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Real Estate Closings

THE FIRM

Samuel W. Miller, Esq., is a sole practitioner specializing in real estate law, landlord and tenant law, and real property tax reductions. Mr. Miller’s office is located in Lynbrook, New York.

Real Estate

Samuel W. Miller, Esq. concentrates in real estate contracts and closings with a particular emphasis on residential real estate, comprised primarily of single family homes, cooperative apartments and condominium units. Mr. Miller also conducts real estate closings for commercial properties, and prepares both residential and commercial leases for apartments, single family homes, offices, and retail stores.

Residential Real Estate

The following is a brief description of the procedures involved with the purchase and sale of residential real estate, specifically a single family home.

Binder

A binder prepared by a real estate broker or seller has the potential to be interpreted as a binding legal contract if it contains the essential terms and conditions of the transaction, which would include the purchase price, down payment amount, mortgage loan amount, and closing date.

Engineer’s Report

An engineer’s report is important to obtain prior to entering into a contract for the purchase of the home because the inspection report will describe the existing condition of the plumbing, heating, electrical and air-conditioning systems, the roof and all appliances. Repairs to or replacement of the foregoing items may be disclosed. In addition, hazardous conditions such as the presence of asbestos, lead paint or leaking oil tanks may be found. Based upon the results of the engineer’s report, the purchaser may be able to negotiate a reduction in the purchase price or may decide not to purchase the home.

Mortgage Financing

Purchasers should retain the services of a mortgage loan officer prior to entering into a contract for the purchase of a home. A purchaser should obtain a pre-approval letter from the lender which preliminarily establishes the ability of the purchaser to obtain financing. The mortgage loan officer will be able to explain the various options to a borrower such as the following considerations:

  • The duration of the loan (15 or 30 years);
  • Whether the interest rate will be fixed or adjustable;
  • The number of points being charged by the lending institution;
  • Application and closing fees; and
  • An escrow account for payment of real estate taxes and homeowner’s insurance.

Closing Expenses

Generally, a purchaser will be required to pay approximately 5% of the purchase price in closing costs. The following is a summary of the anticipated closing expenses for a purchaser, based upon a purchase price of $250,000.00 and a mortgage loan of $200,000:

1. Fee title insurance premium: $1,300.00
2. Mortgage title insurance premium: 300.00
3. Municipal department searches: 300.00
4. Mortgage recording tax in Nassau or Suffolk: 1,500.00
5. Mortgage recording tax in New York City: 3,500.00
6. New survey or survey inspection: 60.00-450.00
7. Recording fees for deed and mortgage: 240.00
8. Policy endorsements and bankruptcy searches: 150.00
9. Real estate tax escrow: 2,500.00
10. Homeowner’s insurance premium: 900.00
11. Prepaid interest: 400.00
12. Points: 2,000.00
13. Bank’s attorney’s fee: 550.00
14. Mortgage application fee, appraisal and credit check: 400.00
15. Fuel oil adjustment: 300.00
16. Attorney’s fee: 1,250.00
TOTAL CLOSING COSTS: $14,950.00 (NASSAU OR SUFFOLK)
TOTAL CLOSING COSTS: $17,450.00 (NEW YORK CITY)

A seller is required to pay the following closing costs based upon the transaction described above:

1. State transfer tax: $1,000.00
2. Real estate broker’s commission: 12,500.00
3. New York City transfer tax: 2,500.00
4. Pick up and recording fees for satisfaction of existing mortgage: 200.00
5. Attorney’s fee: 1,250.00
TOTAL CLOSING COSTS: $14,950.00 (NASSAU OR SUFFOLK)
TOTAL CLOSING COSTS: $17,450.00 (NEW YORK CITY)

Contract of Sale

Once the seller and purchaser have agreed upon the terms and conditions of the sale, and the purchaser has obtained a satisfactory engineer’s report, the seller’s attorney prepares the Contract of Sale. The purchaser’s attorney then reviews the contract and negotiates amendments to the contract with the seller’s attorney. The Contract will generally provide that the purchaser must pay a down payment in the sum of 10% of the purchase price, to be held in the seller’s attorney’s escrow account until closing. In addition, the purchaser will be given 45 days to obtain a commitment from a lending institution for a mortgage loan. The contract will also provide the purchaser with the opportunity to obtain a termite inspection to ascertain whether or not the premises are infested with termites or wood destroying insects, and damaged as a result of such infestation.

Title Insurance

The attorney for the purchaser generally orders a title search for the property after a written commitment is received for a mortgage loan. The purpose of a title search is to confirm that the seller actually does hold title to the property and to disclose the existing mortgages, liens and judgments which must be satisfied by the seller. In addition, searches will be made of the town’s housing and building records to disclose the existing certificates of occupancy for the structure and whether or not there are any violations of the town’s codes and ordinances. The purchaser will be required to purchase title insurance to insure his ownership interest in the property and a separate policy to insure the lending institution in the event that there was an error in the title search which leads to problems with the title.

Closing

After the lender’s attorney has reviewed the title search and ensured that there are no title defects which would prevent the issuance of a title insurance policy acceptable to the bank, a closing can be scheduled with the attorneys for the bank, the seller, the purchaser and the title company to be held at the office of the bank’s attorney. The purchaser’s attorney will inform the purchaser of the amounts of the required bank or certified checks which must be brought to the closing. The purchaser will also be required to obtain a certificate of homeowner’s insurance insuring the bank as mortgagee and a receipt evidencing that the first year’s insurance premium has been paid. It is important for the purchaser to inspect the house immediately prior to closing to ensure that all required items are in working order, as set forth in the contract.

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