Understanding the Real Estate Closing Process in New York

Although it is the last stage in the process of acquiring real estate, closing is arguably the most important stage.  That is because at this stage, all the threads of your transaction, from the first point till now, are woven together.

What you eventually end up with depends a lot on how you handle this stage, which is why investors, especially first-timers, choose to work with a New York real estate attorney who can oversee the process.

If you have started the process of closing real estate in New York, our New York real estate lawyers explain what you can expect and how to set yourself up perfectly for the process.

What are the steps involved in the closing process?

Generally, closing takes place between 60 to 90 days after a contract of sale has been signed.  It includes many steps that take place at several locations and will include all the parties involved in the sale – buyers, sellers, lenders, attorneys and possibly, even real estate agents.  Here are the steps you can expect in the process:

  • Arrange for escrow: Since closing may take a few weeks, you will usually be asked to deposit “earnest money”. This secures the commitment of both parties.  Also, if you are financing the sale partly with cash, opening an escrow account increases the confidence of the seller and gives you a stronger bargaining position.
  • Home and pest inspection: You should never finalize the process until you have completed a physical inspection of the property. A pest inspection may also be required or necessary, especially to ensure there are no wood-destroying insects on the property.
  • Certifications and documentation: Homeowners in New York may also be required to obtain certification relating to well testing, flood search or buried oil tanks. A certificate of occupancy may also be required.
  • Title search and insurance: A title search is usually conducted to ensure that the seller’s title is free and clear. This will include verifying the absence of liens, tax liability, unpaid bills and the like.  The lender may also require that the buyer obtains title insurance to protect against losses arising from here.
  • Mortgage application and approval: It makes sense to begin the mortgage application process at the same time, if you are financing the acquisition, either partly or in full. Interest rates can be locked in at this stage, allowing some advantage.
  • Home insurance policy: The lender will typically require a hazard insurance policy to protect their interest in the property. You should protect yours too by a full home insurance policy
  • Final walkthrough: On the day of the signing or the night before, the house will be inspected again. This ensures that everything is as it should be.
  • Signing and finalizing instruments: There will be a lot of documents to be signed including settlement and loan documents. Afterward, the deed will also be recorded.

How to ensure you are set for a favorable process

Clearly, the real estate closing process will be exhausting.  With so many details to keep an eye on, it may be easy to slip up.  To ensure you are set for a favorable process:

  • Work with an experienced real estate attorney. Everyone else will be bringing their lawyers, you should too.
  • Go over a dress rehearsal with your attorney. This ensures that you know exactly what to expect.
  • Be prepared for closing costs. These costs can really snowball.  Go over them with your attorney.

If you are just starting out the process of acquiring New York real estate or are already at the closing stage, we can help.  Reach out to our experienced New York real estate attorneys who can explain the process and support you all through.