I have just listed my property for sale. What can I do now to be ready for an offer?

It's a good time to locate the offering plan and the last two years of financial statements for your co-op or condo. These are often the first documents requested by purchasers prior to signing the contract. Also locate the closing statement from when you purchased the property. This will provide useful information that will assist in the closing. The closing statement will also help your tax planner determine any personal income tax that might be due as a result of your sale.

I just received the offer I was waiting for, what's next?

The preparation and negotiation of the contract.

Who prepares the contract?

It is customary for the seller's attorney to prepare the contract.

What information will my attorney need to get started?

The address, purchaser's names/address, purchaser's attorney's name/address, personal property (for example, air conditioners and window treatments) included and excluded from the sale of your home and any other terms discussed. Your real estate broker will be a helpful resource in getting this information assembled onto a form called a "deal sheet" that your attorney can use to prepare the contract.

Who holds the down payment and what is its function?

The seller's attorney holds the down payment in a special bank account, called an "escrow account". The down payment (typically 10% of the purchase price) is intended to protect you from the purchaser intentionally failing to complete the purchase after a contract has been signed. If that occurred, you would likely be entitled to keep the downpayment and sell your property to another person.

What is a contract contingency?

Most contracts for the sale of residential properties in NYC make the transfer of title contingent upon certain events occurring. The most common contingency is co-op board of director's approval of the sale. In other words if the co-op does not approve the purchaser then the contract is terminated and he or she would be entitled to their downpayment back. If you are selling a condominium, the waiver of the condominium's "right of first refusal", or its right to purchase your unit in place of the purchaser, will be a contract contingency. A "financing contingency" which provides for the contract to be canceled and the down payment returned, if the purchaser cannot obtain a mortgage, is another kind of contract contingency.

How is an "all cash" transaction different from a contract where the purchaser's obligation to close is not contingent on their obtaining a mortgage?

With regard to financing there are generally three kinds of residential purchasers. First, there is the contract where the purchaser has acknowledged that they are paying "all cash". This means the purchasers will use their own savings to purchase your property. This can significantly speed up the closing process. Also, co-op boards typically view all cash buyers, at least those with significant assets left in the bank after closing, more favorably. Second, there are purchasers whose obligation to purchase is not contingent upon there ability to obtain a mortgage, nevertheless, this purchaser is still going to obtain a mortgage to complete the transaction. This purchaser is assuming the risk of losing their downpayment if they don't get a mortgage and are unable to close. This is preferable from a seller's perspective to a buyer whose obligation to purchase is contingent upon financing, called a "financing contingency". The buyer that has a financing contingency can cancel the contract and receive back their downpayment back if they apply for, but do not receive a mortgage.

If I have a mortgage how do I arrange to pay if off?

Your most recent mortgage statement should give your lawyer enough information to make the arrangements. Since each bank has its own rules (warnings: some require weeks of advance notice), it's best to begin as soon as the contract is signed. If you own a co-op, the bank will likely have the original stock and proprietary lease, both must be obtained and presented at the closing.

My co-op has a flip tax, what does this mean?

A "flip tax" is not a tax in the traditional sense, but a fee charged by your co-op upon the sale of an apartment. Not all co-ops charge a "flip tax". Those that do typically charge the seller. For example, it may be 1% of the sales price; or $1 per share; or a percent of your profit. As you can see there are many "flip tax" formulas so your co-op's policy needs to be reviewed to make the calculation.

Are there any City and State taxes imposed upon the sale of a co-op and condominium?

Yes. Both New York City and New York State impose a transfer tax on the sale of certain kinds of real property. The amounts vary with the property sold and the kind of transaction. Consult with your attorney to determine the exact amount of tax due on your sale. Remember these transfer taxes differ from any income tax that might be due in connection with a profit from your sale.

Are there any other fees and costs?

Yes. Your co-op or condo will likely charge what is frequently called a transfer agent's fee; the bank which holds your mortgage often will charge a fee to make the arrangements to pay-off your mortgage; brokerage commissions are due at closing. Each transaction is unique so it's important to consult with your lawyer for a breakdown of specific fees due on your sale.

How long will the closing take and do I have to attend?

A well organized and prepared closing should take about an hour and a half. If you cannot attend the closing then your attorney or another party can attend for you using a Power of Attorney. Remember Power of Attorney forms need to be executed and approved well in advance of a closing. It's never advisable to try and do a closing with a Power of Attorney at the last minute as this may cause a closing to be adjourned.

Do I need to prepare anything for the closing?

While your attorney will likely be covering all your fees and costs out of the downpayment escrow it's always a good idea to bring along your personal check book. You will also need to have official photo identification with you. If you are selling a co-op and you do not have a mortgage you must bring the original stock and proprietary lease to the closing and don't forget the keys.

THIS PAGE IS INTENDED TO PROVIDE GENERAL INFORMATION ABOUT THE SALE OF CERTAIN TYPES OF REAL ESTATE IN NEW YORK CITY. EACH REAL ESTATE TRANSACTION IS UNIQUE. ALWAYS CONSULT WITH A LAWYER BEFORE MAKING ANY DECISION RELATING TO THE PURCHASE OR SALE OF REAL ESTATE OR RELYING ON ANY INFORMATION ON THIS PAGE.