New York Real Estate Lawyer

In most of the country, condos are far more common than coops. In New York City, however the opposite is true: Coops far outnumber condos.

When you buy a coop apartment, you are not buying real estate. You are, instead, buying shares in the corporation that owns the building in which you wish to live.

When you buy a coop, you receive a stock certificate and a proprietary lease. When you buy a condo, you are buying a portion of the building in which the apartment is located. You actually own the space in which your apartment is located. You receive a deed to show your ownership.

The owner of either a coop or a condo pays a monthly fee. In the case of a coop, the fee is called a" maintenance fee." In the case of a condo, the fee is called a "common charge". For apartments of equal value, the monthly fee paid to the coop is larger than the monthly fee paid to the condo.

The vast majority of coops carry a mortgage on the property. The maintenance fee includes that coop owner's share of the mortgage and taxes on the building. A percentage of the maintenance fee is tax-deductible to the coop owner. In addition to the mortgage and taxes, the maintenance fee includes expenses for maintenance and upkeep of the building. Likewise, the common charge for a condo includes maintenance and upkeep of the building.

Buying a coop is more risky than buying a house or condo because you are buying shares in a corporation. If the corporation is in bad financial shape, you could end up losing your coop and the money you invested in it. Even worse, you may not only lose your coop, you would still owe money on the coop loan. Many lenders will not lend money for a coop purchase if the coop consists of only a few units or if too few of the units have been sold. Beware of coops that have large balloon payments coming due or tax abatements that will be ending. Also beware of coops that do not own the land on which the building is located. They may only have a lease-hold on the land for a set period of time. In such a situation, at the end of the lease, the land would revert from the coop to the original party.

In most cases, purchase of a coop requires approval by the coop board. In addition, in a coop the right to rent your apartment to others may be severely restricted. Both coops and condos have boards of unit owners. In addition, both coops and condos have rules that the apartment owners must follow. In both coops and condos a special charge, known as an assessment, could be charged to apartment owners in the event large expenses for the building become necessary.

Also, in both coops and condos the monthly fees could be increased if necessary. When buying a coop or condo make sure that they have a healthy reserve for major future repairs. Also when buying a coop or condo find out if there is a tax abatement of some type and if there is one, when will it expire and how much will it raise your taxes.

The Real Estate Agent

Many sellers are represented by real estate agents. In the vast majority of cases, the agent represents the seller. If you are a purchaser, unless you have a written agreement with a real estate agent that states that the agent is working for you, the agent represents the seller. It is very important to remember this point.

It is the duty of the agent, to get the best possible price for the seller. Many agents are truly nice people, but--again remember--no matter how friendly the agent is, the agent is legally obligated to look out for the best interests of the seller.

The agent is paid on commission when he or she sells the property. The fee is based upon a percentage of the sales price. There is no set fee for a commission. The fee is always negotiable. In New York City the fee usually varies from 3 to 6 percent. Outside of New York City the fee may be as high as 10 percent.

If you are selling property, you should have a written listing agreement with the real estate agent. The agreement should state the commission and length of time for the listing. Listings are usually given to a real estate agent for 3 to 6 months. The agreement should also state what efforts the real estate agent will take to sell your property, including advertising, internet and multiply listing organizations. The listing can also name particular parties that are exceptions to the listing, that is parties that you may sell to without owing a fee to the real estate agent.

Your Lawyer

Your lawyer is the only person, other than yourself, who is looking out for your best interests. Do not use an attorney who was recommended by the real estate agent or any other parties involved in the transaction. You want to be certain that your attorney's allegiance is only to you. Do not look for a "bargain" when selecting an attorney. A "bargain" can become a costly mistake. You want to be certain that your lawyer is being paid sufficiently so that he or she can spend enough time on your matter.

The best way to find an attorney is by either personal experience or a recommendation by a friend or relative. Also, ask the potential attorney if he or she is experienced. You don't want a lawyer to be learning on the job when it comes to the purchase or sale of your home.

