Purchase of Residential Property
Often, residential real estate transactions occur with the help of a real estate agent. However, a real estate agent cannot answer the many legal questions that may come up for a buyer during the purchase of residential property. For many buyers, the purchase of a home is the most expensive transaction into which they ever enter. If you need assistance with the purchase of residential property, Queens real estate lawyer Shane D. Scott may be able to help.The Purchase of Residential Property
Usually, a buyer’s offer to purchase residential property is made by completing a one-page offer form that a listing broker provides. As a buyer, you do not need to make an earnest money deposit or sign a form contract when you make an offer to a seller in New York. The seller can accept your offer or present a counteroffer, which you can accept or decline. Sellers often communicate their acceptance orally, rather than in writing.
When you make an offer to purchase residential property in New York, and the seller accepts, both parties still have the freedom to walk away. Only after you have signed a formal contract are you “in contract” with the seller and legally obligated to close the purchase.
However, various steps should be taken if the seller has accepted your offer. For example, you should arrange for a home inspector to inspect the home and identify issues that need to be repaired or resolved. If there are issues, they can be addressed in the contract. If the purchase involves a condo or cooperative, it may be necessary to go through the building’s financial statements and other records prior to executing the contract.The Purchase Agreement
The seller’s attorney usually prepares the first draft of the contract, but it is important to have your own attorney negotiate contingencies and other aspects of the purchase, as well as suggesting changes to the contract to make its terms more favorable for you. The final contract should set forth the terms of the purchase, including a property description, the purchase price, any contingencies, and the closing date.
Contingencies are conditions whereupon a deal can be canceled without penalty to either the buyer or the seller. For example, there may be a mortgage contingency. With a mortgage contingency, you can cancel the contract without consequence if you are unable to secure a mortgage. For another example, there may be an inspection contingency whereby the purchase will go forward only upon a satisfactory inspection by your inspectors, or if the seller makes certain repairs to known issues. There may be cancellation rights in connection with termites, engineering issues, or title issues.
Once both the seller and the buyer have executed the contract, neither can abandon the sale without being in breach of contract. If you decide not to buy the home after the contract is signed, it will be necessary to try to convince the seller to cancel the contract and refund the down payment. If you cannot convince them to cancel the contract, the seller may be able to keep the down payment as liquidated damages when you walk away.
If a contract includes contingencies, it is wise to look at whether one of these contingencies has been met to prevent the possibility of the seller keeping the down payment.Down Payment
Once a contract is signed, a buyer must make a down payment. Usually, this is 10% of the purchase price. The down payment amount is deducted from the purchase price, with the balance due upon closing. The down payment is deposited in a non-interest-bearing attorney escrow account.Escrow
There are several things that buyers must do during escrow. Among other things, it is vital to conduct a title search. A title search will reveal whether there are any outstanding liens or encumbrances on the property that the seller needs to clear up. Additionally, mortgage financing is usually obtained during escrow.Closing
If everything goes well, the closing takes place. At the closing, title to the home will be transferred to you. The balance of the purchase price must be paid. If a mortgage has been secured, the mortgage lender may require you to make another down payment at the closing. The lender pays the remainder of the purchase price.Contact a Property Transaction Lawyer in Queens
If you are interested in a purchase of residential property in Queens, you should consult Shane D. Scott. He can handle the complexities of the process on your behalf. Call us at (800) 230-0744 or complete our online form.