New York Residential Real Estate Lawyer

The Purchase Contract: Where the Deal Is Made

In most parts of the country, the purchase contract is a form document completed by real estate agents. In New York, the purchase contract is a legal document drafted by the seller’s attorney and reviewed — and often negotiated — by the buyer’s attorney before execution.

The standard New York residential contract of sale contains provisions addressing:

• Purchase price and deposit: The contract typically requires a 10% earnest money deposit, held in escrow by the seller’s attorney, paid at contract signing
• Financing contingency: Whether the purchase is contingent on obtaining a mortgage, and the terms under which the buyer can cancel without forfeiting the deposit
• Inspection rights and as-is provisions: Whether the buyer has the right to conduct inspections, and what remedies exist if defects are found
• Title requirements: The seller’s obligation to deliver marketable title, free of liens and encumbrances except as specifically permitted
• Closing date and adjustments: The scheduled closing date and how prorations for taxes, utilities, and common charges are calculated
• Representations and warranties: What the seller represents about the property’s condition, outstanding violations, litigation, and use

Buyers who sign a New York purchase contract without attorney review are accepting whatever the seller’s attorney has drafted — including provisions that may be unfavorable or that fail to protect the buyer’s interests.

The Property Condition Disclosure Statement

New York Real Property Law § 462 requires sellers of one-to-four-family residential properties to provide a Property Condition Disclosure Statement before the buyer signs the contract. The disclosure covers the structure, mechanical systems, environmental conditions (lead paint, asbestos, radon, underground storage tanks), and any known material defects. A seller who fails to provide the required disclosure owes the buyer a $500 credit at closing, but the $500 credit does not substitute for the disclosure itself — and the disclosure does not substitute for an independent professional inspection.

Buyers should treat the PCDS as a starting point for due diligence, not as a complete picture of the property’s condition.

Title Search and Title Insurance

Once the contract is signed, the buyer’s attorney orders a title search — a review of the public records to confirm that the seller has good, marketable title and to identify any encumbrances, liens, or defects that might affect the buyer’s ownership after closing. Common title issues include:

• Unpaid tax liens: Property taxes that remain unpaid become a lien on the property and must be paid at or before closing
• Open mortgage liens: Prior mortgages from previous owners that were not properly discharged
• Mechanic’s liens: Claims by contractors or suppliers who were not paid for work on the property
• Judgment liens: Unsatisfied civil judgments against the seller that automatically attach to real property
• Encroachments and easements: Survey issues revealing that improvements cross property lines, or utility easements that affect use of the property
• Open building permits: Permits for construction or renovation that were never formally closed out, which can affect financing and future resale

Title insurance protects the buyer against losses arising from title defects not discovered in the search. New York requires lenders to be covered by a lender’s title policy; owner’s title insurance for the buyer is separate and recommended.

Co-op Purchases: A Unique New York Framework

New York City and its suburbs have a large stock of cooperative apartment buildings — a housing form that is rare in most of the country. A co-op transaction differs from a standard real estate purchase in several fundamental ways:

What you are buying: In a co-op, you purchase shares in a cooperative corporation — the entity that owns the building — and receive a proprietary lease for your specific apartment. You do not receive a deed to real property. Your ownership is personal property, not real property, which has implications for financing, estate planning, and tax treatment.

Board approval: Co-op boards have broad discretion to approve or reject prospective purchasers. Unlike condominium associations, co-op boards typically do not have to explain their rejections. This means buyers must submit a detailed board application — financial statements, tax returns, reference letters, and personal interview — and face the possibility of rejection even after a fully negotiated contract.

Proprietary lease review: The proprietary lease governs the relationship between the shareholder and the cooperative corporation. It sets out maintenance obligations, subletting rights, renovation approval requirements, and grounds for termination of the tenancy. Reviewing the proprietary lease — and the co-op’s financial statements and house rules — before signing the purchase contract is essential.

Financing constraints: Co-ops frequently restrict the loan-to-value ratio on financing, require all-cash purchases for certain units, or require board approval of the financing. Working with a lender experienced in co-op financing and having legal counsel who can navigate the board package process is essential.

Condominium Purchases

Condominium ownership in New York is governed by the Condominium Act (RPL Article 9-B). A condominium buyer receives a deed to the unit and an undivided interest in the common elements of the building. Unlike co-ops, condominium boards cannot reject purchasers outright (though they may have a right of first refusal).

For purchases in new condominium developments, the New York Attorney General’s office requires the sponsor (developer) to file a condominium offering plan — a disclosure document that describes the building, the units, the finances, and the terms of purchase. Buyers in new developments must receive and review the offering plan before contracting. The plan is a complex document; attorney review is not optional in any practical sense.

For resale condo purchases, the buyer’s attorney reviews the bylaws, house rules, and current financial statements of the condominium association, and evaluates whether the association has adequate reserves and no significant pending litigation that might affect the buyer’s ownership or financing.

Closing Day in New York

New York residential closings typically involve the seller’s attorney, the buyer’s attorney, a representative of the title company, and a representative of the lender. The seller’s attorney provides the deed, the transfer documents, and the seller’s closing affidavit. The buyer’s attorney reviews the closing package — including the title commitment, the settlement statement (or closing disclosure for federally regulated transactions), and the lender’s loan documents — and coordinates payment of the balance of the purchase price and all closing costs.

Transfer taxes: The New York State transfer tax is $2 per $500 of consideration (0.4%), paid by the seller. Properties selling for $1 million or more are subject to an additional 1% “mansion tax” paid by the buyer. New York City imposes an additional city transfer tax on transactions within the five boroughs. The New York State Department of Taxation and Finance provides information on real property transfer taxes applicable to all conveyances.

Mortgage recording tax: New York imposes a mortgage recording tax on the recording of a mortgage — currently 1.05% to 1.8% of the loan amount depending on location and loan type. This is paid by the borrower at closing and can be a significant cost on larger loan amounts.

Recording fees: The deed and mortgage are recorded with the county clerk’s office in the county where the property is located. Recording fees vary by county.