Buying a house in the Empire State.


Get a Home Inspection prior to entering a Contract of Sale:
Now that you’ve found the home that you want to buy, you need to engage the services of a home inspector. This is to be done before entering into a contract of sale. Unless you know whose services you would like to engage, ask your realtor for a recommendation or simply conduct an internet search for a local inspector. The inspector will prepare a report summarizing his findings about the building, such as structural condition, roof, basement, plumbing and electrical systems. Consider being present for the inspection. Have a termite/wood boring insect inspection as well. In certain areas, a radon inspection is performed. Ask your inspector if a radon inspection is necessary. Once you receive the report, forward it to your attorney. Discuss with your attorney the repairs you wish the seller to make. Your attorney should include the desired repairs in the contract of sale.

Contract of Sale:
The seller’s attorney will send the proposed contract of sale to your attorney. Review the terms of the contract with your attorney. Let your attorney know if any terms are unacceptable and any terms you would like added. Expect to sign three to four copies of the contract. In addition to the contract, you will need to draft a contract deposit check to show the seller that you are serious about purchasing the property. The deposit is typically five to ten percent of the sale price, although it can be more or less than that. It will be whatever is negotiated. Understand that if you materially default on your contractual obligations under the contract, you could forfeit your deposit. It is for this reason that sellers always want as much of a contract deposit as they can get and why buyers want to put down on contract as little as possible. Your attorney will then send the signed contracts and contract deposit to the seller’s attorney.

The seller’s attorney will then review the contract with his client. If all is acceptable, the seller will sign the copies of the contract that you have already signed. You are now “in contract” or “under contract.” The seller is now contractually obligated to sell the home to the buyer and the buyer is contractually obligated to buy the home from the seller. The seller’s attorney will send one or two contracts back to the buyer’s attorney. The seller’s attorney will then deposit the contract deposit into his attorney trust account. That money will remain there until the closing.

Obtaining a Mortgage Commitment:
Assuming that as the buyer you do not have the funds to buy the property with cash you have on hand, you will seek to obtain mortgage funds from a lender. Of all the things that you must do in the home purchase process, this is perhaps the most important obligation you must fulfill as a buyer. Intentionally failing to submit to the mortgage process is a material breach of the contract and you risk losing part or all of your contract deposit. A lender will request financial records from you such as tax returns and other financial records. You may either approach a bank or use the services of a mortgage broker to apply for a purchase money funds. This process can take 45 days or more. Be patient. Once a lender has agreed to provide you with mortgage funds, you will be issued a mortgage commitment. A mortgage commitment is a promise from a lender to provide you with a certain amount of money specifically to purchase the home that you are in contract to purchase, at a certain interest rate over a given period of time, typically somewhere between 15 and 30 years. Once you receive the mortgage commitment, you must send a copy to your attorney without delay. Your attorney will then forward it to the seller’s attorney. You are contractually obligated to send the commitment to the seller’s attorney. It lets the seller know that they have a real buyer, and this transaction is moving toward conclusion.

Order a Title Report:
Your attorney will order a title report from a title insurance company or a title abstract company. The title company will perform research on the property to determine who owns the property and whether there are any judgments or liens that need to be paid off in order for the seller to transfer the property to you free and clear of these items. These items are compiled into a “title report.” Your attorney will go over the findings of the title report with you. Once these issues are addressed by the seller, any judgments and other items against the parties are cleared, and the title insurance premium is paid by you, the title company will issue title insurance for the property at the closing insuring clear title to you.

Homeowner’s Insurance:
Often overlooked until the last minute is securing homeowner’s Insurance. It is also known as fire insurance. Your lender will require it before they authorize any funds released.

The Closing:
The moment you’ve been waiting patiently for several months has arrived. Make sure you bring a pen, preferably black, and your valid unexpired driver’s license. At the closing will be you, your attorney, the seller, and their attorney. Also present will be the title closer and the attorney for the lender. The realtors involved in the transaction are usually present as well. The title closer will make copies of the drivers’ licenses of the parties, collect the title insurance premiums and other title fees, including the seller’s transfer taxes. The closer also collects the transfer documents such as the deed, transfer tax documents, and affidavits. The closer typically notarizes any document that is sworn to by a party at the closing.

Once the mortgage documents are signed and the lender’s attorney is authorized by the lender to disburse the mortgage money, the funds due to the seller are given to the seller in the form of a bank check or wire, minus the seller’s closing costs. In exchange, the seller gives the buyer a deed transferring the ownership of the property to the buyer. The original deed is taken by the title closer to be recorded in the Office of the County Clerk where the property is located. Upon recordation, the recorded, original deed is then returned to your attorney or you. The transaction is closed, and you now own the property.