Buying Real Estate in NYC by Harlem Properties
CHAPTER 1: Introduction
This guide was written to help you understand the home buying process in New York City. We understand that this decision to buy a home might be one of the biggest financial decisions you will ever make in your life, and it should be taken very seriously. The information contained herein will certainly help you especially if you are a first time home buyer, but we recommend that you should also assemble a team consisting of a real estate broker, loan officer / mortgage broker, and a real estate attorney.
CHAPTER 2: Making the decision to purchase a home
Most people that live in New York City are renting their home. There are many benefits to this. For instance, you don't need to take much responsibility for the up-keep of the property, you can decide to move every few years, and you only have one primary bill to pay off every month. It's simple, but there are the downsides which many of you know. Most people think about buying a new home when their rent gets “too damn high” as Jimmy McMillan so poetically puts it, but there are costs and decisions to be considered before you jump into it.
You need to ask yourself a few questions when you begin:
– Why do you want to buy a home?
– Do you need to consider a growing family, or plan for visitors to come to your new home (as you know, living in NYC means you WILL have friends coming to stay with you!)
– How long do you plan on living in your new home? If you only intend to stay a few years, you might be better of renting for that short amount of time.
– How much cash do you have for your down payment and closing costs?
– Can you afford the monthly payments of RE tax, mortgage, maintenance/common charges, and insurance? If you are buying in a co-op, for instance, most boards won't allow these bills to be more than 33% of your monthly income.
– Do you need to have an income tax break? The interest you pay on your mortgage as well as your annual real estate tax payments are all tax-deductible and although the cost of owning might be more than renting on a monthly basis, you should consider your tax deductions and if you can actually save money by owning rather than renting.
Some of the benefits of home ownership
– Tax Deductions: A home can be used as a tax shelter against the income you earn, allowing you to get yourself into a lower tax bracket and pay less tax at the end of the year. For anyone, this is a serious advantage that can save you thousands of dollars.
– Appreciation: In a neighborhood like Harlem, this can hold especially true. Over time, as our population grows, demand will most likely increase and real estate will appreciate in value over time. Of course there is nothing in this world that is a “sure bet,” but real estate is considered to be one of the safest investments you can make, especially in major metropolitan areas like NYC.
– You're the boss: Unlike a rental situation, you are pretty much free to make your own decisions in your own home. With the exception of coops, most changes you make inside of your condo or townhouse are totally up to you so long as they are done safety and with major works, with licensed professionals. Do you want to turn on the grill in the back yard at 2:00 AM? Go right ahead!
The Costs Involved
– Once you have made the decision that you definitely want to buy a home, you need to analyze your current financial situation to figure out what it is exactly you can afford for at this time. New York City is a very expensive place to buy a home, so the numbers can get pretty big, but don't let this dissuade you. There are many programs available for first-time home buyers that can help you limit your costs as much as possible.
– Down payment
- While searching for a home and negotiating a deal, you will have no financial expenditures. That, however, begins after you have an accepted offer and you are ready to sign a contract of sale. When you sign the contract, you will be expected to deliver a 10% good-faith deposit to the seller's attorney who will hold the funds in escrow until you close. The purpose of the deposit is to bind you to the contract agreement, and you will not get this money back unless you are able to negotiate for certain contingencies for yourself.
– Closing Costs
- The closing costs surprise most time home buyers because most people don't know what they are, and that closing costs are different from your regular down payment. Closing costs can vary depending on what time of property you are buying, and you should take a few minutes to review our NYC BUYER'S CLOSING COST WORKSHEET when you have time.
- In addition to your monthly mortgage payment, you will also be responsible for other costs and that depends on what time of property you buy. For instance, in a co-op, you will be responsible for your apartment's share of the building's monthly “maintenance.” In a condominium building, same thing, but it is called “common charges” or “CAM payments.” These payments are unavoidable and are necessary to run the building you live in and will cover things such as real estate tax, property insurance, building employees salary, landscaping, elevator maintenance, and building reserves in case major capital improvements are necessary while you are living there. You can think of the monthly maintenance, common charges, and real estate taxes as basically another form of “rent,” so sorry—even though you own your home you can't ever fully escape the rent payments! But trust us, this is all building towards something way better than renting your home.
