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1 Graig Zappia, Partner Tully Rinckey PLLC 441 New Karner Road Albany, New York 12205 518-218-7100 Real Estate Closings for the.

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Presentation on theme: "1 Graig Zappia, Partner Tully Rinckey PLLC 441 New Karner Road Albany, New York 12205 518-218-7100 Real Estate Closings for the."— Presentation transcript:

1 1 Graig Zappia, Partner Tully Rinckey PLLC 441 New Karner Road Albany, New York Real Estate Closings for the Non-Real Estate Attorney ©2012

2 2 About Your Presenter ©2012

3 3 Overview of Real Estate Closing Overview / Introduction You made it to the closing table…now what? The hard part is usually over, given how difficult it has been recently with getting the home to appraise and obtaining a mortgage. Tully Rinckey PLLC © 2012

4 4 Who’s coming to the closing? Invites should have gone out to attorneys for seller & buyer, the bank attorney, both realtors, and the title company. Tully Rinckey PLLC © 2012

5 5 Typical Private Client Closing Forms & Issues The Closing Statement / Statement of Sale: In order to fill out this form, be sure to refer back to the original contract and the attorney-approval letters for verification. Tully Rinckey PLLC © 2012

6 6 Purchase Price – Tax Adjustments (Different Municipalities = Different Tax Periods) More often than not, the tax years for property and school taxes are routinely the same from municipality to municipality. The school tax years normally run from July 1st to June 30th, while the town and county tax years run from January 1st to December 31st. Different in cities like Schenectady where they have quarterly tax bills due in January, April, July and October. Tully Rinckey PLLC © 2012

7 7 Water & Fuel Readings Usually calculated at the last minute and credits or bills are issued at the closing table. Lean on the realtors to help you out in this regard. Tully Rinckey PLLC © 2012

8 8 Purchaser Deposit Again, check the contract to be sure the purchaser receives credit for the correct deposit amount. Some contracts call for more than one deposit. Tully Rinckey PLLC © 2012

9 9 Realtor Commissions Most realtors provide their commission statements ahead of time and are simply inputted into the final statement of sale. Sometimes, one office calculates their commission a little differently when seller concessions or repair credits are involved. Tully Rinckey PLLC © 2012

10 10 Title Insurance Costs – Search Fees, Premiums, Endorsements, etc. Review the title insurance invoice so the purchaser is aware of what they are responsible for. Sometimes, the bank and/or the title company already figures in an Owner’s premium as well. Tully Rinckey PLLC © 2012

11 11 Mortgage Tax vs. Transfer Tax/Deed Stamps Mortgage Tax = Buyer Responsibility. Normally, the clerk calls for the purchaser to pay a total of 1% of the mortgage amount in the form of a tax. The lender usually foots the bill for.25%, and the buyer picks up the rest. Not uniform from county to county. Transfer Tax = Seller Responsibility. Based upon the purchase price of the home. $4 in tax for every $1000. Filled out on the TP-584 form, discussed below. Tully Rinckey PLLC © 2012

12 12 Recording Fees: Deed, Mortgage, POA, etc Standard rates for all to be recorded with the county clerk. More often than not, you have a standard per page charge (usually $5/page) on top of a standard document recording charge ($45 per document). Tully Rinckey PLLC © 2012

13 13 HUD-1 Settlement Statement – Real Estate Settlement Procedures Act (“RESPA”) RESPA is a HUD consumer protection statute designed to help homebuyers be better shoppers in the home buying process. Tully Rinckey PLLC © 2012

14 14 New and improved HUD-1? GFE Page / Loan Terms – conveniently restated within the HUD-1. Borrower should have already seen these items within their original GFE, and their commitment letter, but here they are again, just in case. Very confusing, but make sure the client understands if there is a variable rate feature or if there is PMI on the loan. HUD-1 – Lines : closing fees involved with the transaction for both buyer and seller. Tully Rinckey PLLC © 2012

15 15 Comparing your Statement of Sale to the HUD-1 at the Closing Purchasers on the left, Sellers on the right Sellers Concession/Contribution Issues – FHA caps the amount of concessions Tully Rinckey PLLC © 2012

