This list reflects commonly asked questions but it is not exhaustive and should not be relied upon as legal advice for any particular set of circumstances. If you have questions about your residential real estate matter, please contact one of our attorneys.
How are closing dates set in New York residential real estate closings?
In New York, residential closing dates are typically “on or about” closing dates. An “on or about” closing date refers to an estimated timeframe for the completion of the real estate transaction. It allows for flexibility in the exact closing date, taking into account potential delays or unforeseen circumstances that may arise during the closing process.
The inclusion of an “on or about” closing date acknowledges that certain factors, such as title searches, lender requirements, or legal proceedings, may impact the closing timeline. All parties are entitled to a reasonable adjournment from that date and while reasonable is determined on a case-by-case basis, up to thirty (30) days is generally considered a safe definition of reasonable.
The vast majority of the time, the parties work together to set a firm date that is convenient for everyone once all title and lender requirements. In the unlikely event that one party is not cooperating in setting a firm date, a time of the essence letter (or TOE letter) can be sent to the non-complying party fixing a date by which the deal must close or be in default under the contract.
It’s important to note that the term “on or about” indicates an approximation rather than an absolute deadline. Parties should keep this in mind when locking a rate with your lender, terminating any existing leases, booking flights or movers and other moving pieces in this process.
Do I need to be present in person for my closing?
Many of the documents that need to be signed at a real estate closing require wet ink, notarized signatures, so someone needs to be present in person at the closing.
Traditionally buyers and sellers, together with the attorneys, lender’s attorney and title representative would sit around a conference room table for closings. Changes in technology and COVID restrictions resulted in changes to the norm, with more and more parties opting to close by pre-signing documents or granting powers of attorney to a trusted party.
Whether or not you need to attend in person is fact specific so if you think you might not be able to attend a closing in person talk to your attorney at the onset of the transaction.
It is important to note that New York does not accept remote notarizations of powers of attorney. All signatures on a power of attorney – the principals, the agents and the witnesses – need to be live, wet ink signatures. Even if you chose to give someone a power of attorney, you will still need to meet with a notary and witnesses in person to sign that document.
What are the costs associated with a residential real estate closing?
Buyers have three categories of fees: title fees, legal fees and, if the buyer has a lender, lender’s fees. In each case the fees will depend, in part, on a buyer’s purchase price and loan amount.
The cost of title insurance and the searches required are set by the New York State Department of Financial Services. Insurance premiums are statutory but they vary based upon location and type of property, the purchase price and the loan amount. On purchases where the sale price is $1MM or more, buyers will have to pay a “mansion” tax equal to one (1%) percent of the purchase price.
Each lender has its own fee structure and the fees will depend on the specifics of the loan. Fees for a 30 year fixed rate may be different than those for an adjustable rate mortgage. A buyer’s credit and the size of mortgage compared to the value of the home (jumbo versus conventional) will also impact loan costs. Buyers can ask lenders for a preliminary disclosure of the expected fees. Lender’s fees include application and processing fees. In addition, lenders will withhold from your loan amount at closing certain additional fees due to the bank such as short-term interest and escrows. When talking to a lender about how much to borrow, it is important for a buyer to remember that if you’re borrowing $500,000.00 you won’t have $500,000.00 to spend at the closing table.
Lawyer’s fees and expenses also depend on the particular facts of a transaction and may be a flat fee, an hourly fee or a combination of both. As with lenders, you should talk to your attorney and explain to specifics of your situation to get an accurate fee quote.
Sellers fees for a closing will also depend on the specific circumstances of the sale. Typically a seller will have the agreed to commission to pay to the broker and transfer taxes which are taxes based on the sale price due to NYS and other municipalities depending on the location of the property.
At or prior to closing Sellers will also have to pay any liens against the property, including any mortgages, credit lines, taxes due and water charges.
Both buyers and sellers are encouraged to ask their professionals for a quote of expected expenses at the beginning of any transaction.
What is an appraisal contingency?
If a contract includes an appraisal contingency it means that the buyers’ obligation to close under the contract is contingent upon the home being valued for a certain fixed amount, usually, but not always, the purchase price. Often, a contract with an appraisal contingency would allow the parties to lower the purchase price to match the appraised value and if the seller is unwilling to do so, the buyer would have the right to cancel the contract.
What is a mortgage contingency?
If a contract includes a mortgage contingency it means that the buyers’ obligation to close under the contract is contingent upon a lender giving the buyer a commitment for a loan. Typically, the maximum amount of the loan that the buyer can apply for will be listed in the contract. A buyer could always borrow less, but the contract would not be contingent upon their ability to borrow more.
What is the timeline for the purchase or sale of residential real estate?
Timeline for every transaction will vary based on a number of factors including but not limited to the parties specific needs, the type of property, lender’s requirements and the title searches. For a general overview of a timeline for a residential purchase of a home or condo, click here; for a timeline for a seller of a home or condo, click here here; a timeline for a residential purchase of a co-op, click here here; a timeline for the sale of a co-op, click here.
If you have questions about the specific circumstances of your transaction and how they may impact the timeline of your deal, speak to your professionals.