– Finding out how big of a loan you can qualify for
- The first step in obtaining a mortgage is to call a loan officer or mortgage broker and get a “pre-qualification.” This is the first step toward obtaining a “pre-approval.” Basically this is a free question and answer conversation you have with a mortgage professional where they ask you some questions about your current income, assets, debts, and liabilities. This helps them to give you a rough estimate as to what you will qualify for and is the first step you should take before you start to physically spend time looking for properties.
CHAPTER 3: Tax deduction basics
Taking tax deductions from your property is probably the most important financial benefit to owning a property. Especially if you are in a higher tax bracket, you can use these deductions to spend less on an annual basis than if you were renting your home.
Deduct your mortgage interest payments
If you loan is amortized, that means that in the beginning of the loan term you are making heavy up-front interest payments to the bank in the form of interest payments. A small portion of your monthly mortgage payment goes to the actual principal to paying down the loan. That's right, banks basically collect their profit up-front. Who can blame them? The benefit to you, is that you can take most of those early mortgage payments and basically write them off of your annual income, which can most likely drive you into a lower tax bracket and end up saving you thousands of dollars. Sounds too good to be true, right? Well, it is to a point. You can deduct all of your interest payments on your first $1 million of debt. If you have any additional (but separate) debt, such as a second home mortgage or a home equity loan, you can write off that interest as well—but only on loans up to $100,000.
Write off your real estate tax
As the saying goes, there are two things that you must do in this life: pay taxes and die. Well, that's pretty much true. Especially when you own a home—you will pay real estate taxes. The good news is, is that all of the real estate tax payments you make over the course of a year are 100% tax-deductible. So just like your mortgage interest payments, you can write this off of your income and help lower your tax burden at the end of the year. In most cases, your bank/lender will tax your tax payments into escrow and pay the government out of that account. In cooperatives, however, your tax payments are included in your monthly maintenance charges (since there is only one tax bill for the entire building). The bank or the co-op accountant will provide you with a statement at the end of the year which will tell you how much tax you paid, so you can be sure to include the deduction on your tax filing.
The Taxpayer Relief Act of 1997
In 1997, Bill Clinton did an amazing thing. He proposed and passed the Tax Payer Relief Act which is a basic principle but very powerful. Basically, when a taxpayer sells his or her property, they usually will make a gain due to the appreciation of their property. Well, the Tax Payer Relief Act says an individual can sell their property up to a $250,000 profit—completely tax free. That's great! Better yet, if you are married, you can claim up to $500,000 profit tax free. There is one catch—you can only take advantage of this rule once every two years.
CHAPTER 4: Condo vs. Co-op vs. Cond-op vs. Townhouse
What is a condominium?
A condominium is considered real property and the purchaser obtains title to the property by receipt of a deed. A condominium owner owns the interior of the apartment and a common share of the building, also known as common elements or common area like the elevator, hallways, gym, etc. In general, a condominium owner is allowed to make alterations to his or her unit so long as it does not adversely affect the building's safety, systems, or neighboring apartments. Condominium owners all pay a monthly rent called “common charges” which include costs to run the building such as repairs, building-wide insurance, reserve funds, staff salaries and more. Real estate taxes are not included in common charges.
What is a co-op apartment?
A co-op (short for co-operative) is a corporation that owns an entire building including all apartments and common areas. When you buy in a co-op, you buy shares of the corporation's stock, and in return the corporation gives you a proprietary lease which gives you the right to live in an apartment. Co-op shareholders are in essence tenants of the corporation and pay a monthly rent, called “maintenance” which includes costs to run the building, such as repairs, insurance, real estate tax, staff salaries, and other items.
