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Real Estate Articles



Real Estate Q & A Series (1)

Q:  What is the differences between Co-op and Condo?

A: The main difference between Co-op and Condo is the matter of ownership.

Owning a condo is like having an ownership over a house. You will receive a deed of the property after closing and completion of registration.

As for owning a Co-op, your ownership is not the real property itself but a portion of the shares of the real estate company that owns the entire apartment. You will receive a stock certificate and a proprietary lease at the closing date.

All leasing and transactions of the Co-cop are subject to the permission of the Board of Directors, but this rule does not apply to Condos.

Whether you own a Condo or a Co-op, you have to pay a monthly fee which may refer to “Monthly Maintenance” in Co-ops, and “Common Charges” in Condos.

Monthly Maintenance fee normally include Co-op employees’ wages, mortgage, and real estate taxes, whereas these features also don’t apply to Common Charges.

Monthly Maintenance is tax deductible, such amount will be decided upon the total amount of real estate taxes and mortgage payments made by the Co-op. All owners will receive relevant tax documents by the end of each annual tax day.

 

Real Estate Q & A Series (2)

Q1: Not a while ago, I signed a House Purchase Agreement. Immediately, I applied for a loan and paid the application fees. Absence my knowledge, the seller failed to sign the Agreement. Does this constitute a breach of contract? Can I ask the seller to reimburse my loan application fee?

A1: The first issue to this question is: whether a contract was legally formed.

A House Purchase Agreement            will not be binding until the buyer signs the contract, sends it to the seller along with the down-payment (normally 10% of the purchase price), and signed by the seller. In this case, because the seller hasn’t signed the Agreement, there is no binding contract, therefore, the seller is not obligated to perform the contract and not responsible to reimburse you for your loan application.

Q2: Recently I signed a House Purchase Agreement and mailed the seller the down-payment. Due to my own fault, I failed to maintain sufficient balance in my account and the check bounced. If then  the seller send me back the contract bearing his/her signature, does he/she still have the right to terminate the Agreement?

A2: The answer to this question really depends on the terms of the Agreement. Normally, the seller’s attorney will put in a term in the Agreement saying that the seller has the right to terminate the Agreement if the down-payment check bounces. However, taking into account that most of this situations occur by mistake, thus sellers normally provide buyers a second chance to fulfill the down-payment provision.

Sometimes extra processing fees will be applicable for the additional work provided by the seller’s attorney, hence we strongly advise buyers to check their accounts and make sure there is sufficient funds before writing a check.

 

Real Estate Q & A Series (3)

Q1:  I found a house and did an inspection, does the seller have to fix all the items listed on the inspection report?

A1: Housing Inspections are meant to help buyers have a whole grasp of the condition and situation of the house so that buyers may make more effective bargains with seller.

Normally sellers are willing to correct the following problems: (1) leaks, (2) termites, (3) asbestos.

If the seller agrees to make such repairs, the buyer should add a term to the House Purchase Agreement clearly stating that the seller agrees to complete all repairs before the closing date. Asbestos and termite problems can only be fixed by professionals, and normally a 1 year warranty shall be provided for termite problems.

All other house problems can be dealt with under mutual agreement between the parties, and whether the seller will correct them really depends on the market ( whether it’s a buyer’s market or seller’s market), purchase price (over priced or not), and the negotiation skills of the parties.

There is no law that clearly addresses this matter.

Q2: What is a “Property Condition Disclosure Statement”? Can I ask the seller to proffer a Property Condition Disclosure Statement?

A2: According to the New York State Property Condition Disclosure Act, the seller must provide a Property Condition Disclosure Statement along with the Agreement. Such Statement must contain basic information of how long the seller owns the building, the date when it was built, whether there were easements before, whether oil containers were placed on the premises, leakage and decay inspections, termite problems and so on, a total of 48 questions that are required to be answered.

Sellers rarely provide these Statements because they either don’t want to result in buyers declining the offer or to bear any responsibility on providing wrongful or misleading information.

Taking into account of the said above, the law provides sellers an alternative, which is to provide a $500 discount upon closing.

This $500 discount is to compensate the buyer for conducting his/her own inspection and fixing the premises. Once seller has offered the discount, buyer shall not request such Statement.

 

Real Estate Q & A Series (4)

Q: Why do we have to conduct a title search before buying a house? Does this also apply to buying condos and co-ops?

A: For most people, a house is the most important investment of the household. When you purchase a house, you’re not just buying a building and a parcel of land, but actually purchasing the title to this property: the right to live and use.

Therefore, once the Purchase Agreement is signed, the buyer will need to find a good Title Company to make a thorough investigation to determine whether the property is marketable. The Title Company will carefully examine all previous conveyances to see if all of such are in compliance of the law (unbroken chain of title). The Title Company’s investigation generally includes unpaid loans, uncleared liens, and court judgments. There will also be a certificate of occupancy check.

The buyer may negotiate with the seller if any of the above are questionable, and if seller is unable or incapable of correcting the problems, buyer may cancel the Agreement and retrieve the down-payment along with title search fees.

Title search generally contain many other items, such as violations, government records, any modifications of the structure, and whether the parties have declared bankruptcy. Real property conveyance taxes and water, electricity bills will also be reflected on the record. Upon closing, Title Insurance can be provided through insurance companies to insure the accuracy of such records provided by the Title Company.

As for purchasing Condos, since the buyer is buying a unit of the property, therefore it is necessary to conduct a thorough title search. Such rule does not apply to Co-ops because no real property ownership is involved, however, Title Search Companies can still run a lien search (which includes  UCC1 record) to check and see if seller has used the Co-op as collateral to obtain any loans or so on.

 

Real Estate Q & A Series (5)

Q1: I’ve recently purchased a Co-op, and the contract says I must obtain a loan from the bank within 45 days. Just before closing, the bank agent informed me that my loan will be revoked unless I can provide documentation to prove I am either a US Citizen or a Permanent Resident. If the bank revokes my loan, do I have the right to terminate this contract and get my down-payment back?

A1: The key issue to this questions depend upon the terms of the Agreement. If the Agreement says that the buyer will still have to close whether or not the land was denied due to any reasons, then the buyer shall not unilaterally terminate the Agreement and retrieve the down-payment without obtaining the seller’s consent.

If the Agreement says that the buyer was not at fault to fail to obtain the loan, then buyer shall have the right to terminate the Agreement and retrieve the down-payment Under such situations, buyer has to prove that the bank’s denial was not the buyer’s fault.

Q2:What is Title Insurance? What type of real estate transactions require Title Insurance?

A2: Title Insurance is an insurance policy purchased by the Title Company. The purpose of such is to insures that the title of the real estate is legal, marketable, there’s an unbroken chain of title, the title won’t be affected by any court judgments, and that the seller did not default in any governmental taxes. Either one of the above occurs, the insurance company will provide full coverage. Every type of house including Condos all require title insurance.

The insurance is purchased with 1 time payment, and the premium will be determined by the sale price of the house.


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