Buying or selling a home in New York involves several moving parts, which all culminate in the closing. Whether you’re a first-time buyer or a seasoned seller, understanding the process can help avoid surprises and ensure a smooth transaction. Below are some of the most common questions asked about residential closings.
1. What happens at a closing?
The closing is the final step in the transaction, where ownership officially transfers from the seller to the buyer. At the closing, the parties sign the necessary documents, funds are exchanged, and the deed is recorded with the County Clerk. Once complete, the buyer receives the keys and takes legal possession of the property.
2. Do I need a real estate lawyer for a residential closing?
Yes. In New York, attorneys play a central role in closings. Your lawyer reviews the contract, ensures clear or insurable title, negotiates contract terms, explains obligations, and protects your interests throughout the process. Attempting to close without an attorney can leave buyers and sellers exposed to costly risks.
3. What is an “On or About” Closing Date?
An “on or about” closing date is not an exact date but a target timeframe, typically allowing for a flexible window to close the transaction. This accounts for potential delays in mortgage funding, title clearance, or other requirements. Your attorney will help manage these timelines and protect against unreasonable or unnecessary delays.
4. What representations are sellers required to make pre-closing, and what are their obligations thereafter?
Sellers must disclose certain conditions of the property through required representations. For example, though subject to some exceptions, sellers are required to provide buyers with a Property Condition Disclosure Statement. After closing, sellers may remain liable for breaches of these representations, including those of undisclosed issues that surface later. An attorney ensures these representations are accurate and may negotiate some protection on your behalf through contract negotiation.
5. What are the pros and cons of seller financing?
Pros:
- Can attract more buyers who may not qualify for traditional mortgages.
- Provides sellers with potential interest income.
- May allow for faster closings.
Cons:
- Sellers take on the risk of a buyer’s default on the loan.
- Requires careful drafting of terms and ongoing administration.
- May complicate the sale of your property.
6. Are title searches necessary?
Absolutely. A title search verifies the seller’s legal ownership and uncovers liens, judgments, or restrictions that could affect the buyer. Without a proper title search, buyers risk inheriting legal or financial problems tied to the property.
7. Can I defer taxes with a 1031 Exchange?
Yes, but only under specific conditions. A 1031 Exchange allows sellers to defer capital gains taxes by reinvesting sale proceeds into another qualifying property. Strict deadlines and IRS requirements apply, so legal guidance is critical to avoid losing the tax benefit.
8. Allowing the seller to live in the property post-closing?
Sometimes sellers need more time to move out. In this case, a “Post-Closing Possession Agreement” can be negotiated. It should set clear terms for rent, duration, liability, and security to protect the buyer while giving the seller flexibility.
9. Allowing the buyer to live in the property pre-closing?
This arrangement is less common and riskier. If a buyer takes possession before the closing, issues could arise if the deal falls through. Any agreement must be carefully drafted to protect both parties, address liability, insurance, and what happens if the transaction does not close.
10. What do I need to know about closing costs?
Closing costs vary but typically include attorney’s fees, title insurance, recording fees, transfer taxes, lender fees, and other administrative expenses. Buyers and sellers should budget for these costs in advance, as they can significantly affect the net proceeds or cash needed at closing.
Final Thoughts
Residential closings in New York involve more than just signing papers. They require careful legal and financial planning. Working with an experienced real estate attorney ensures that your rights are protected and that the process goes as smooth as possible.
For guidance tailored to your situation, you may contact Sabrina Rabban, Esq. PLLC, a New York real estate law firm experienced in residential closings and related real estate matters. Fill out the form below or call 516-452-8198 to schedule your free consultation.
We are based in Nassau County and proudly serve clients in communities including Suffolk County, Brooklyn, Queens and Manhattan.