What is a cond-op?
A cond-op is a residential co-operative building where, usually, the ground floor is converted into a separate condominium unit or multiple units owned by either an outside investor or by the original sponsor of the building. In these cases, usually the rental income from these commercial spaces does not belong to the corporation but rather the condominium owner.
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CHAPTER 5: Your professional team
Real Estate Broker
Most listings today are online and buyers are becoming savvier than ever. However, the value of a great buyer's agent still holds true. A real estate broker is best when they specialize in a certain neighborhood. He or she not only helps to keep you abreast of new properties coming to the market but will also aide you in negotiating your purchase, help refer you to great financial and legal services, coordinate all activities during the buying process, and help to compare the eventual product you are going after with other like properties to ensure that you do not ‘overpay.' The best part is that working with a broker is free, as the brokerage commission is paid by the seller and split between the listing and buying agent.
Mortgage brokers and Loan officers
Mortgage brokers and loan officers are the people that will help you secure a home loan by evaluating your financial history and current financial standing in order to pre-approve you for a loan amount that you can afford. This is the most important step in the buying process (if financing will be used) and should be taken as the first step. Loan officers and mortgage brokers will help you submit a loan application to the lender and answer any questions about the mortgage process. They will also help you choose the product that works best for you. Most people go to their current primary bank for a loan, and they find out that their bank may not offer them the best terms as compared to shopping around for another bank unless you have a private banking status or otherwise. Using a mortgage broker can help you shop for the best rates/deals but you must do your own homework when it comes to this. A real estate broker can certainly help you with referring great loan officers and mortgage brokers that they have worked with in the past.
Real Estate Attorney
You should definitely hire a real estate attorney to help you with your closing. Specifically, you should hire a real estate attorney that practices in New York City and is proficient in helping buyer's secure new properties. NYC is a very specific market place and it take a local professional to help you close. Before you sign a contract of sale, your attorney will help you with due diligence review and title searches. They will examine the deed, title report, survey, certificate of occupancy, easements, and covenants, to ensure that you are buying a property free and clear. For condo a co-op purchases, the attorney will also read and examine the offering plan, by-laws, house rules, board meeting minutes, financial statements, assessment history, construction history, and whether or not there are any major capital repairs in the foreseeable future. For co-ops, they will also review the proprietary lease. Once you have an accepted offer, the seller's attorney will send your attorney a first-draft copy of the sale contract for review. This is when the process begins. Most attorneys collect a flat-fee for real estate closings, which is payable at the closing table.
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CHAPTER 6: Finding your new home
Once you have settled on your budgets for your new property and have assembled your broker, loan officer, and real estate attorney together, you should start to physically view properties for yourself. Your real estate broker will help you identify new properties on the market that suit the needs you have described and also keep you abreast of new properties coming to the market. They can also assist you in scheduling appointments to view the properties. You should also attend open houses—usually on Sundays is the busiest day—but remember to register your real estate broker's name as your representative so that he or she may help you should you decide to pursue the property.
When you are seeing properties, its best to bring a camera to take photos of each apartment and also be sure to take notes so that way you can keep all of the different homes straight. There will be a lot to take in, so you have to make sure to keep it organized as much as you can. Your broker can help you with this, too.
Questions to keep in mind
– How close is the nearest public transportation (subways)? This is probably one of the single most important factors in NYC real estate.
– Are there any parks / schools / shopping areas nearby? Obviously the closer you are to neighborhood amenities, the more valuable your property will be should you decide to sell one day.
– How is the condition of the building? How is the exterior / façade? What about the lobby, hallways, and elevators?
– Which direction does the apartment face? In the NYC (and the rest of the Northern Hemisphere for that matter) the direct sunlight will be best in a SOUTH facing apartment. But maybe that can be too hot in the summertime, resulting in high electricity bills. Consider also the view and whether or not there will be much noise / traffic.
