If you plan on selling your home in New York, you’ll need to know the process and pay close attention to detail. This article address the several steps involved in selling your home.
Selling a home in NY state and making sure that everything flows smoothly requires knowledge and experience. Failure to disclose properly or not drafting the correct paperwork can cause the deal to go sour, and may cause you, the seller, to be put in a disadvantage. A proper real estate attorney NYC will explain to you the entire process of selling a home in NY and what to expect.
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In addition, a real estate attorney NYC will discuss in detail with you who the actual owners of the property are, as reflected on the recent deed, purchase price, down payments, personal property to be excluded from the sale, along with time frames and contingencies of the sale.
A real estate attorney NYC should also advise you about the different ways to list your home and the listing requirements. When consulting with your attorney, you’ll want to make sure the listing agreement addresses the commission that you (the seller) will pay, the type of listing, the duration of the listing, the list price, the property included (or not) in the sale, and the duties and obligations of the seller and real estate agent in regards to the listing.
When it comes to listings, there are five basic types of real estate listing agreements. The first is the exclusive right to sell listing. This is a formal agreement under which a real estate agent has the sole right to sell a specified property, usually within three-twelve months. During this period the seller cannot list the property with any other agent and must pay the agent’s commission even if he or she (and not the agent) finds a buyer. Also called exclusive right to sell.
The second type is the exclusive agency listing. An exclusive agency listing is an agreement between a seller and a real estate firm or agent granting the firm or agent the right to be the only firm or agent to market and sell a property, except the seller retains the right to market and sell the home to a buyer without having to pay a commission to the listing agent.
The third type is the open listing. An open listing lets an owner sell their home by themselves as a FSBO or “For Sale By Owner.” It is a non-exclusive agreement, meaning the owner may execute open listings with more than one real estate broker and pay only the broker who brings an able buyer whose offer is accepted by the owner. An open listing would be ideal if there are a lot of buyers in the marketplace. That’s because an open listing can be negotiated separately with each real estate broker, and the commissions can all be different from each other or identical, whatever can be negotiated. It gives the seller more flexibility, although it can limit the number of buyers who might want to buy the home.
The fourth type is the one-time show listing. A “one-time show” is similar to an open listing in many respects, as it is most often used by real estate agents who are showing a FSBO to one of their clients. The home seller signs the agreement, which identifies the potential buyer and guarantees the agent a commission should that buyer purchase the home. This prevents the buyer and seller from negotiating directly later and trying to avoid paying the agent’s commission.
As with an open listing, agents will not be spending money on marketing your home and it will not be placed listed in multiple places.
The fifth type is the net listing. This is a listing based on the net price the seller will receive if the property is sold. Under a net listing the broker can offer the property for sale at the highest price obtainable to increase the commission. This type of listing is illegal in most states, including New York, so be aware if this type of listing is presented to you.
The next step is that your real estate attorney NYC will draft the real estate contract and send it to the buyer’s attorney for review. Your real estate attorney NYC will do everything they can to ensure that you are protected in the contract. The buyer’s attorney will then discuss the contract with the buyer and may propose changes to the contract. The buyer’s attorney and seller’s attorney will then work together until the contract is mutually agreeable. Once the buyer agrees, they will sign the contract and send it back to the seller’s attorney along with the down payment for the house. Typically, in New York State, the downpayment is for 10% of the purchase price, and the seller’s attorney will deposit this amount into an escrow account.
When deciding upon real estate firms NYC, you’ll want a reputable real estate attorney who is familiar with the process, especially when the seller is contractually bound by the sales contract.
When is a real estate contract binding? Once your real estate attorney NYC receives the fully executed contract from the buyer and the down payment check is received and cleared in the attorney’s escrow account, your real estate attorney NYC will then notify you that you are legally bound to sell your home and have you counter-sign the contract.
The next step in the process of selling a house in NY state is that the buyer’s attorney will perform a title search on your home by ordering a title report. The purpose of the title search is so that the buyer can determine if there are any outstanding liens, judgments, or violations on the property.
