The real estate market in the Hudson Valley continues to soar as we move into 2022 – and here at McCabe and Mack LLP, we’re not at all surprised! After all, our home region offers robust educational, recreational, cultural, and economic opportunities, rich history, charming communities, and unspoiled beauty; we cannot think of a better place in which to live and work.
With countless people buying and selling properties, we thought it would be a good time to share some answers to frequently asked questions on the topic of real estate transactions. This month, we caught up with McCabe and Mack LLP Partner Richard J. Olson, who has an extensive background in commercial and residential real estate, in addition to his expertise in municipal law, banking and secured lending, land use and environmental law.
A. We ensure that the terms of the deal are reflected correctly in the contract of sale. Verbal agreements not included in the contract are not legally enforceable. Most importantly the attorney will review everything to ensure that there are no title defects affecting the property.
A. First time home buyers should learn as much as possible about the process. You need to know what you can afford. Speak to a mortgage lender to understand the total cost of a purchase. What are the taxes? What are the carrying costs on the property? Home inspections should be included in the process so you know if there are any potential additional costs in the future. If you are selling a home, I suggest that you have a municipal search performed to make sure there are no outstanding issues before you enter into a contract.
A. The purchase offer is exactly that-just an offer which must then be accepted. It usually includes the following: the purchase price, down-payment, whether or not the purchaser will be seeking financing and any contingencies that need to be included in the contract (mortgage, inspections, attorney review, appraisal, etc.). Once the purchase offer is accepted, the parties enter into a formal contract incorporating the items from the purchase offer.
A. You need to have cash on hand, and be ready for surprises. Most short sale or foreclosure properties are AS IS deals with no room for negotiation. By the time the seller is underwater or has lost the property to foreclosure there are usually deferred maintenance issues, which can lead to expensive surprises.
A. Anyone considering a major investment such as a home needs title insurance. A mortgage lender requires title insurance to ensure that its mortgage lien is first in line. Title searches disclose prior mortgages, judgments, tax liens, mechanics liens and insure against loss of title. Searchers are human and if they miss something, the lien would attach to the property so you need title insurance in the event of a subsequent discovery of a lien or defect in the chain of title.
A. Contingencies are negotiated into the contract, the major one being a mortgage contingency. If the buyer has applied and provided information but the lender determines that they will not issue a commitment, the contract would provide that the buyer can withdraw and receive the down payment back. The same holds true for a title defect: if the seller cannot pass a good title, the buyer can withdraw from the contract.
A. As I said above, I would have a seller do a property record search to ensure something doesn’t pop up when they get close to closing. A lot of local municipal building officials are now reading real estate offerings. If you list your house as a 4-bedroom, for example, but the CO (Certificate of Occupancy) is for a 3-bedroom, then that will cause issues if that information comes up later in the deal. Buyers should obtain a pre-approval with a lending institution so they at least know they are “qualified” for the loan they are seeking (just be aware that it still is not a guarantee, since pre-approval doesn’t go through full underwriting).
A. In terms of family transfers, it is still good to have an attorney review the deal – at least from the aspect of title. It is possible for all parties to agree to have one lawyer involved. If the property has been in the family for many years, there could be old mortgage liens of record that were paid but never satisfied. If a lender is involved that outstanding lien will need to be satisfied and that lender may have been sold or gone out of business years before.
If you’re buying or selling a property, reach out to our legal team at McCabe and Mack LLP. Call 845.486.6800 or visit our website, www.mccm.com, to learn more.