Do you need a Lawyer?
The reality is, you do not need an attorney to represent you in most real estate proceedings in New York. That being said, you would be well advised to have legal representation. Do you know how to read a title report? Are you prepared to review and approve financial reports and adjustments? Do you know the meaning of the legal language in the documents you will be signing at Closing? A good Real Estate Attorney will protect your interests in the following areas:
REAL ESTATE LAWYER FOR BUYERS
• Review and negotiation of the real estate contract,
• Explanation of the real estate contract and mortgage commitment,
• Resolving any issues including repairs, termite damage, etc.,
• Correspondence with the seller’s attorney, title company and mortgage company,
• Preparation for closing, including obtaining the Title,
• Review of mortgage commitment and title commitment, and
• Representation at closing
REAL ESTATE LAWYER FOR SELLERS
• Preparation, review and negotiation of the real estate contract,
• Explanation of the real estate contract,
• Resolving any issues including repairs, termite damage, etc.
• Correspondence with the buyer’s attorney,
• Preparation for closing, and
• Representation at closing.
In New York City, Coop and Condo Closings do not require many hours of work for an attorney who knows what they’re doing. Any lawyer that tells you otherwise is just trying to justify their inflated legal fee.
CALL NOW for a free 20 minute consultation and get a solid, reliable, and affordable representation.
WHAT YOU NEED TO KNOW ABOUT THE NEW YORK CITY REAL ESTATE MARKET BEFORE YOU BUY
TOP 3 MISTAKES BUYERS MADE:
MISTAKE #: Failure to Inspect the Property by a Professional Engineer
Many buyers think that the bank will do the required inspection or rely on their visual observations of the Coop or Condo and assume the house they’re buying is in good condition. Beware: most Contracts of Sale provide for the house to be sold “as is.” Only a qualified engineer can detect potential structural or other problems that may require major repairs. Do not cut corners. Hire a seasoned expert to make sure you’re not buying a “money pit.”
Mistake #2: Finding out Too Late that your Lawyer represents the Developer and not You
Many buyers assume that the lawyer recommended by the Developer represents them and are shocked to discover that they actually represent the Developer. Make sure you are represented by an attorney who owes you, and only you, a complete allegiance.
Mistake #3: Not Understanding the Home-Buying Process
Many buyers have no inkling of what they sign and are unprepared for the home-buying process. A good real estate attorney will explain all the documents to you and get you ready you for each step of the process, including finding the right mortgage company and preparing you for delays in closing to make sure that you end up in your dream house without a glitch.
Most first-time buyers do not anticipate common delays in Closing due to Sellers’ inability to move out or other problems and, as a result, are faced with major life disruptions. Whatever your pre-closing housing situation is, make sure you allow some flexibility with your move-in date so that you don’t end up having to stay in a hotel or are forced to employ some other expensive last-minute resolution.
The Differences between a Co-op and a Condo
Understanding the difference between Co-ops and Condos is very important for first time Buyers. While Co-ops are generally less expensive and there is a lot more to chose from (approximately 80% of apartments for sale in New York City are comprised of Co-ops and only 20% of Condominiums), Co-ops come with a lot more restrictions, a rigorous Board Review and higher maintenance fees, which makes them a lot harder to re-sell so sublease.
COOPERATIVE CORPORATION (CO-OP)
A Buyer of a Co-op does not buy real estate, but shares of stock in the Cooperative Corporation, which holds the title to the real estate. As a result of the sale, the Buyer receives shares of stock in the Co-op and a “proprietary lease,” which allows the Buyer to occupy a specific Apartment. The Buyer, who is now a Shareholder, pays a monthly maintenance fee to the Co-op based upon the number of shares he or she owns.
To purchase a Co-op, a prospective Buyer must obtain financing (Mortgage) and undergo a comprehensive Board approval process, which requires an extensive investigation into the Buyer’s financial, employment, and personal background. A Co-op Board of Directors can accept or deny any application without disclosing their reasons for rejection and they often do so, turning down even celebrities and other high profile applicants. Typically, higher-end buildings have tougher approval standards but all buildings require Buyers to provide personal financial information including two years of tax returns and bank statements, as well as personal and business reference letters. The review process is followed by a personal interview with the Co-op’s Board of Directors.
Monthly maintenance fees in Co-ops are much higher than in Condos because they include part of the underlying mortgage for the building. In addition, many Co-op Boards limit the amount of the purchase price that can be financed and require higher down payments than for Condominiums. Typically, Co-op Buyers are allowed to assume only between 10% to 50% percent of the purchase price in financing.
However, while Co-op monthly maintenance fees are generally higher than in Condos, a portion of maintenance charges is tax deductible, usually in the form of real estate taxes and interest charges on the building’s underlying mortgage and the interest on the shareholder’s loan.
Many Co-ops impose “flip taxes” and other management fees, which go to a reserve fund to finance maintenance and improvements of the building. The amount of tax generally depends on the purchase price and is usually payable by the Seller but can also be imposed on the Buyer so it is important to review the building’s tax procedures before signing a Contract of Sale.
Most importantly, Buyers must be aware that many Co-op buildings limit or outright forbid subletting the apartment. These restrictions, combined with the Board Review which is as rigorous for renters as it is for Buyers, makes Co-ops much harder to sublease and/or re-sell. A careful review of the Offering Plan and the house policies is advisable prior to Contract signing to prevent future surprises.
Condominium has become the most popular form of real estate ownership in New York City..A Purchaser of a Condo unit shares the hallways, stairs, lobby, elevators, and other common areas in a building much like the purchaser of a Co-op but the similarities end there. Unlike a shareholder in a Co-op, a buyer of a Condo owns a title to real property and receives a Deed to the specific apartment he or she purchased, which is recorded in the County Clerk office. Each owner is responsible for real estate taxes and mortgage payments and, in addition, pays monthly common charges to the Condominium to cover maintenance of the common areas of the building. These charges are usually significantly lower than in Co-ops but are not tax deductable.
While most Condos require an application to be submitted to the Condominium’s Board of Managers, the application process is a lot faster and involves a lot less financial and personal disclosure than in Co-ops. In practice, it is almost impossible to be rejected by a Condo Board.
The Board of Managers has the first right of refusal to purchase or lease any condominium being offered for sale or lease, but it almost never exercises this right. In the event that the Board of Managers chooses to exercise its right of first refusal, it must purchase the apartment unit for the same price and under the same terms and conditions upon which the purchaser being rejected agrees to purchase the unit.
To discuss these and any other Real Estate legal issues call our In-house Counsel for a free 20 minute consultation. We will be happy to set you on the right track so that your home-buying experience is fun and stress-free.