FROM CONTRACT TO CLOSING: THE ATTORNEY’S ROLE
The purchase or sale of a home, investment or commercial property, is an important transaction requiring care, skill and expertise. The transaction is usually complex and involves decisions which have important legal and financial consequences. Most Buyers or Sellers select an experienced and knowledgeable real estate attorney to work with them on the transaction.
CONTRACT OF SALE
A prospective buyer or seller should consult an attorney before signing a Contract or a “Binder” Agreement for the purchase or sale of real estate or a Cooperative Apartment Unit. The Contract of Sale is a legally binding document which, if well-drafted, will cover all aspects of the transaction, such as the purchase price, the precise description of the property being sold, any personal property which is included in the sale, the type of deed to be delivered, any restrictions or encumbrances which might effect title to the property, the Closing Date, any contingencies such as the Purchaser’s obtaining a Mortgage or Coop loan, and any warranties or representations made by the Seller concerning the condition of the real estate, as well as a host of other details.
Most real estate transactions involve some form of financing. Usually, a bank or other financial institution will provide a Mortgage Loan or Coop Loan to the buyer, through which up to ninety percent of the purchase price is financed. Sometimes the Seller will accept less than the full purchase price at the Closing and the Buyer will give a Mortgage note secured by a Mortgage for the balance. There are almost limitless variations of Mortgages and Coop Loans including fixed or variable rate, one-year, three-year, and five-year adjustable, negative amortization, variable rate covertible to fixed rate, no income verification, etc.
It is imperative that the Purchaser understand the various options, and make an informed decision. The Purchaser’s attorney will work closely with the client so as to give a clear explanation of the various loan packages.
TITLE, TITLE INSURANCE & UCC SEARCH
If you are buying or selling a parcel of real property (improved or unimproved by a dwelling) or a Condominium Unit, your attorney will order a title report & recommend that you purchase title insurance at the Closing. Minor defects in title are often unimportant. However, some defects may interfere with the owners use or enjoyment of the property or Condominium Unit. Both Seller’s and Purchaser’s attorneys will cooperate in clearing up any serious defects.
If you are buying or selling a Cooperative Apartment, a UCC search will be ordered which may reveal any liens (existing Coop Loan, etc.) on the unit. Most of the liens, that are reported by the search, are removed at Closing.
TIMING & CLOSING
Typically the Contract of Sale shall allow between 30 and 45 days to obtain a Coop Loan or Mortgage Commitment and 60 days to the “Closing,” which finalizes the transaction.
At the Closing the Seller shall provide a deed (transferring title to property) or in the case of a Coop, the transfer agent shall provide a newly executed Stock Certificate, and either provide an original Proprietary Lease, or assign the Seller’s copy. In addition, keys, and any other items, such as garage door openers are exchanged. Further more, Seller pays certain costs, such as:
The seller pays:
The purchaser pays:
Within 48 hours of Closing, Purchaser should do an inspection of the Premises. Typically, possession shall be taken by the Purchaser immediately after Closing unless otherwise agreed upon. Preparation, for both sides of the transaction, is imperative. All closing costs should be agreed upon prior to Closing & documents should be prepared well in advance of the Closing date. All mortgage or Coop Loan documents must be explained at Closing before signing. Subsequent to Closing, a “Statement with Exhibits,” will be provided by your attorney which is a compilation of the salient documents executed on the day of the Closing, as well as a reconciliation of the financial details of the Closing.
Working with clients on a real estate matter is extremely satisfying. It usually is the largest and most important transaction of the client’s lives. Reducing any tell-tale anxiety and providing for a smooth transaction from Contracts to Closing is the objective of our office. We look forward to hearing from you when the need arises.
A. FREDRIC CAPUTO, ESQ.