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NYC Real Estate Law Blog

Monday, April 1, 2013

Steps to a Smoother Transaction

Steven Matz, Esq., Katz and Matz, PC

As you begin to navigate through a NYC condo or coop transaction, think about taking a few steps that are guaranteed to make the journey smoother. Yes, we’ve all heard how the NYC Real Estate Market is a daunting and overwhelming place, but it really doesn’t have to be.  With the guidance of your broker and attorney, by doing a bit of your own “due diligence”, you’ll be better equipped to make educated decisions with the speed that is often required in these transactions. 

If you are selling your home, do a bit of homework, even before listing.  If you are selling a “combined” unit, or have done significant renovations, ascertain if all jobs have been “signed off” by the City.  Many an unsuspecting seller learns that there is an “open construction permit” on record, or that certain paperwork was never submitted, as they’re going to contract with a buyer.  If you discover this, do not panic, but speak candidly with your broker and attorney and they can explain the steps to be taken to remedy the situation – and this can alleviate last minute surprises.  Buyers, and most importantly, lenders may have a difficult time with any open or incomplete permits.  The same goes for ensuring there is a valid and current Certificate of Occupancy for the house or building.  It is easy to do your research on the City’s DOB websites, and again, your broker and attorney will assist

Sellers should also anticipate a buyer’s attorney’s questions.  A good Manhattan real estate attorney is quite likely to ask you to make certain representations…have you had any leaks?  Bed bugs?  Have you been complaining about a noisy neighbor?  Do the appliances all work?  Yes, you may be selling your apartment “as is”, but these issues will invariably rear their heads.  Do what you can ahead of time to mitigate any buyer’s concerns.  If you have had a leak, gather what you have to show it was fully repaired and the area affected repaired.  Bed bugs?  Ensure the exterminators have conducted a full remediation, and so on. 

Buyers, you too can take a few steps to ensure a smoother transaction.  If financing, inquire if banks will lend in the building you’re bidding in before beginning the process.  In this market, it is not so much a buyer’s creditworthiness that is a concern, but rather if a particular bank will issue a mortgage in a particular property.  Owner occupancy, amount of insurance, and money in reserves are all factors that banks look to when making a determination.  Of course, your attorney should do an exhaustive investigation on the coop or condo itself, but it is a good idea to preemptively speak with your mortgage professional before getting too far in the process. 

Speak with your broker about the coop/condo board requirements before signing Contracts.  This is an area where your broker’s expertise is invaluable and will help to manage expectations and see if the building is a “good fit.”   It is also important to remember that closing dates in New York City transactions are rarely “set in stone”.  Indeed, it can be frustrating not knowing when you’ll need the movers, or when to end your lease, or when to lock in a mortgage rate – you may not have a final closing date set until weeks or even months down the road.  Most contracts will have built in flexibility to account for board interviews and potentially lengthy bank underwriting, but remember, the faster you are in submitting loan documents and/or board applications, the more streamlined the entire process can be.  Get organized now. 

Whether buying or selling, if the transaction is not structured “all cash”, the question of whether or not a contract is contingent on financing is likely to arise, and in fact, should be discussed from the onset of an offer.  Naturally, sellers may be reluctant to offer such a contingency (the right of a buyer to cancel the contract and be returned their down payment if they cannot secure financing), and many buyers simply will not proceed without one.  Often solutions can be negotiated, and language crafted to appease both parties to help expedite signed contracts. 

With just a little bit of work before going to contract, or even if you are still just thinking about buying or selling, you can be prepared to easily handle important issues that otherwise may not be discovered until your attorney reveals their importance, and possible problems that have arisen.  Most importantly, whether buying or selling, assemble and align yourself with a top-notch team: Real Estate Broker, Experienced Real Estate Attorney in the location you are transacting, and mortgage professionals; create the support needed to get you closed with ease. 






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