|
| 1. Why do I need a lawyer to represent me when I am buying real estate? |
|
| Ans. Technically, you are not legally required to have an attorney represent you when you are buying real estate. However, unless you have actual experience with due diligence, contract negotiation and ultimately, the closing transaction, legal representation is a small expense to ensure that your investment is properly handled. |
|
| 2. What is the timeline and what process is involved from an accepted offer to actual closing? |
|
| Ans. The closing process varies greatly depending on many factors, including type of property; financial structures of the transaction; and whether or not third party approval of the purchase is required. However, there are some basic expectations: |
|
| 1. |
Due diligence, including property inspection |
| 2. |
Contract review and negotiation |
| 3. |
Bank approval, if applicable |
| 4. |
Board approval, if applicable |
| 5. |
Closing |
|
|
| On average, a typical purchase that involves financing in today’s economic climate takes approximately 60 days to complete. |
|
| 3. What is “due diligence” and what does it involve? |
|
| Ans. It is the process of taking a closer look at the financial and operational aspects of a cooperative corporation or condominium. It involves reviewing two to three years worth of the building’s financial statements; four to five years worth of Board minutes review; and involves an interview of either the Board or the building’s Managing Agent with current and pointed questions surrounding the building and its future outlook as well as the particulars regarding the unit being purchased. |
|
| 4. What is the difference between a co-op and condo? |
|
| Ans. A cooperative apartment ownership is evidenced by the issuance of the cooperative corporation’s stock certificate denoting the assigned number of shares of the corporation to that particular unit. In addition, a proprietary lease is issued from the corporation to the respective unit owner. As such, a cooperative apartment is not considered “real” property but rather is viewed as a “good” under the law. |
|
| By contrast, a condominium unit ownership is evidenced by the issuance of a deed that is ultimately recorded with the county clerk’s office where the unit is located denoting the percentage of the condominium that the respective apartment comprises. |
|
| Purchasing a cooperative apartment is usually less expensive in terms of pricing and closing costs than a comparable sized condominium, largely due to its classification as a good versus real property. |
|
| 5. What should I anticipate in terms of closing costs? |
|
| Ans. There are many variables in determining closing costs, including whether you are purchasing a cooperative apartment or real property, as well as the state you are buying in. |
|
| In New York, for the purchase of a cooperative apartment less than one million dollars closing costs should average approximately $4,000. If the purchase price is more than one million dollars, then an additional one percent of the purchase price should be factored in. A typical real property purchase, with financing, under one million dollars is approximately four percent of the purchase price. If greater than one million dollars, factor in an additional one percent of purchase price. |
|
| By contrast, New Jersey does not invoke a mortgage tax when acquiring real property and as a result, the real property closing costs are approximately two percent less than in New York, even if the property is being financed.. Purchase prices of real property greater than one million dollars in New Jersey incur a “mansion tax” of one percent of purchase price. |
|
| Closing costs on a typical New Jersey cooperative apartment are comparable to New York. |
|
|
