Frequently Asked Questions - Real Estate

Do I need an attorney to assist me in buying a house? When I bought and sold my last house (which was not in New York State), the title company and bank’s attorney handled everything.

Purchasing a home is usually the largest investment many of us will make. When you are spending and borrowing hundreds of thousands, or even millions of dollars, it is important that you have an independent, knowledgeable and experienced attorney who can advise you in connection with all facets of the transaction, from negotiating the contract to executing all mortgage documents at the closing.

How much of a downpayment do I need to purchase a house?

Generally, sellers expect you to pay 10% of the purchase price as a downpayment upon signing the contracts of sale. However, in some cases, the downpayment can be less.

Should I get an engineering inspection before I sign the contract?

New York still very much adheres to the principle of “buyer beware.” Therefore, we encourage you to obtain an engineering inspection of the house, including a test of the oil tank, if any, and the water. The cost of the inspection is borne by the purchaser whether or not a contract is signed and the deal goes through. Depending on the size of the house, engineering inspections should cost between $500 to $1,500.

What are “closing costs” when purchasing property and how much are they?

A purchaser can generally expect to pay:

An insurance premium (except on co-ops) for title insurance which can range from $1,000 to $10,000 or higher, depending on the purchase price and the amount of your mortgage.

A mortgage recording tax (except on co-op mortgages) 1) In Westchester County (except Yonkers) of 1.05% of amount of the mortgage less $30; 2) In Yonkers of 1.55% of the amount of the mortgage less $30; and 3) In New York City of 1.8% of the amount of the mortgage less $30 unless the mortgage is $500,000 or greater in which case the amount is 1.925% of the amount of the mortgage less $30.

A “mansion tax” of 1% of the full purchase price where the purchase price is $1,000,000 or more.

Title search and recording fees of $500 to $1,000.

Legal fees, which vary in amount, depending upon the circumstances of the transaction.

The cost of a new survey (if necessary) of $750 to $1,500.

Lender fees, including discount points (each point is 1% of the loan amount), bank service charges, application fees and appraisal fees of $1,000 to $1,500 and a bank’s attorney fee generally in the range of $500 to $750.

What are “closing costs” when selling property and how much are they?

A seller can generally expect to pay:

Realtor’s commissions of 4% to 6% of the purchase price

Transfer taxes to:
New York State of $2.00 per $500 of purchase price
Yonkers of 1.5% of the purchase price over $25,000
Mt Vernon of 1% of the purchase price over $100,000
New York City of 1% of the purchase price unless the purchase price is greater than $500,000 in which case the transfer tax is 1.425%

A fee to payoff and record a satisfaction of your mortgage of generally $250 per mortgage

Legal fees that vary in amount, given the circumstances of the transaction.

What if I need the money from the house that I am selling to purchase the house that I am buying?

As is the case with many of us, it is difficult or impossible to carry the expenses of more than one home. There are a number of solutions, including arranging for short term “bridge” financing, or entering into an agreement with your purchaser that allows you to occupy the house you are selling on a short term basis after the closing pending the sale of your current home, or closing on both homes in the same day. We have assisted hundreds of clients in this situation and are experienced in the logistical as well as legal issues involved.

What is title insurance and do I really need it?

Title insurance provides you with insurance coverage, up to the amount of the purchase price (and in some cases, more) in the event that your seller did not own some or all of the property when they sold it to you or if there are liens on the property that were not discovered before the closing. Title insurance is not required, but we strongly recommend it. If you are financing your purchase with a mortgage, your lender will generally require you to obtain title insurance to cover them as well.

I have heard that closings in New York can take hours and are very stressful - is this true?

Although different transactions can pose unique problems which serve to lengthen the closing process, generally, your closing should take no more than one to two hours. Most of this time is spent signing all the necessary mortgage documents. Our firm prepares for the closing well in advance of the designated closing date to assure that there are no unresolved issues at closing and to alleviate any stress.

I live out of state or I am unable to get away from work to go to the closing - do I have to attend?

Although we encourage clients to attend their closings, generally, we can arrange to close the transaction for you if you cannot or do not want to attend, either through a power of attorney or by having you pre-sign the necessary documents.

I inherited my house from my parents and their names are still on the deed - can I still sell the property?

The answer may be a very simple “yes” if you were also on the deed as a joint tenant. If not, however, any time that title to real property is in the name of a deceased individual, and there is no surviving joint tenant, it is generally necessary to probate the decedent’s will or administer their estate so that the property can be transferred to the executor or beneficiary. We have an extensive estate practice and can assist you in all the paperwork necessary to complete the transaction.

Do I have to pay capital gains tax if I sold my house for more than I bought it?

The amount of capital gains tax, if any, depends on many factors, including whether or not the house served as your principal residence (and for how long), and what your “basis” is in the house. We have an extensive tax practice and we can advise you as to the capital gains issues connected with the sale of your home.

PLEASE NOTE THAT THE ABOVE QUESTIONS AND ANSWERS ARE FOR INFORMATIONAL PURPOSES ONLY AND DO NOT CONSTITUTE ADVICE. EVERY SITUATION IS UNIQUE AND IF YOU ARE CONFRONTED WITH AN ELDER LAW ISSUE, WE ENCOURAGE YOU TO MEET WITH US SO THAT WE CAN GIVE YOU ADVICE SPECIFICALLY TAILORED TO YOUR NEEDS.