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Anyone contemplating a real estate transaction in Westchester, Putnam or Rockland County, must be mindful of the serious sums of money involved and the concomitant levels of risk. So, whether you are buying or selling a home - having one dependable and affordable resource to handle all the legal steps and any problems that may arise can save you time, money and a lot of worry.

A home purchase or sale is one of the largest financial transactions most people will ever make.

If these transactions didn’t occur with regularity the real estate attorney, the complexities involved could otherwise be daunting. However, being familiar with standard industry contracts, riders, title questions, etc., the representation of buyers and sellers of real estate is a real pleasure. A key role in making things move a lot smoother in Westchester County real estate transactions is being well prepared prior to the closing.

The following brief overviews illustrate some issues common to most residential real estate closings in Westchester County, New York.

Residential Real Estate Sale/Purchase Closing Overview:
Selection of Closing Date: The date of the closing will generally be agreed upon between the real estate brokers and the buyers and sellers in the early negotiations. Bear in mind, however, that the loan approval process, as well as, potential conflicts with leases or other real estate transactions of the parties, sometimes delay the actual closing.

Disclosures and Inspections: In New York, it is the obligation of the seller to disclose various conditions of their property in what is known as the Property Condition Disclosure Statement. For a variety of reasons, typically sellers are advised to avoid this requirement by providing a “credit” to the buyer in the sum of $500.00 as an adjustment at the closing. It is generally the responsibility of the buyer then to arrange any inspections of the property, including oil tank testing and pest inspections.

Property Appraisal: The buyer’s lender will arrange for the property to be appraised. The ensuing appraisal report provides a detailed description of the property and comparable property values used to ascertain the value of the property for sale. This process involves both an interior and exterior inspection.

Mortgage Loan Approval: It goes without saying that the buyers cannot proceed to closing until they have a mortgage commitment (i.e.; written approval for the loan). These commitments from mortgage lenders have been taking longer and longer these days. Delays in getting a timely commitment or a denial can jeopardize the buyer’s down-payment if a denial comes after the mortgage contingency date without the attorney having obtained an extension of time. Once approved for the loan, the closing process and scheduling is set into motion.

Truth-in-Lending Statement: Shortly after applying for the loan, the lender is required by law to give the buyers a truth-in-lending statement. This statement supplies an estimate of the total cost of the loan, including bank fees, fixed or variable interest rates and terms of repayment.

Title Report: It is customary for the buyer’s attorney to recommend a reputable title company to perform searches to confirm the seller is the legal record owner of the property and that there are no outstanding liens or other judgments against the property, including real estate taxes and special assessments. The results of their search serves as the basis for their insuring against title issues that might arise at a later date.

Homeowner’s Insurance: Buyers will need to obtain homeowners insurance and provide proof of coverage prior the closing. The intended policy must also contain specific language (ordinarily supplied by the lender) listing the lender as a named insured.

Transfer of Utilities: Buyers should contact the utility companies for the property during the weeks ahead of closing for transferring all applicable utilities (gas, electric, etc.) to their name effective on the actual closing date.

Walk Through Inspection: A day or two before the closing, buyers will conduct a final walk-through of the house. This is the buyers last opportunity before taking ownership to ensure everything is in the same condition as when first seen (e.g., that all items to be conveyed are present, appliances are in working order, etc.) In addition, if the contract was contingent upon certain repairs following the home inspection, the buyers should confirm those repairs have been completed. Keep in mind that most representations in the contract of sale do not survive closing. Thus, the buyers should assure themselves of the satisfactory present condition of the property they are about to purchase.

Closing: A typical closing takes about two hour's time and is commonly held at the lender’s office located in the County where the property is situated. All parties are required to bring a photo identification with each of them as well.

Certified Checks: Unless otherwise directed, you will need to have certified checks at closing to cover any differences between the purchase price and the net proceeds of the loan, as well as, to cover some of the closing costs. The amount of these checks will be based upon the Estimated Closing Statement figures provided to the Buyer by their attorney in the days prior to the closing. Note: personal checks are permitted only for a limited amount set forth in the Contract of Sale (typically, no more than $1,000.00).

Seller’s Document Checklist: To help move things along, Sellers should locate the following documents and be prepared to bring them to the closing (or, provide to their attorney ahead of time): plat or survey of the property, seller’s original deed or mortgage agreement, seller’s most recent real estate tax bill, condominium documents if your home is a condominium, and homeowner association rules and fee schedule (if applicable).

Seller’s Pay-Off Letter(s): The sellers are responsible to obtain a payoff letter of all current liens against the property; primarily their existing mortgage lender. The pay-off letter will give the exact amount need to pay-off the existing liens, if any, on the closing date.

Buyer’s Closing Documents: The buyers have only a brief period at closing to review all of the documents before signing. By far, the bulk of these documents are from their own lender. The buyer’s closing attorney can provide explanations for each document. There are no negotiations as to terms at that point. The closing documents are to be signed as provided. No changes may be made to the wording of the lenders loan documents at the closing.

Closing costs: Prior to the closing date the mortgage broker or loan officer should advise the buyer of the approximate amount of closing costs (i.e.; funds needed by buyer at closing in addition to the loan proceeds). My firm customarily provides an "Estimated Closing Statement” to clients in the final days leading up to the closing. This Estimate will be close, but may not include some items which appear in the Final Closing Statement (delivered after Closing); such as owner's title insurance, homeowners dues, adjustments to the per diem pre-paid interest, funds needed for the escrow account and other fees, that are calculated at the closing. Review the Estimated Closing Statement carefully. If you find errors or items you don't understand, bring it up with your real estate agent, attorney or loan officer.

Closing costs are typically paid directly by the home buyer or seller, depending on what type of cost it is. The seller usually pays the transfer tax in Westchester County while the buyer pays recording fees. On occasion, the parties may agree to a different apportionment of costs with the seller paying some of the buyer's closing costs. However, disagreements concerning terms, inclusions, exclusions, price, and repairs should be completed before the Contract of Sale is executed.

When a buyer is stretched for financing, an agreement where the seller may pay closing costs on behalf of the buyer is known as a "seller’s concession.” A seller’s concession assists the buyer to finance their closing costs. Basically, the closing costs are estimated in advance, and that amount is added to the sales price of the house. The seller then pays the closing costs of the buyer with these extra funds. These details would need to be spelled out expressly in the real estate contract and be approved by the lender. However, in difficult economic times, this type of financing may work against the buyer’s qualifying for a higher mortgage loan and the lender may decline the loan entirely.

Example: If a sale price of a particular home is $500,000. Assume that the actual mortgage amount is $450,000 and the estimated closing costs are $12,000. Under these facts, a seller's concession may adjust the figures in the Contract of Sale to a sale price of $512,000 and a mortgage of $462,000. So in essence, the extra $12,000 that the seller earns would be used to cover the buyer's closing costs.

Some mortgage lenders may allow residential real estate buyers to finance their closing costs directly. This is a good way for buyers to reduce their closing cost out-of-pocket expenses. This should be discussed with the broker or lender at the outset of discussions for financing the loan. Of course, the borrower pays for this higher loan amount in terms of principal and interest over a longer period of time.

The key to a successful real estate closing is being informed and prepared. Maintain a list of expected closing costs and compare them to the list provided by your mortgage broker or lender prior to the real estate closing. Understanding the home real estate Closing process will help ensure a smoother transaction.