Be sure not to sign, or pay anything, without first obtaining your attorney's approval.

The Inspections

The contract should have provisions for an engineering and a termite inspection of the house. The termite inspection should cost less than $100 and the engineer inspection for a one or two family house should cost between $350 and $500.

Inspections may be done either prior to signing the contract of after signing the contract. If the inspections are to be done after signing the contract there must be provisions for the inspections. The provision commonly provide the following options in the event serious problems are discovered as a result of the inspections:

The termite inspector looks for signs of active termites and other wood-destroying insects. The termite inspection also looks for damage from active or past infestations. All lenders require a termite inspection.

Although an engineer inspection, also known as a home inspection is not required, it is highly recommended. When hiring an inspector, be sure to use a reputable licensed inspection. The inspection will include an examination of the major systems of the house, for example, the electrical, plumbing, heating, and structure.

Sometimes further inspections, such as for lead, septic or radon, are appropriate. If so, they should be specified in the contract.

The Title Company

The title company works behind the scenes to make sure that you obtain good title to the house. The title company searches public records to make sure that the person selling you the property legally owns the property and that, when you close, any judgments and liens on the property will be paid by the sellers.

After the closing, the title company issues a policy that states that you own the property. In the event someone challenges your right to ownership, the title company defends you in court. In the event the challenger wins the title company pays up to the coverage of the policy.

Mortgage

If you do not have the cash available to buy the real estate outright or if you choose not to put all that money into the property, you will need a loan. With the exception of a coop, the loan is called a mortgage. In the case of a coop the loan is simply called a coop loan. The mortgage is a secured loan in which the security is the real estate that you have purchased. If you do not pay your mortgage as promised, the lender can foreclose on the loan and take back the property. A mortgage may be issued by a bank or mortgage company or even by the seller of the property. It is best to check with different lenders to find the best rate.

If you purchase a coop, the coop loan is secured by the stock certificate and proprietary lease. Notice is given to the public of the lender's security interest in the coop with a Uniform Commercial Code (UCC) filing with both the State and County in which the coop is located.

If you have good credit, it would best to start by checking with a bank. Start by checking with the bank in which you already have an account. If your credit is not perfect, you may want to check with a mortgage company. The important thing to do is check with several different lenders. Be aware, the real estate agent may want you to use a particular lender. This may or may not be in your best interest. Try to stick to a known bank. Also be aware of lenders that promise unrealistly low rates. To avoid future problems it's best to stick to a loan with a 15 or 30 year fixed rate mortgage. Also, be aware that some lenders will promise to "lock-in" a low rate for 30 or 45 days. Since it usually takes 90 or more days to close the 30 or 45 day "lock-in" will do nothing more than lock you into a lender that will most likely will be raising their rate at closing.

When shopping for a mortgage, ask the lenders for a complete list of all fees and expenses associated with the mortgage. . Also ask whether the loan is a fixed-rate or variable-rate loan. If it is a variable-rate loan, how often the rate change. Also, how the new rate is established and the maximum rate that can be charged. Also ask when the interest rate will be locked in, whether any fees are charged to lock in the rate, how long the rate will be locked in what happens if you can't close within the "lock-in" period. Be sure to get all promises in writing.

There are different type of mortgages, including conventional, FHA, VA, and Sonyma. There are fixed-rate mortgages and different types of variable-rate mortgages. There are balloon mortgages, interest only mortgages, and negative amortization mortgages. Mortgages come in varying lengths, usually for fifteen or thirty years. Some mortgages require a down payment of 3 percent of the sales price, others as much as 20 percent. Learn about these different options and decide which is best for you.

After you apply for a loan, the lender checks your credit history and verifies your employment and other information you provided on your application. Usually about four to six weeks after your application you should have a written mortgage commitment from the lender.

The Typical Purchase

You have found the home of your dreams or at least a home that you would like to own. The first thing you need to do is to come to an oral agreement with the seller concerning the purchase price. If you are working with a real estate agent, the offer should be made through the agent.