16 16 TP-584 A seller-related form. Form TP-584 must be used to comply with the filing requirements of the real estate transfer tax (Tax Law, Article 31), the tax on mortgages (Tax Law, Article 11), as it applies to the Credit Line Mortgage Certificate, and the exemption from estimated personal income tax (Tax Law, Article 22), as it applies to the sale or transfer of real property or cooperative units under Tax Law, section 663(a). Tully Rinckey PLLC © 2012

17 17 E&A Form / RP-5217 A borrower-related form, the RP-5217 Real Property Transfer Report is a form (RPL Article 9, Section 333) used to document the information associated with most property transfers within New York State. An original RP-5217 form must accompany all deeds and correction deeds upon filing with the Recording Officer. A filing fee (normally $125; $250 for vacant land) is also required. Pursuant to Section 8017 of Civil Practice Law and Rules, the state and counties, and agencies and officers thereof are exempt from this fee. Tully Rinckey PLLC © 2012

18 18 – Basic STAR: If you own property and it is your primary residence, you are probably eligible for a STAR school property tax exemption. To get your exemption, fill out this form and submit it to your local assessor. – Enhanced STAR - Senior Citizens: For jointly owned property, only one spouse or sibling must be at least 65 by December 31 of the year when the exemption will begin. Income limit of $79,050 or less. The income limit applies to all owners, and any owner's spouse who resides at the property. – Veterans: Real Property Tax Law, section 458-a, is available only for residential property of veterans who served during wartime or received an expeditionary medal. Not all municipalities choose to have this exemption in place. School Tax Relief Forms for Purchasers Tully Rinckey PLLC © 2012

19 19 Post Closing Matters – Escrow for repairs, post-closing occupancy agreements, etc. If the walkthrough did not go so well, you may need to draft a repair escrow or some form of post- closing occupancy agreement to protect everyone involved. It may also be helpful to have the seller’s insurance remain in place until this issue underlying the escrow agreement has been resolved. – Get Copies: Checks, payoff letters, deed, etc. More often than not, something will come up down the road that will require you fishing one of these items, either for your client, the bank, or the other attorney. Tully Rinckey PLLC © 2012

20 20 Important Bank Documents Notes & Mortgages: Standard documents within New York State. You’ve seen one, you’ve seen them all. Everything within the note and mortgage are basically the same from closing to closing. Make sure the bank has the correct spelling of the borrower, the correct interest rate, and the correct property being mortgaged. Regarding the mortgage: as long as the borrower pays the bank on time, pays the property & school taxes on time, keeps the property insured, and takes care of the property, nothing in these documents will come back to hurt them. Tully Rinckey PLLC © 2012

21 21 The Note: The “I.O.U” to the bank. Contains the (hopefully) agreed-upon interest rate and terms of repayment that the client locked in at the very beginning of the process. Important to check the rate and whether it is fixed or variable to ensure the client is signing up for what they originally anticipated. Tully Rinckey PLLC © 2012

22 22 Good Faith Estimate: Commonly referred to as the “GFE”, this form must be provided by a mortgage lender or broker to a customer, as required by the Real Estate Settlement Procedures Act (RESPA). The estimate includes a list of fees and costs associated with the loan and must be provided within three business days of applying for a loan. Banks also provide another version at the closing. These mortgage fees cover every expense associated with a home loan. mortgagebrokerReal Estate Settlement Procedures ActRESPAloan business days The Annual Percentage Rate of the GFE: The most confusing part of this document to is the APR box. This is not the Note rate for which the borrower applied. This percentage is the cost of the loan when taking into account various loan charges of which interest is only one such charge. Tully Rinckey PLLC © 2012

23 23 Borrower Application: Form 1003 The loan application is re-signed by the borrower(s) at the closing to recertify the information they provided the bank at the outset of the loan application process was truthful and accurate and hasn’t changed significantly in the interim. Tully Rinckey PLLC © 2012

24 24 Borrower 4506-T Form: IRS Form 4506-T is the Request for Transcript of Tax Return Form. IRS Form 4506-T is a request made to the IRS by the tax payer to issue transcripts of their tax returns to the lender. A mortgage lender may ask the borrower to submit a completed Form IRS 4506-T as time of submitting application, at the time of closing, or both.

25 25 Graig Zappia, Partner. Tully Rinckey PLLC 441 New Karner Road Albany, New York Questions? Tully Rinckey PLLC © 2012


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