Buying a Home in New York – What You Need to Know
February 18, 2015
Important Information For First-Time Home-Buyers
One of the greatest accomplishments a person can achieve is to own their own home. For most of us, it will be our largest asset and provide shelter and stability to our family. When purchasing a home, it is important to have an experienced real estate attorney that can guide you through the process and ensure the transaction is handled correctly and protects your interests. As a New York real estate attorney, I want to make sure that our community understands a few important points before they begin the process of purchasing a home.
In New York, most real estate contracts are structured so that purchasers are buying the home in an “as is” condition. This means that the purchaser is buying the home in the condition it is currently in and any discovery of a defect in the house, such as a leaky roof, structural flaw or termite infestation, cannot be a basis to cancel the contract. Purchasers should order an inspection of the property by an engineer BEFORE they sign the contract. An engineer’s inspection will cost around $300-$500 depending on the size of the house. If the inspection unveils the need for any major repairs this can be a basis for renegotiating the price of the house.
When you purchase a home, you are also purchasing any debts or liens that may be associated with the property. If a lien is recorded against the property, even for a personal debt in the seller’s name, the lien will continue to stay attached to the property, and the new purchaser will inherit the responsibility for the lien. Therefore, conducting a thorough lien search is necessary and ensuring that any liens that have been discovered are cleared before or at the closing. Most real estate contracts in New York are structured so that the seller provides a home free and clear of any liens at the time of the closing. In practice, this allows for a lien search to be conducted after the signing of the contract and resolved anytime before or at the closing. Generally, the purchase money provided by the buyer at the closing will pay off any liens that are discovered and not resolved before the closing. A check from the buyer to the lien holder will be credited towards the purchase price.
Purchasers should be aware of additional costs due at the closing when making an offer on a home. New York imposes a mortgage recording tax on purchasers that take a bank loan and record a mortgage on the home. The tax varies depending on which county of New York you live in but ranges from 1.8% to 2.0% of the mortgage amount. This tax does not apply to the purchase of co-op apartments, but does apply to condos and private homes. A “mansion tax” of 1.0% of the price of the home is imposed on purchasers when the purchase price is $1,000,000.00 or more. The “mansion tax” applies to co-ops, condos and private homes. Sellers must also pay a 1.0% transfer tax to the City of New York when selling a home in the five boroughs and the purchaser has to make sure the seller pays this tax otherwise they will become responsible.
Purchasing a home can be stressful and confusing. Feel free to contact Ali Najmi for any questions and guidance you may need.