– How long has the property been on the market? If the property has been on the market a long time (i.e. 6+ months) it could mean that there are underlying issues that are not seen, or perhaps a seller who is not realistic with the market. This is common. We recommend that if the property suits your needs but might be overpriced, you should make an offer since there is nothing binding you to the seller until you have an accepted deal and when you sign a contract.
After viewing many properties you will begin to learn the market and begin to feel more comfortable with what it is you want. It is hard to do, but buying property will also require you to balance a fine line of pros and cons. It is up to you to find out where that line is, but rely on your team of professionals to help you bring clarity to your decision so you can make the right choice and be confident with it.
Choosing the type of ownership you will take
Sole Ownership: One person owns the home entirely
Joint Tenancy with Right of Survivorship: When two or more people own an equal and undivided interest in the home. If one owner dies, the surviving owner(s) automatically become the owner of the deceased owner's interest in the home.
Tenancy by the Entirety: The same as joint tenancy with the right of survivor ship except that it only applies to married couples. If one spouse dies, the other becomes the sole owner.
Tenancy in Common: Two or more people own a share (i.e. 50/50) of ownership without rights of survivorship.
CHAPTER 7: How to make an offer
Once you have located a property you would like to buy, it is time to submit an offer to purchase. If you are working with a real estate broker they will submit your offer for you and be involved throughout the entire process. Most buyers feel more comfortable working with a real estate broker because of their experience and confidence negotiating. It is hard to negotiate with a seller face-to-face without letting emotions take over which can end up costing you thousands.
There are a few points of negotiation that you can play with in order to find yourself to a deal. They are:
– Sales price
– Closing date
– Loan amount
– Length of time to obtain a loan
– Financing contingency
– Repair work
– Inclusions and exclusions of personal property
Once you have agreed on these basic points as well as others if applicable, a contract of sale will be generated by the seller's attorney and will be sent to your attorney for review and feedback/comments. The contract will specify all terms that were agreed on between the two parties, including any contingency provisions that are tied to your eventual 10% deposit. The contract may go back and forth between you and the seller through the attorneys several times. Changes to wording are made, and eventually if things go well, agreed upon. Once there is an acceptable contract, the buyer will sign first and deliver a deposit of 10% of the purchase price, on a personal check is OK, to the Seller's attorney. These funds will be held in escrow until there the closing day, where additional funds such as additional down payment and closing costs, are due.
Important contract terms to consider when making an offer:
Co-op Board Approval: In a co-op deal, the contract will state that the sale of the unit's shares will be subject to co-op board approval. The purchaser is required to submit an entire board package which will include but not limited to income tax returns, bank statements, reference letters, paystubs, employment letters, proof of assets, and even a personal interview. After the board reviews the application and holds an interview, a decision on the application is usually given within a day or two. If the purchaser is rejected by the board, the contract deposit should be returned to the buyer and that will be stipulated in your contract.
Condominium Right of First Refusal: Not common but nevertheless a possibility, the sale of a condominium apartment is subject to the condo's board of manager's right to purchase the apartment on behalf of the condominium. The contract of sale will provide that the condominiums board of managers must waive its right to purchase the apartment as a condition to close.
Contract Deposit: The contract deposit is usually 10% of the purchase price. The money is usually held in a non-interest bearing escrow account.
Closing Date: The closing date in the contract is usually used as an initial reference, and rarely do deals close on the exact date which is initially stated in the contract. Most often, contracts will give a date preceded by the words “on or around” which can mean that either party may extend the closing date by 30 days. Any more than 30 days will be at the discretion of the seller.
Financing Contingency: This is an important inclusion for a buyer, because it allows the buyer to cancel the contract and have their deposit returned should the buyer not be able to obtain financing. The clause will usually contain what the maximum financing allowance is as well as give a time-frame for the buyer to obtain the loan commitment.
Flip Tax: If the sale is of a cooperative apartment, a flip tax may apply. Flip taxes are fees which are levied by the cooperative and can are usually anywhere from 1-5% of the purchase price. Sometimes more. The flip tax is customarily paid by the seller, but that can be negotiated. Not all cooperative buildings charge a flip tax.
