Every real estate deal is unique, and the process may vary depending on the location of the property and the type of property being purchased (i.e., a condominium unit, a cooperative apartment, or a single or multi-dwelling house).  An overview of the general process is as follows:

Step One - The Contract Process

• A buyer’s offer is accepted by the seller.

• A summary of the transaction terms, known as the “deal sheet,” is prepared.

• Depending on the type of property being purchased and the location, the buyer may elect to have a home inspection to check for any structural issues or other hidden defects.

• The buyer may also elect to have their attorney order a title search to be performed to obtain information about the history of prior ownership and whether any liens, judgments, or violations exist on the property.

  • If any defects are uncovered during the home inspection or title search, the buyer may modify the terms of the purchase by seeking a price adjustment or closing costs credit.  

• If purchasing a cooperative apartment (“co-op”) or condominium unit (“condo”), the buyer’s attorney will review documentation and conduct due diligence prior to the signing of the contract of sale.  

• A contract of sale is drafted reflecting the terms of the transaction including the description of the property, purchase price, anticipated closing date and any details about events that must happen prior to closing. Once all terms and conditions of the contract are reviewed and agreed-upon by both parties, the buyer signs the contract of sale and provides a down-payment to be held for safekeeping in escrow by the seller’s attorney until the closing. The seller counter-signs the contract of sale and returns fully-executed copies of the contract to the buyer’s attorney along with written confirmation that the down-payment has been deposited into escrow where it will be held until the closing.  

• Generally residential real estate contracts in New York contain a 72-hour attorney review period that starts when the contract is fully-signed by both parties. During this time, changes can be made to the contract that are agreed-upon by both parties. Either party can walk away during the 72-hour period (if the attorney finds cause).

• If purchasing a co-op or condo, the buyer will need to go through an application process. The real estate broker will generally provide a copy of the application package containing the documentation that will be necessary to submit with the application. The documentation will be similar to that which is submitted to the lender for a mortgage including: financial disclosures, account statements, professional and personal references, W-2s, and tax returns. Letters of recommendation and an additional credit check are also usually required. The application and approval process for a co-op will entail additional steps including an interview with the Board of Directors.  

  • TIP: A buyer should start the application process as soon as the contract of sale is fully-executed and the 72-hour review period has passed.  

• Depending on the type of property being purchased, there are other tests, inspections, and certifications that may need to be performed.

  • Buried oil tank;      

  • Well testing for homes that have buried water well;

  • Flood search (performed through a survey);

  • Certificate of occupancy ensuring that the property can be lived in and complies with local zoning and building code.

• The seller may either provide a disclosure about the condition of the property by answering a questionnaire of information comprised of the following categories: general, environmental, structural, and mechanical systems, or may provide the buyer with a $500 closing credit. The disclosure requirement does not apply to the purchase of condominium units or cooperative apartments in New York.    

• The buyer’s attorney orders a title report to make sure the seller is conveying “clean” title and that there are no liens, violations, or judgments against the property that would impede closing. To the extent any liens, judgments, or other issues are uncovered, the buyer’s attorney will negotiate the resolution of these issues with the seller’s attorney.  

  • Once it is determined that the seller can convey a clean deed, the buyer will be purchasing a Title Insurance Policy at closing, which is a one-time payment established by law that depends on the purchase price. Title insurance protects the insured person on the policy from financial loss related to the title of the property as well as the cost of defending the title in court.

• A survey of the property may be completed to make sure that the legal description in the deed matches the piece of property that the buyer expects to receive. Generally, lenders require a survey of the property as a condition of financing. If recently performed, the survey can be supplied by the seller and may be accepted by the lender. Otherwise, the buyer’s attorney will order a new survey to be completed.    

Step Two - The Financing Process

• A buyer submits a loan application to a lender, referred to as the Uniform Residential Loan Application. 

• Within three business days, the lender provides a Good Faith Estimate (“GFE”), which consists of a breakdown of estimated settlement costs of the loan and purchase. The final costs are likely to deviate from the GFE.  

• The buyer provides the lender a series of personal financial disclosures. The most commonly requested documents are: 

  • Several months of statements from each bank account a buyer/borrower holds.

  • Several months of statements from any outstanding loans, lines of credit, or other liabilities, including documentation of rent payments. 

  • Up to two years of tax returns. 

  • Recent paycheck stubs (typically the last month) and contact information for each buyer/borrower's employer. 

  • Any other disclosures that are material to a buyer/borrower's financial situation. This includes, but is not limited to, marriage licenses, divorce settlements, child support, liens, bankruptcies, or judgments. 

