In New York City and across New York State, purchasing real estate is a legally intricate process that necessitates the involvement of a buyer’s attorney. Unlike in some states where legal representation is optional, in New York, it is customary—and often essential—for both buyers and sellers to retain legal counsel to safeguard their interests and ensure compliance with local laws. This article outlines the step-by-step process of a property purchase in NYC and delineates the critical responsibilities of the buyer’s attorney at each stage.
Step-by-Step Process & Buyer’s Attorney Responsibilities
- Offer and Deal Sheet
The homebuying journey begins when a buyer submits an offer, typically through a real estate agent. Once the seller accepts, the agents prepare a non-binding deal sheet summarizing key terms such as price, contingencies, and closing date. This document is forwarded to both parties’ attorneys to initiate the contract process.
- Contract Review and Negotiation
In New York, the seller’s attorney usually drafts the initial contract of sale. The buyer’s attorney meticulously reviews this contract, ensuring it aligns with the buyer’s interests. They negotiate critical terms, including:
- Purchase price and deposit amount
- Mortgage contingency clauses
- Inspection and repair provisions
- Closing date and possession terms
The buyer’s attorney may also add a rider with additional terms to be negotiated with the seller’s attorney.
Upon finalizing the contract, both parties sign, and the buyer provides a deposit (commonly 10% of the purchase price), which the seller’s attorney holds in escrow.
- Due Diligence and Title Search
After contract execution, the buyer’s attorney conducts thorough due diligence to uncover any potential issues with the property. This includes:
- Ordering a title search to verify clear ownership and identify any liens, encumbrances, or title defects.
- Reviewing building records, including certificates of occupancy and any open violations.
- Examining co-op or condo documents, such as offering plans, financial statements, and board meeting minutes, to assess the building’s financial health and any pending assessments.
The attorney ensures that any issues identified are addressed before closing.
- Financing and Mortgage Commitment
If the purchase involves financing, the buyer’s attorney collaborates with the lender to:
- Review and explain loan documents, including the mortgage agreement and closing disclosures.
- Ensure compliance with mortgage contingency deadlines stipulated in the contract.
- Coordinate the appraisal process and address any issues that may arise.
The attorney’s role is to protect the buyer from unfavorable loan terms and ensure that financing aligns with the contract’s conditions.
- Preparing for Closing
As the closing date approaches, the buyer’s attorney:
- Resolves any outstanding title issues and obtains title insurance to protect against future claims.
- Calculates closing costs, including taxes, fees, and adjustments for utilities or common charges.
- Prepares and reviews closing documents, such as the deed, transfer tax forms, and settlement statements.
The attorney ensures that all documents are accurate and that the buyer is fully informed about the financial aspects of the transaction.
- Closing the Transaction
At the closing, the buyer’s attorney:
- Represents the buyer, ensuring that all documents are properly executed and funds are correctly disbursed.
- Confirms the recording of the deed and mortgage with the appropriate county clerk’s office.
- Provides the buyer with a closing statement, detailing all financial transactions and ensuring transparency.
The attorney’s presence at closing is crucial to address any last-minute issues and to ensure a smooth transfer of ownership…