-way), review assessment and property tax figures, discuss the option of obtaining a new property survey, coordinate a closing with the mortgage company’s attorney, prepare a closing statement and represent the purchaser at the closing.
Expenses vary depending on whether you are the seller or the purchaser and also on the complexity of the transaction, type of real estate and whether financing is involved. A flat fee is often quoted for a straightforward transaction, but an hourly rate may be used if complications are likely to arise. At closing, the seller will pay a New York State transfer tax, and depending on location of the property, a county transfer tax. The seller also pays the real estate broker’s commission, as well as the balance of any existing mortgages or other liens affecting the property. The purchaser will pay the cost of recording the new deed and mortgage, the New York State mortgage tax (generally 1% of the amount of the mortgage), and bank fees associated with the mortgage. We review all of these expenses with the client early on in the transaction to ensure that he or she knows what to expect for total closing costs.
It is always a good idea to have a competent home inspector or contractor thoroughly inspect a home for defects prior to closing. Purchasers will typically have structural, pest, septic, water, radon and electrical inspections done either prior to signing a contract, or after signing the contract and pursuant to the inspection contingency in the contract.
When selling residential property in New York, a seller is normally required to either to give the purchaser a Property Condition Disclosure Statement; or, provide them with a $500.00 credit in lieu of this Statement. However, providing this Statement to a purchaser creates post-closing liability for the seller and it is always a good idea to discuss these options with your attorney to determine which option is best for you.
The Closing Disclosure, or “CD” as it is often referred to, is the result of new TRID banking regulations that have eliminated the standard Form HUD-1 Statement in an effort to create a more all-inclusive and easier to understand closing statement for home buyers obtaining mortgages. The extent to which the CD achieves this goal is open for debate. However, it is now what the banks will provide to borrowers to disclose loan costs, and we frequently review these disclosures with clients prior to closing to insure that the bank fees being charged are usual and accurate.
A Quit Claim Deed conveys real estate to a grantee without any warranty of title by the grantor. This is as compared to a Full Warranty Deed where the grantor warrants title to a grantee, including the title of prior owners. A Bargain and Sale Deed is the deed type most commonly used in New York’s Hudson Valley. This type of Deed includes a title warranty from the current owner, but no warranty as to title of prior owners.
Section 1402-a of the New York Tax Law imposes a 1% tax on any sale of any residential property with a purchase price equal to or over $1,000,000.00. This tax is reported on the transfer tax return (form TP-584). Whereas transfer taxes are generally paid by the seller, the mansion tax is paid by the purchaser at the time of closing. If a portion of the property is non‑residential in character, it may be possible to allocate the purchase price between the residential and non-residential portion of the property, thereby reducing, or in some cases, eliminating this tax. However, the New York State Tax Department will frequently audit these allocations, so it is important to review all of the property details and regulations carefully with an attorney.
No. In most cases, both the seller and purchaser can avoid physically attending the closing by signing transfer documents ahead of time.