Inspection: If you are purchasing an older apartment, and most definitely for a townhouse/building, you should hire a building inspector to check for things such as termites, mold, structural deficiencies, and other latent defects. The contract will usually state that the property is sold in “as-is” condition, so the buyer will not be allowed to cancel the contract for issues found during a property inspection. Therefore, the buyer should always perform a building inspection prior to signing a contract.
Lead-Based Paint: The seller must disclose any knowledge of evidence of lead based paint in their home. There are significant dangers to lead based paint, which was widely used prior to 1978. If the home you are buying was built before 1978, there is a good chance lead paint exists in the home or in the building. It is not a hazard, however, so long as the surfaces in the home have been properly maintained. The buyer will have to sign a disclosure form that states they understand the dangers of lead based paint if the property was constructed prior to 1978.
Marketable Title: The contract will state that the seller is transferring the premises free and clear of all judgments, liens, co-op loans, mortgages, real estate tax arrears, and other encumbrances on the property. If you are purchasing a condo or building/townhouse, your attorney will conduct a title report after the contract is signed. If the title report reveals problems with the seller's title, the seller and their attorney will usually have the right to clear the title before closing. At the closing, a title insurance company will record all transfer and tax documents and will issue a title insurance policy that verifies you have received clear title.
Occupants: If the occupants of the apartment will be someone else other than the purchasers (for example parents buying for their son or daughter) then this will be detailed in the contract.
Pets: If the building permits pets, the contract will state the type and number of pets to be kept in the home. This is usually the most important when it comes to co-ops which usually have specific rules detailing the types of allowances shareholders may have with pets.
Purchase Price: Purchase price will be stated in the contract, along with the contract deposit and the amount due at the closing.
Personal Inclusions / Exclusions: It is understood that when buying real estate, you buy the land and everything affixed to the land. Therefore, anything that is not affixed to the home or apartment, will be considered personal property and are not assumed to be included in the sale. Some examples of fixtures (inclusions) are: kitchen appliances, cabinetry, lighting fixtures, mounted flat screen televisions, wall-to-wall carpeting, washer/dryers, window screens, and window treatments. Items that would be assumed to be not included may be: furniture, throw rugs, small kitchen appliances (toasters, microwaves if not affixed), floor lamps, and portable A/C units).
Property Condition: In general, house and apartment sales are sold “as-is.” That is, the condition the property is in when the contract is signed is the expected condition it will be in at the closing. Most contracts allow for the buyers to perform a final “walk-through” or final inspection just before closing to make sure that the condition has remained the same. It is possible that major damage can be done when the previous owner is moving out of the home, so it is important to take advantage of your final walk-through.
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CHAPTER 8: How to obtain a loan
New York City has some of the most expensive properties in the United States. Most buyers end up financing their purchases. It is wise to obtain a real pre-approval letter (not a pre-qualification letter) from a lender before you enter into a sales contract with a seller. That means that the bank issues you an approval based on verification of your assets, liabilities, income and debt. A pre-approval is about as close as you can get to obtaining a loan before actually finding the property you want to buy. It is important to take this step before you physically look for properties in order to prevent wasting your time on buildings that you may or may not be able to afford for. In addition, obtaining a pre-approval also sets you apart from other buyers and gives you a competitive edge because you are more “ready” to buy, as compared to a buyer that hasn't taken that step yet.
Types of loans
The most common loan product is a conventional 30-year fixed mortgage, but there are many different options available to you. Your loan officer or mortgage broker is the best person on your team to talk to you about the different loan products available to you in order to find the one that suits your needs.
Fixed Rate Loans: With this product, the interest rate is set and fixed before you close on the loan and will remain constant throughout the entire life of the loan (e.g. 10, 15, 30 years). When you make a mortgage payment, you payments will confirm to a standard amortization schedule in which most of your payments in the beginning will be interest payments and a small portion will go towards the actual principal of the loan. As time goes on, the balance shifts over from mostly interest payments to mostly principal payments.
