Overview of a Residential Purchase in Westchester County

Clients often find it helpful to see an outline of the process and timeline of residential purchase in Westchester County. Here is a guide to the basics.

Timelines vary, but an all-cash deal for a home or condo can be completed in just 30 days. The purchaser typically engages counsel as soon as there is a deal sheet. Then, you can normally expect the due diligence and contract drafting phase to take about 7-10 days, with 3+ weeks for title review and closing, assuming no significant title problems.

If the purchase is being financed, lender requirements will add considerably to the time and procedures required to close the transaction (60-90 days). Coop purchases (whether cash or financed) also take considerably more time due to the Board approval process.

Deal sheet. The transaction typically begins with buyer and seller negotiating, through their brokers, until they reach agreement on sale price and related terms (such as closing credits, repairs to be performed, etc).
- Once such a (verbal) agreement is reached, the brokers write up the basic terms of the accepted offer in a “deal sheet,” which buyer and seller then pass on to their attorneys.
- In Westchester, unlike in some other U.S. markets, the parties do not yet sign a contract or “binder” and no deposit is paid until a contract is signed. The parties are free to walk away from the deal at this point without facing legal consequences.

Due diligence phase. The attorneys then begin drafting the contract, but prior to signing, the buyer and buyer’s attorney should conduct due diligence (a background investigation) on the property, which includes:
- Physical inspection. I recommend hiring an engineer or architect to conduct an inspection of the premises, and provide the buyer a written report of the condition of the Premises and major systems.
- Municipal records. The buyer or real estate agent should review the municipal records to determine whether they accurately reflect the condition and configuration of the Premises (such as number of bedrooms/bathrooms, kitchen/bathroom/attic/basement renovations, structural alterations, mechanical improvements, )
- Financial review for coops and condos. Buyer’s attorney should review the building’s financial statements and recent history to assess the risk of significant increases to unit ownership costs.
- Legal review for coops and condos. Buyer’s attorney should review the condominium’s formation documents, bylaws, offering plan and house rules, to advise the buyer of potential issues presented (such as restrictions on your use of the property, ongoing construction issues, property tax abatement programs, etc.).

Contract signing.
- Deposit (often 10% of purchase price). The deposit must be paid at the time of contract signing. It will be held in the escrow account of the seller’s attorney. It can only be disbursed (or refunded) upon the conditions specified in the contract.
- Signatures. The contract may be signed electronically and in counterparts.
- The contract will provide for the possibility of the purchaser backing out of the deal, and the deposit being refunded, if certain conditions are not met.

Board application for coops and condos. After the contract is signed and deposit paid, the Coop and Condo Board will request certain disclosures about the purchaser’s identity and finances. You are required to provide this information to the Board. In a condo — unlike in co-op buildings — there is little they can do if they have a problem with what they see.
- Condominium Right of first refusal. If the Condo Board wanted to block your purchase, the only way to do so would be to purchase the unit in your place at the contract price. In practice, this almost never happens, because the Condo can rarely afford to do so. If the Board does not exercise its purchase authority within a certain timeframe, that power lapses and you can proceed with your purchase. (There is some wiggle room for the Board to stall, so it’s best to stay on their good side.)

Title search/report (for single-family homes or condos). After the contract is signed, the buyer’s attorney engages a title company to perform a complete search of public records relating to the property. If there are liens, lawsuits or other claims affecting the property, the buyer will have to discuss how to proceed with his/her attorney. Few title problems are bad enough to sink a deal.

Lien Search (for coops). After the contract is signed, the buyer’s attorney engages a title company to perform a search of public records for any liens relating to the coop unit and building.
- Title insurance. Once title issues have been cleared, house and condo buyers normally purchase a title insurance policy covering the property. The premium is payable at closing. In certain instances coop buyers will want to buy a Coop Unit Leasehold Policy (for example, when buying from an estate).
- Typically contracts use an “on or about” closing date. This means it is a fluid date and either party is entitled to a reasonable adjournment (custom is 30 days or less). The closing may not occur on the closing date set forth in the contract for many reasons, including awaiting board approval, or the non-availability of either of the parties or the transfer agent, and closings may be and sometimes are postponed as late as immediately prior to the scheduled closing.
  - The balance of the purchase price is paid, and ownership of the properties conveyed, at the closing. The parties schedule the closing as soon as is practical after all contract contingencies are resolved.
- “New York Style Closing.” Unlike the procedure in many other parts of the U.S., a New York real estate closing is a face-to-face meeting, in which the parties, attorneys, lender and title agent typically meet in person to exchange checks and sign the closing documents. Contrast the “Escrow Closing” procedure utilized in (for example) California, in which the parties hire a third-party depositary (an “Escrow Officer”) to hold and disburse the sale proceeds, collect the parties’ signatures on all closing documents, and record the deed.
- Final walk-through. Buyers should inspect the properties on the day of the closing or shortly before, to ensure that the condition of the units has not changed since the time of contract signing.
- Closing funds. In addition to the balance of the purchase price, there are a variety of additional transaction costs that must be paid at the closing, which are frequently subject to last-minute adjustments. I provide my clients an itemized breakdown of these costs to discuss prior to closing.

Post-closing. Roughly 3-6 weeks after closing, the conveyance documents will be recorded publicly with the County. The buyer’s attorney should provide the buyer with copies of closing documents and an accounting of all sums paid.