20 Feb Buying residential property in New York City (Part II)
by Maurizio Gardenal partner, Studio legale internazionale Gardenal & Associati Milano, and Anthony Bruozas, Attorney at Law
Articolo pubblicato su “Diritto 24″, rubrica del Sole24Ore.com, 20 febbraio2012
This second part of this article focuses on the negotiation and purchase of the real estate (the first part: clic here).
When one has found the right property, a “bid” or “offer” is going to be placed, usually through one’s real estate broker (“agent”). Thus, while the property may have a listed price, a prospective purchaser may offer less and see if the seller accepts the offer, counters it, or simply rejects it outright. If the seller provides a counter-offer lower than the listing price but higher than the prospective purchaser’s offer the negotiation process has begun which will eventually lead to a meeting of the minds.
It is worth noting that in New York City most property deals are carried out through brokers or agents who specialise in residential real estate.
In New York, agent fees are usually paid by the seller in the form of a percentage of the selling price. The seller’s agent will split the fees with the buyer’s agent according to the ‘broker listing agreement’.
The buyer’s agent will convey the offer to either the seller’s agent or to the seller directly.
One should not be hesitant about negotiating every aspect regarding the apartment as in the Big Apple most everything is negotiable.
Therefore, it is recommended that one inquire about assessments, fixtures, windows replacements, air conditioners, rugs, floors, curtains, appliances, working fireplaces, dryers along with their working conditions, just to name a few.
Once a meeting of the minds has occurred the parties will memorialize their agreement in a contract.
Every purchase contract sometimes referred to as an “earnest money agreement” or a “residential offer” should include some essential terms and conditions such as:
2) Amount of the down payment (sometimes called “earnest money” or “deposit”);
3) The time-period for which the offer will remain open;
4) The date the sale will be finalized or “closed” and the date they buyer will move in;
5) Which party holds the deposit money (usually referred to as the “escrow agent”) and who will be the closing agent and/or escrow agent for the closing;
6) Items to be included in the purchase price, such as carpeting, lighting, fixtures, appliances and so forth;
7) A legal description of the property;
8) A guarantee that the seller will provide clear title to the home through an abstract of title, certificate of title, or a title insurance policy;
9) A provision that the seller is responsible for paying utility bills, property taxes, insurance and other house- related expenses through the closing date;
10) provisions that requires the return of the purchaser’s deposit if the sale isn’t completed due to lack of financing or some other contingency of the sale;
12) An inspection clause that allows the buyer to have the home inspected by a professional inspector, usually within a few days prior to the closing. This prevision should make the purchase offer contingent on receiving a satisfactory inspection report;
13) Language that states a set date upon which the purchaser can do a walk-through inspection before the closing date to make sure everything is in order according to the stipulations contained within the contract;
14) A provision that requires the seller to pay a certain amount of money for every day beyond the date of occupancy that the house is not available for the buyer to move into (often called a “liquidated damages clause”).
15) A provision that allows the buyer to withdraw from the contract should the governing board of the property deny the buyer’s application.
The transaction is consummated at the closing when the offer is finalized and all the contingencies are fulfilled.
It is quite common and convenient for the party who is unable to go the USA for the closing to be represented at the closing through a power of attorney of an appointed person who will have the right to close the deal on their behalf.
A New York style closing is a “sit down” closing where the parties or their attorneys meet in the physical presence of each other to close a real property or real property-related transaction.
It is necessary to distinguish between two legal instruments in such a procedure. On the one hand, the purchase agreement describes the respective rights and obligations of the parties. On the other hand, the property deeds are legal instruments that are used to assign ownership of real estate rights.
Usually, words used to convey property transfer may be “grant”, “assign”, “convey”, or “warrant”, but they basically all do the same thing, they transfer the interest of the person selling the property to the person buying it.
In the New York County courthouse there are some books where the history of all owners and related matters such as loans and releases of those loans are recorded.
Today, of course, transfers are recorded electronically but all titles are recorded from the day the US patent was issued in those books.
There are two kinds of books: the “Grantor” containing information about the seller and the “Grantee” containing information about the buyer.
If one buyer travels to New York it would be helpful to look up these books to find out the conditions of the real property, the potential loans and any other appropriate investigation related to it. Property documents are also maintained online using the Automated City Register Information System (ACRIS). This is a digital storage and retrieval system for personal and real property-related documents in Manhattan, the Bronx, Brooklyn, and Queens. This online system, however, is not available for Staten Island. ACRIS provides online access to documents and associated data. One can use ACRIS to search for property record indexes and view document images back to 1966. Documents prior to 1966 must still be viewed on microfilm and microfiche at the City Register’s offices in each of the four boroughs except Staten Island which is provided by the Richmond County Clerk’s office.