If there are, the buyer’s attorney will discuss the results with the seller’s attorney, and the seller, in all likelihood, will be required to make sure that the home is free and clear of any such encumbrances before the sale can move forward.
The next step in selling a house in NY state is that the buyer’s lender will appraise the property. If the buyer is obtaining a mortgage your property will be appraised by a New York property appraiser. Appraisal and a mortgage commitment will be received by the buyer.
The next step in selling a house in NY state is to schedule the real estate closing. Your real estate attorney nyc will need to do several things to prepare for a closing. First, the attorney will review the title report ordered by the buyers’ attorney to see if there are any issues that must be resolved before a closing. These may include liens or violations against the property. Second, your attorney will prepare all of the closing documents, including the deed and transfer tax documents. Third, your attorney will calculate the amounts owed at closing, which may include nyc coop closing costs, new york condo closing costs, and condo closing costs nyc buyer.
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If you had a mortgage, your attorney will request a pay-off letter to determine the amount owed to your lender. Your attorney will also calculate the closing costs that you owe and proceeds owed to you by the buyers. In order to schedule a closing date the buyer’s mortgage broker will need to receive a clear to close from the lender or what’s also called a closing statement or closing statement real estate. In addition, the buyer’s title company will need to issue a clear to close to the buyer’s attorney.
Attend the Closing
Finally, the last step in selling a house in NY is the closing itself, in which both you and your real estate attorney NYC will attend. At the closing, your real estate attorney NYC will review and advise you on the documents that you are signing, such as the deed, transfer tax documents and any other relevant documents. At the end of the closing, you will have sold your house and the buyer will become the new owner, effectively taking and assuming legal ownership. This is the last stage in selling your house as is in NY.
Making Real Estate Disclosures in New York
In addition to counseling the seller about types of real estate listing agreements, the NY real estate attorney will also discuss with the seller about home disclosures. New York law requires you, the seller, to disclose known home defects to the buyer when it comes to selling a house as is in NY. Under today’s law, you, as a New York home seller, could be found liable to a buyer for having failed to disclose certain property conditions, or defects, in the course of the sale.
Under the New York Property Condition Disclosure Act or PCDA, the seller is required to make these disclosures to the buyer or else pay a $500.00 penalty to the buyer at closing. While the PCDA requires you to complete a standardized disclosure statement and deliver it to the buyer before the buyer signs the final purchase contract, in practice, most home sellers in New York opt not to complete the statement and instead pay the credit. However, just because the seller pays the $500.00 credit instead does not mean that the seller is not liable to the buyer for not disclosing under the PCDA. If there is a known defect that is not disclosed by the seller, the seller may still be liable to the buyer for any loss sustained as a result of that non-disclosure.
Types of Disclosures New York Sellers Must Make
Sellers must disclose known housing defects when it comes to selling a house as- is in NY. If the seller passed information about the property to the buyer that the seller actually knew was false, or if the seller omitted material facts about known defects, the seller may be liable to the buyer for damages; but only if the misinformation, or omitted information was material to the buyer’s decision to purchase the property. This may include termites, rat infestation, mold, or significant damage to the floor, walls, or roof. Although the buyer may not request such information, the seller must disclose the information.
These disclosures will be in a NY real estate disclosure form or a standard form disclosure statement, required by the PCDA. They address the following areas:
- General Information: age, ownership, utility surcharges and possession of the property
- Environmental: whether the property is located within a flood plain, wetlands, or agricultural district, near a landfill; whether the property contains asbestos, lead pipes, or fuel storage tanks; whether a radon test has been performed on the property; or whether petroleum products or hazardous or toxic substances are known to have been spilled, leaked, or otherwise released on or from the property
- Structural: water, fire, smoke, or insect damage and the condition of the roof, and
- Mechanical systems and services: utilities, water source and quality, sewers, drainage, flooding.
When reviewing your ny real estate disclosure form in regards to how to sell a house in NY and selling a house as-is in NY, you should discuss the form with a qualified NY real estate attorney. In addition, you’ll also want to discuss with them the different types of real estate listing agreements to determine which ones will be best for you.