  • An explanation of any credit inquiries or substantiation of any large deposits or cash gifts that are not regular income.

• If a buyer’s loan is approved, the lender issues a Loan Commitment Letter stating its willingness to fund the mortgage provided certain conditions are met.  

• The lender orders an appraisal. If the appraisal comes in lower than the purchase price, a lender can decline to approve the borrower unless a change is made to the purchase price or the size of the down payment. 

• The lender will require the purchase of property hazard insurance to protect its interest against physical damage. A buyer must usually provide proof of coverage and a receipt showing payment in full for the first year of the loan. It should be noted that hazard insurance is different from homeowner’s insurance which typically includes liability protection and hazard insurance.

  • TIP: Most residential real estate contracts in New York are contingent upon financing in which the buyer is provided with a limited amount of time to procure a mortgage loan commitment. This is why it is recommended to get a head start on the mortgage underwriting process even before a contract of sale is signed. A buyer can submit the key documentation for a lender to start the underwriting process (such as pay stubs, W-2 forms) to apply for and obtain a mortgage pre-approval letter. Pre-approval requires the lender to review a buyer’s credit information and assess the buyer’s financial situation. If a buyer is pre-approved, the lender will provide a letter stating the amount they would be willing to lend to the buyer. If the buyer has a pre-approval letter, the seller may have more confidence that the buyer will be approved for a loan large enough to purchase the property.

  • TIP: Because closing dates in New York are not exact and are usually “on or about” dates with a 30-day window (or more depending on the circumstances), it is recommended that a mortgage rate is not locked in until the lender or loan representative has reviewed the contract of sale and understands the flexibility of the “on or about” closing date.  If a rate is locked in too early, the buyer may be subject to extension fees if the closing is delayed. A buyer should find out about extension capability for the loan product as a result of delays that may been countered along the way.

Step Three - The Closing Process

• Provided title is “clean,” and the lender has determined the buyer satisfied all conditions of its Loan Commitment Letter, the lender will issue the “clear to close.” At this time a closing date will be scheduled.

• A Closing Statement is prepared that breaks down how much money the buyer needs to bring to the closing and how much money the seller will get after all expenses are paid and credited. The Closing Statement lists all the debits and credits for the buyer and seller. The buyer’s lender will prepare a final cash figure in the form referred to as a Closing Disclosure (HUD-1 Settlement Form), which outlines the amount the buyer must bring to the closing table in the form of a cashier's check. 

  • It should be noted that if the buyer is financing it is likely that a Closing Statement (and the amount the buyer needs to bring to closing) will only be available shortly before the actual closing date. The Closing Statement breakdown cannot be completed until the lender provides information on the exact amount of the loan that is being funded at the closing – the lender collects the underwriting/processing fee, appraisal fee, bank attorney fee and remaining mortgage interest for the month from the loan amount. So, if your mortgage loan amount is $600,000, the lender may fund $594,629.25, and the buyer is responsible for making up the balance of that amount.

• A final walkthrough will often be performed the day of or right before closing to verify the property is in the same condition it was when the process began. It is recommended that the buyer check all of the appliances and plumbing fixtures and keep an eye out for any damage that was not apparent when the contract was entered into.

• The buyer and seller along with their attorneys and a title agent will attend the closing as well as an attorney for the lender if the buyer has financing. Closings can also be arranged without all parties present by using a power of attorney. At the closing, the buyer and seller’s attorney will explain the documents that each side must sign and the amounts owed. The buyer will execute all closing documents, including settlement statements and final loan documents, and pays the balance of the purchase price (after credits, deposits, and any down payments).

• The last step in the closing process occurs when the new deed, mortgage, and any other necessary instruments are recorded into public record at the County Clerk's Office within the county where the property is located. 

For more information about how The Law Office of Izabell Lemkhen can assist you through the technical nuances of residential real estate transactions in New York State or New York City, CONTACT US TODAY.

One of the things that makes the New York City real estate market unique is the availability of different types of housing options, including condominium units (“condo”) and cooperative apartments (“co-op”). Co-ops are more common in New York City than condos, but most new construction buildings are condos.

When you buy a condo unit, you own an individual parcel of real property, like a house or a town house. The condo building is divided into individual condo units and common areas. The buyer of a condo receives a deed at the closing. A condo owner owns its apartment along with an undivided interest in the common area and is responsible for paying real estate taxes and its share of common charges for the expenses to maintain and operate the common areas. Unlike co-ops, there is no Board approval or interview process for prospective buyers of a condo unit. Condo units can generally be subleased giving owners greater flexibility. While condo units are generally more expensive than co-ops, common charges are comparably lower than maintenance fees for co-ops. Condo units can be sold at will and do not require any Board approval.

