New Home
New HomePoint #1: Making an offer. Making a written offer for a home can create legal liabilities. You will often hear “we need an offer now or you’ll lose the house”. While sometimes that may be true, often it is just a sales technique to get you locked in, so if possible, discuss any offers with us first.
If you truly feel you may lose a great deal, make the offer, but be SURE to add the following language:
and
“Subject to an Engineer’s Inspection” (even if you’re unsure about retaining an engineer)
Point #2: Home inspections. Don’t rely upon the engineer or inspector to find all the problems with the home. Always be present with the engineer during the inspection. Look over the home with the engineer and ask plenty of questions. If you see something that doesn’t look right, point it out and ask the engineer for his opinion.
Once the contract has been signed, the condition of the property at that time of the contract is most often the condition that you have agreed to accept at closing, unless otherwise stated in the contract. The time to negotiate for repairs, or a price reduction to cover repairs, is before the contract is signed.
Point #3: Oil heat and oil tanks. Be sure to tell us if the property you are buying has oil heat, and in particular, if the oil tank is buried in the ground. If the tank is leaking, you can incur significant liability once you own the property, so at the very least, the tank and/or surrounding soil needs to be tested. It is always preferable to work with the seller to have the tank abandoned prior to closing.
Point #4: Certificates of Occupancy. Make sure you tell us about any sheds, pools, decks, porches, garage conversions, finished basements, apartment, dormers, extensions, etc. which may require a Certificate of Occupancy or Completion. Your bank may require these be obtained before setting a closing, so we need to know as soon as possible.
Point #5: Personal property. Know exactly what appliances, ceiling fixtures or other items of personal property are included in (or excluded from) the sale and be sure to bring it to our attention so that we can include them in the contract. If possible, get a copy of the broker’s “listing sheet” which should have an itemization of all the items included, as well as the amount of real estate taxes, lot size, etc.
Point #6: Contract deposit. While you may have heard that a 10% contract deposit is customary, it is not necessary to put down such a large deposit. Most sellers and their attorneys will accept a 5% contract deposit. No interest is earned on the contract deposit, so there is no reason to tie up your money if it is not necessary.
Point #7: Mortgages. If you feel you may have a problem in getting a mortgage, let us know. We may be able to structure the deal so that it is easier to get the mortgage you want, or refer you to a lender that can accommodate your needs.
After making your mortgage application, your lender will send you disclosure statements, and ultimately a commitment letter. Remember, sign NOTHING that we haven’t reviewed. Bring them in and we’ll look everything over for you.
Point #8: Certified checks. The balance of the purchase price, over the amount of your mortgage, will need to be in the form of either a bank or certified check. As soon as we have determined these amounts, and have instructions on whom to make them payable, we will give the information to you so that you can have the checks drawn.
All checks must be made payable directly to the seller, or as the seller otherwise directs. They cannot be made out to you and endorsed to the seller at closing.
If possible, once you’ve agreed upon the terms of the purchase, have us review any offers before signing them. If you feel you must sign them, make sure they are “subject to attorney’s and engineer’s approval”.
If you want an engineer’s inspection, it must be conducted before contracts are prepared, so have an engineer or home inspector ready to go.
The seller’s attorney will prepare the contract and send it to us, often by fax. We will review it with you, have you sign it, and return it to seller’s attorney along with your deposit check. Once the seller signs and returns the contract to us, we will send you a copy which you will bring to your mortgage company.
Apply for your mortgage as soon as possible after the contracts are signed. Feel free to ask us for our recommendations for a mortgage company or bank.
We will order the termite inspection, which is usually conducted within 10–15 days after the contract is signed. If there are termites or other wood destroying insects, and/or damage, the seller has the option of making repairs or canceling the contract, or, as a last resort, you can accept the property “as is”.
You will receive a mortgage commitment usually due within 30–60 days after the contract is signed. If you fail to get a mortgage, the contract deposit will be refunded and the transaction cancelled. Be sure to provide us with a copy of the commitment, or a denial letter, as soon as it is received.
Once you have a commitment, we will order a title report, and if required, a new survey.
Once title is clear, a closing date will be set and you can arrange for your movers. The closing date stated in the contract is only a “target date”, and the actual closing date can vary by as much as a month or more.
Usually, we will not have the final figures from your lender, which we need to calculate the amount of the checks you will need for closing, until the day before the actual closing. We will provide you with these figures, or at least a rough estimate, as soon as they are available.
Be sure to arrange for a walk-through of the property, often with your broker, about 24-48 hours before the closing. Test everything! The appliances, heat and air-conditioning, stove, oven, dishwasher, etc. Once you close, you can no longer make a claim if anything is broken. Let us know when you complete your inspection, and if there are any problems.
Contact your utility companies (LIPA, water, etc.) and your homeowner’s insurance company, and arrange for the start of your new utility services and insurance.
The closing will usually take place in the office of your bank or lender, or their attorney.
The seller may stay in possession of the property after closing (typically 3–5 days), and money is held in escrow to guarantee the condition of the property after they vacate. You will do a second walk-through of the property when the seller vacates, to be certain no damage were caused in the move, and you should call us as soon as possible with the results.
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Copyright by James P. Calamis, Esq., Commack 2005