Adjustable Rate Loans / Adjustable Rate Mortgages (ARMs): After an initial period of fixed interest rate (usually 3, 5, 7, or 10 years) the interest rate on these mortgage changes according to market conditions. It might sound scary, because no one can tell us what the prevailing interest rates will be, say, 7 years from now, but most ARMs come with rate caps that can protect the borrower from extraordinary changes.
Interest Only Loans: These loans allow you to only pay the interest on a loan for a set period of time, usually 5 or 10 years. During this time, you do not have to pay any principal portion of the loan which effectively frees up that cash for the borrower to use in other investments that may have a higher rate of return. These loans also usually allow the borrower the option of making more than the minimum payment, and if they do that portion will be applied to the principal of the loan.
Negative Amortization Loans: This loan allows the borrower to make a monthly mortgage payment that is less than the interest actually owed for a given month. The result is that the outstanding balance of the loan is actually increased rather than decreased as with loans that reduce principal. What's good about this loan is that your payment doesn't increase just because the variable rates go up. What's bad is that the payment will eventually reset to a level to allow the loan to amortize over its remaining life which could increase the monthly payment substantially.
Home Equity Line of Credit: This is a secondary loan in which borrower can loan against his or her equity in their current property.
Amortization: The process of decreasing an amount over a period of time. When used in the context of a loan, amortization is the process by which your loan principal decreases over the life of the loan.
Appraisal: A report by a neutral third party whose job is to determine the market value of a property based on comparable properties in the area and recent sales. Sometimes the appraised price is lower than the purchase price in the contract of sale. The bank will lend on whatever the lower amount is, which can sometimes cause trouble with getting a loan if the purchaser is putting down the minimum down payment.
Conforming Mortgage: Any loan which falls below the amount that Fannie Mae or Freddie Mac can purchase in the secondary loan market. Specific limits change from time to time, so it is best to speak with your mortgage broker or loan officer about current conforming mortgage rules.
Escrow: A special bank account which is kept in the custody of a third party taking effect only when a specified condition has been fulfilled. In terms of financing, lenders may hold a borrower's monthly real estate and insurance payments in escrow in order to guarantee that those payments are made.
Equity: This is value of a mortgaged property after existing charges or liens against it are deducted.
Fannie Mae and Freddie Mac: The nation's two federally chartered and stockholder-owned mortgage finance companies. These banks do not give loans directly to consumers, but rather purchase loans from other banks in the secondary mortgage market.
FHA Loans: An FHA loan is insured by the Federal Housing Administration and usually helps low and moderate income families to become homeowners by providing insurance to lenders to encourage them to make loans to buyers that they otherwise would not lend to. Some FHA loans may allow borrowers to borrow as much as 96.5% of the purchase price, with as little as 3.5% down.
Interest: Usually set as a percentage, it is a fee charged by a lender for borrowing money.
Jumbo Mortgage Loan: A loan amount which does not conform to Fannie Mae and Freddie Mac standards by exceeding the loan limit. Jumbo loans are slightly riskier investments for the banks, so they usually have higher interest rates.
Loan to Value Ratio: The amount of money borrowed vs. the value of a property. For example, if a property is worth $1,000,000, and $800,000 was borrowed, then the loan-to-value ratio is 80%.
Points: Equal to one percentage of the loan amount. Points are paid to the borrower usually at closing in order to reduce the overall interest rate of a loan.
Prepayment Penalty: A fee against a borrower is the loan is paid off prior to the end of the term.
Primary Residence: A home that is occupied primarily by the borrower. Loans on a primary residence usually have lower interest rates than secondary homes or investment properties.
Principal: The total amount of money from which a borrower borrows from a lender.
Rate Lock: A commitment issued by a lender to a borrower r or other mortgage originator guaranteeing a specified interest rate for a specified period of time.