Once you and the seller have agreed on the purchase price, it is time for you to retain your lawyer. Under no circumstances should you sign anything or pay any money before you have your attorney's approval. Your attorney will contact the attorney for the seller of the property.

The seller's attorney will then send the proposed contract to your attorney. You and your attorney will meet to review the contract. If the contract meets with both your approval and your attorney's approval, you sign the contract and hand your attorney a check for the deposit. Your attorney sends the contract and deposit check to the seller's attorney. The seller's attorney has his or her client sign the contract and return a fully signed contract to you, and the seller's attorney deposits your check in a special escrow account.

Now it is time to take the fully signed contract to your lender and to make the mortgage application and to order the termite, and if applicable, the engineering and any other needed inspections. If all goes well, approximately four to eight weeks later your lender will issue a mortgage commitment. If all does not go well and you do not receive a mortgage commitment, through no fault of your own, your attorney will cancel the contract and get your deposit back. Please note, that in order to be refunded your down-payment it is essential that your lawyer gives notice of the denial prior to the expiration of the mortgage contingency.

Once you receive your mortgage commitment, your lawyer orders the title searches and survey from a title company. Approximately a month later, everything should be complete and the closing date is set.

Within twenty-four hours prior to the closing, you should visit the property and make sure that it is in the same condition as when you entered into the contract to buy it. On the day of closing, you, your lawyer, the seller, the seller's lawyer, and a representative of the title company will meet at the office of the lawyer for your lender.

If you are buying a coop, the coop's attorney and perhaps a representative from the seller's lender will also be present at the closing, and the closing may take place at the coop's attorney's office. The closing should take from one to three hours. If all goes well, at the end of the closing you will be the owner of a new home. Several months after the closing, you should receive the original recorded deed and title policy.

There are many expenses related to the purchase of a home. If you are getting a mortgage, it will be the biggest source of your expenses. The lender may or may not charge you points. A point is one percent of the loan. Thus, if you have a $100,000 loan, one point would be $1,000. In addition, your lender will charge you other fees--and for example, an application fee, which is typically about $500, and the lender's lawyer fee, which is typically about $600. At the closing, your lender will also collect money for escrow.

Escrow is money set aside for future tax and insurance premium payments. You will also have your own lawyer to pay. For a one or two-family house, condo or coop this should be anywhere from $700 to $2,000. Don't look for the cheapest lawyer. Look for one who comes highly recommended. Remember, this lawyer will be looking out for your interest, in perhaps the biggest purchase of your life. This is not a time to cut corners.

You will need to purchase a hazard insurance policy, which for a typical condo, one-family or two-family house will cost anywhere from $1,000 to $2,000. You will also need a title company to search public records to make sure that you get good title to the property. The title company will also issue a title policy to you and your lender. For a typical condo, one-family or two-family house, the fees you pay to the title company will amount to approximately $2,000 to $3,000.

New York State charges a mortgage tax of 1 3/4 %. Thus, on a mortgage of $100,000, this tax will be a tax $1,750.

In addition to all of these expenses there will be other various expenses such as a fee to record the deed.

The Expenses for a Typical Seller

The greatest expense for the seller with a mortgage is paying off what is still owed on the mortgage. If the seller has a real estate agent involved in the sale, the seller is responsible for paying the real estate agent's fee at the closing. Typically, the fee will be three to six percent of the sale price. The seller is responsible for a transfer fee to New York State of $4 per thousand, and a fee of 1% to New York City. Thus, on the sale of a home costing $100,000 there are taxes of $400 to New York State and $1,000 to New York City. If the sales price of the property is $500,000 or more the New York City Transfer Fee is 1.425 %t instead of 1%. There is an additional $25 fee charged when paying the New York City Transfer Fee. If the property is located outside of New York City--with the exception of Yonkers-- there is only the New York State tax to pay. The Yonkers Transfer Fee is 2.75% of the sales price.

In addition to the above there may be other expenses such as a fee to record a satisfaction of the mortgage.

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Differences between a Coop and a Condo