Last month, I participated in an exciting continuing education course for brokers at the Real Estate Board of New York (REBNY). It was set up as three mock closings: one for cooperatives, one for condominiums and lastly, one for townhouses. I played the part of the purchaser in each and several of my industry peers played sellers, attorneys, closing agents and brokers. It was incredibly fun and funny as we covered many of the issues that can go terribly wrong at a closing, how to prevent them and also how to remedy each problem case by case.
It was such an impactful course that I wanted to share with you the lessons learned. Beyond the people and basic documents involved in a closing, there are some minutiae you should look out for as it can delay or postpone your ability to close as scheduled.
I will cover the three different closing outlines in a three-part entry over the next few days to help prepare you for the closing table.
PART I: Condominiums
- ACRIS Document: It is pertinent that the purchaser have pre-registered transfer tax documents on ACRIS transfer tax forms for a condo closing. This is how your purchase is filed with the city.
- Loan Payoff/Line of Credit: The seller’s attorney must order payoff letters for all loans and lines of credit. These letters state that there is a freeze on the loans or lines of credit the day of closing thus giving you the set payoff figures for which your bank checks are cut.
- Wavier of Right of First Refusal/Common Charge Letter: The wavier of right of first refusal must come for the condo board stating the right is waived and they approve the sale – it is the only way to close. The common charge letter states that the CC’s are paid at least up to the closing date. If they have not been paid and the letter is not up to date, money may need to be left in escrow until the issue is cleared.
- Unpaid Real Estate Taxes: It states in the contract that the taxes must be paid prior to closing. It is pertinent that you confirm the taxes are paid and there are no penalties prior to closing. It is the seller’s responsibility to pay them.
- Work Permits: Check with the DOB and make sure there are no open work permits registered to the apartment. Most title companies will not allow a closing unless all permits are closed.
- Broom Cleaning: As a seller, make sure the apartment is cleaned before someone does a final walk through. It helps move the process along.
- Walk Through: Try to do the walk through the day before so any issues that may arise can be addressed prior to arriving at closing.
- Closing Time: Schedule closings in the morning. This will help if there are any issues with documents or checks that need to be attained that same day.
- Photo ID: PLEASE bring it! This is so easily overlooked.
- Keys: The seller should always bring all the keys (especially the mailbox key) at to the closing.
These are just a few issues you can run into at a closing but very important to make sure that you avoid any closing delays.
Jarrod Guy Randolph