Co-ops are owned by an apartment corporation and owners of co-ops are shareholders. When you buy a co-op, you own shares in the corporation that is your apartment building. The size of your share depends on the size of your apartment; buying the shares allows you to occupy a unit in the co-op building. The buyer of a co-op receives a proprietary lease. All prospective buyers of a co-op must be approved by the co-op’s Board of Directors. The Board approval process is arduous requiring prospective buyers to submit extensive information regarding finances, employment, and personal background and to appear for an interview. While co-ops are generally less expensive than condo units, the maintenance fees (which cover heat, hot water, insurance, staff salaries, and real estate taxes) are higher than condo units. Maintenance fees are usually dictated by the number of shares owned. Co-ops also have less flexibility than condo units. Sub-leasing a co-op is subject to Board approval and is usually significantly limited or entirely prohibited. The sale of a co-op also requires Board approval.  

For more information about how The Law Office of Izabell Lemkhen can help guide you through your purchase or sale transaction for a co-op or condo unit, CONTACT US TODAY.

Buyers and sellers of real estate often think that a paying an attorney to represent them through the transaction process is just another added cost without much value-add. However, attorneys play a significant role in identifying and resolving the many obstacles that may delay, or even worse, entirely impede the closing of your transaction. In addition to tackling contractual disputes and/or legal issues that may arise during the process, real estate attorneys protect buyers and sellers by doing the following:

• If purchasing a condo or co-op, thoroughly reviewing and analyzing any and all documents pertaining to your transaction and obtaining information to ensure that you are fully-informed about the unit, the building, and are aware of any potential issues or red flags prior to the signing of the contract of sale (documents include, but are not limited to, the Offering Plan, Bylaws, Financials of the Home Owners Association, minutes of Board meetings, information about whether any upcoming projects or renovations are planned, whether there are any special assessments);

• Negotiating the contract of sale to ensure that the terms, conditions, and provisions are favorable and include adequate protections if issues with regard to financing or with respect to the title arise;

• Ensuring “clean” title and making sure there are no liens, judgments, and/or violations, and to the extent any issues with title are uncovered, resolving these issues prior to closing;

• Negotiating repairs, price adjustments, or credits if a home inspection report reveals any defects or issues with the property;

• Ensuring that specific disclosures required by law are complied with;

• Calculating the amounts owed at closing and ensuring that each party pays the appropriate fees;

• Reviewing and explaining any and all documents that will signed at the closing.

For more information about how The Law Office of Izabell Lemkhen can protect your interests in the purchase or sale of property, CONTACT US TODAY.

• Corporation

  • S-Corporation

  • C-Corporation

• Limited Liability Company (“LLC”)

• General Partnership

• Limited Partnership

• Sole Proprietorship

For more information about business entity options and how The Law Office of Izabell Lemkhen can guide you through the business entity formation process, CONTACT US TODAY.

An LLC is an unincorporated business organization that is a hybrid of a corporation and a partnership combining corporation-style limited liability and partnership-style flexibility. The owners of an LLC are called members. A member of an LLC can be an individual, a partnership, a corporation, or another legal entity. An LLC can be formed for any lawful business purpose. Members of a domestic LLC can elect how to be classified for federal tax purposes.  

For more information about how The Law Office of Izabell Lemkhen can help you decide if an LLC is an appropriate entity for your business, CONTACT US TODAY.

Generally, the steps to form an LLC in New York are as follows:

• Select a unique, distinguishable name for the LLC in compliance with relevant sections of the New York State Limited Liability Company Law;

• Draft and sign Articles of Organization for the LLC (which acts as a charter and sets forth basic information about the company);

• File Articles of Organization with the appropriate government agency;

• Draft and sign an Operating Agreement for the LLC (which sets forth information about the governance of the company);

• Satisfy New York’s publication requirement within 120 days of the filing of the Articles of Organization;

  • Notice of the formation of the LLC must be published once a week for 6 consecutive weeks in two newspapers (one daily newspaper and one weekly newspaper in the county where the LLC is located)

• Submit a certificate of publication with affidavits from the newspapers in which notice was published to New York Department of State.

For more information about how The Law Office of Izabell Lemkhen can help guide you through the formation of an LLC, CONTACT US TODAY.