CLOSINGS

New York has traditionally used lawyers at closings. Many states use escrow agents who are often the title insurance agents. In New York, the seller’s attorney prepares the closing papers, except the note and mortgage which the buyer’s or bank’s attorney prepares.

The seller’s papers include the deed, transfer tax return (New York State levies a tax of $4 per $1000.00 of sales price), and transfer report (tells the assessor about the buyer and purchase price). Additional papers may include a bill of sale (for personal property, usually appliances and other non-fixtures), smoke alarm and carbon monoxide detector affidavit (required for single family dwellings) and certificate of non-foreign status (so the buyer doesn’t have to withhold the foreign seller’s federal capital gains tax.)

The seller’s attorney will obtain an updated abstract of title and five (5) year tax search, usually from a title abstractor at the County Clerk’s office. The seller’s attorney will also prepare a statement of sale with credits for taxes paid, down payment and fuel. She/he will also get a payoff statement from any mortgage holder.

A sophisticated seller may be able to do this without a lawyer but that is rare. The buyer will need a lawyer to review the title abstract and guarantee that the title is good. A commercial lender normally requires the borrower to purchase a mortgage title policy and pay for the bank’s attorney to prepare the lender’s closing paperwork. The buyer’s own attorney is an additional expense.

Title insurance is a single premium policy that insures title and defends challenges thereto. It is rarely needed but worth more than its weight in gold if title is challenged. Owner title policies, with or without market value rider, are also available.

Finally, buyers should usually, in my opinion, obtain a survey. This will tell the buyer exactly where the land boundaries are and whether any structures encroach on the land or onto the neighbor’s. It is well worth the extra expense.

E-mail Paul Herrmann: pauljosephherrmann@yahoo.com