Term: The period of time in which you agree to pay back a loan. Most mortgages are for a term of 15 or 30 years.
Underwriting: The process by which a lender analyzes a borrower and all of the financial aspects of a deal to make a determination on a loan application.
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CHAPTER 9: Timing your purchase
There are many steps involved once you have found a property, and have agreed on the terms of a deal with the seller. For instance, negotiation of the contract is only the first step before you can even submit a complete loan application. Your lender will take time processing your application because there are many steps involved on their end including review of your entire financial background, an appraisal and survey of the subject property, title report, lien search, and more. In addition, if you are buying a co-op property you will have another step of filling out a getting a board package approved by a board of directors.
To make the process move as fast as possible, you should prepare the following documents:
– Past two years federal income tax returns
– All of your bank statements from the past 6 months
– Net worth statements from your accountant
– Landlord reference letter if you are currently renting
– Employment letters stating annual salary and term of employment
– Past six months paystubs
– Brokerage account statements for the past six months
In general, if you are purchasing a condominium unit or townhouse and are financing you can expect to close within six to ten weeks after the contract singing. This is a rule of thumb and depending on certain conditions, deals can happen faster or slower. Cooperative apartment deals generally take longer, due to the additional step of a board approval, so figure total time closer to 10 – 14 weeks after a contract signing. These time frames are for deals that are being financed and in which both the seller and purchaser have agreed on an “ASAP” closing date. Of course, the seller and purchaser can agree to close at a later date that is more convenient to the parties.
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CHAPTER 10: Title Insurance and Title Search
Ensuring that you are buying free and marketable title is one of the most important steps of a real estate transaction. “Title,” is in essence the right to claim ownership of a property. You want that claim to belong to you and only you. The only way to ensure this is through a thorough title search on the property and the purchase of a title insurance policy.
Title insurance is, in our opinion, a must for any deal. This policy is taken out by the purchaser in the deal and helps to protect against any loss, damage, or defects relating to ownership of real property or from the enforcement of liens against it.
It all starts with a title search. The title search is the process of retrieving documents evidencing events in the history of a piece of real property to determine relevant interests in and regulations concerning that property. For instance, perhaps the seller of a building does not disclose that their spouse or anyone else for that matter has an interest in the property and is not involved in the sale for malicious reasons. If you purchase the property it is possible, without title insurance, that someone else can claim ownership or partial ownership and the governing bodies find that they are correct, you could lose your entire property because you did not buy it entirely from the previous owner.
Once the title policy is in effect, it will pay for defending against any lawsuit attached the insured title and it will either resolve the title problems for you or pay for your losses against the hidden risks in title such as forgery, incompetency, fraud, or other unknown errors that cannot be seen through the search of public records.
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CHAPTER 11: NYC Buyer’s Closing Costs
Please see our separate documentation for NYC BUYER'S CLOSING COST WORKSHEET and if you have additional questions regarding closing costs, we recommend that you consult your real estate attorney.
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CHAPTER 12: Closing your property
After you have completed most of the steps and are getting ready to close, the following items should be taken care of about a week from your closing date:
– Schedule your final inspection
– Move any needed cash for the closing to your checking account
– Order homeowners insurance policy
– Start packing for your move!
On the day of the closing you will:
– Perform your final walk-through of the property
– Bring certified checks for balance of purchase price due
– Bring personal checkbook for various closing costs
– Bring your driver's license or passport
– Have your new utilities turned on
– Get your keys!
During the closing you will sign a lot of documentation from your lender dealing with your loan documents. The seller will sign several documents, too, relating to transferring the property to you. For real property such as condos and townhouses, a deed and title insurance certificate will be transferred. For co-ops, a stock certificate and proprietary lease will be transferred. If you are financing, your lender will pay the sellers side the remaining funds needs to complete the deal minus whatever you are putting down yourself. Once checks have cleared and all paperwork is signed and photocopied for the respective parties, you will get your keys and you will officially be a homeowner!