Procedure for Completing and Delivering the Disclosure Statement
The seller’s real estate broker, agent, or sales person will provide the seller with a copy of the standardized form disclosure statement. They are also required to share this information with any non-represented buyer. In fact, if they fail to inform you, or the buyer, about the PCDA, they may also be liable for this violation.
The seller completes the disclosure statement by answering the questions and explaining any known defects in detail in the space provided on the form, or on a separate sheet of paper that you may attach. Then, the seller signs the certification located near the bottom of the last page. The seller’s signature means that their answers, and any explanations on or attached to the form, are true and complete to their actual knowledge as of that date.
The completed and signed disclosure statement should be delivered to the buyer before the buyer signs the final purchase contract. A copy of the completed form should be attached to the final, signed purchase contract.
If You Don’t Make the Required Disclosures: Risks and Penalties
According to the PDCA, if the seller does not submit the disclosure statements to the buyer, they have to pay a statutory fine of $500.00 to the buyer. Most NY sellers find that the disclosure statements are too cumbersome and just voluntarily pay the $500.00 in lieu of disclosure. However, the seller can still be liable to the buyer for failure to disclose pursuant to the PDCA.
If you, the seller, are found liable to the buyer for a “willful failure to perform” the requirements of the PCDA, you may be required to pay the buyer’s actual damages caused by the defect.
Federal Law Requiring Lead Disclosure
If you are selling a house built before 1978, you must comply with a federal law called the Residential Lead-Based Paint Hazard Reduction Act of 1992 (U.S. Code § 4852d), also known as Title X. You must:
- disclose all known lead-based paint and hazards in the house
- give buyers a pamphlet prepared by the U.S. Environmental Protection Agency (EPA) called Protect Your Family from Lead in Your Home
- include certain warning language in the contract as well as signed statements from all parties verifying that all requirements were completed
- keep signed acknowledgements for three years as proof of compliance, and
- give buyers a ten-day opportunity to test the house for lead.
As a penalty for failure to comply with Title X requirements, the buyer has the right to sue you for triple the amount of damages actually suffered.
Purchase Agreement in New York
Your real estate attorney NYC and your agent should be familiar with submitting offers and contracting procedures. Under the real estate laws in NY state, a contract for the sale for real property must be in writing; thus a verbal offer creates no binding obligation upon either party. If your offer is accepted, you’ll need to contact a real estate attorney NYC to proceed with the sale. If your offer is rejected, either make a counter-offer or move on to a different buyer. Do not put anything in writing, as this may, unintentionally, create a binding contract. Oftentimes the real estate agent will request that you sign an “offer” or even a “contract.” Do not do so without speaking to a real estate attorney NYC.
What Is Escrow, Closing of Your New York Home
It is customary for the seller’s attorney to prepare the Contract of Sale for selling a house in NY state. The job of the buyer’s attorney is to review the contract in detail and make sure that it is safe to sign for the buyer and make the necessary changes. Once the attorneys have finalized the contract, you and the seller will sign it, and you will send the seller’s attorney a downpayment, which you may lose if you walk away from the deal without a reason contemplated by the contract.
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Your NY real estate attorney will work with you to provide information and documents requested by lenders in connection with your mortgage applications. Third, the buyer’s attorney will calculate the amount that is owed at closing to the seller, the seller’s lender, and the title company, among others.
Your NY real estate attorney will advise you about escrow and the process. Escrow is where the mortgage company establishes an escrow account to pay property tax and insurance during the term of the mortgage.
Finally, your NY real estate attorney will help you close, as discussed above.
At Law Office of Yuriy Moshes, we are experienced and knowledgeable and are one of the top real estate law firms NYC because we keep up-to-date with the NY real estate law blog, NY real estate commission law, and NY real estate law. We represent sellers in the greater New York City area including all its boroughs, including Manhattan, Brooklyn, Queens, the Bronx, and Staten Island) as well as Northern New Jersey, Long Island, and Upstate New York. If you’re selling or purchasing your home, you need to consult with the best real estate law firms NYC.