Finding your dream home should be an exciting, liberating process, as it marks a new beginning and adventure down the road; however, between the regulations, contracts, and fees, it can also be incredibly stressful.
Unexpected predicaments can pop up, especially at a closing, which can further delay the process of setting foot in your new abode. Thus, it is important to prepare yourself for obstacles at a closing, so that you can tackle them both efficiently and quickly.
To help you make informed decisions, contact a qualified New York City real estate attorney. At Sishodia PLLC, our experienced attorneys are ready to assist you at every stage, safeguarding your interests and securing the best possible results. Whether you’re a first-time buyer in New York or require comprehensive support, our dedicated team is here to help. Schedule a consultation today by contacting us at (833) 616-4646.
Apart from hiring an attorney to keep you protected and in the know, taking note of all legal documents with a detail-oriented eye, and maintaining your health, so that your brain is sharp and alert, you should mentally prepare yourself for issues that can occur at a closing and make your purchase less smooth and accessible than desired. Here are seven things that can go wrong at closing and how best to take action.
1. A Low Appraisal
Upon purchase, the buyer’s lender often requests an appraisal of the home, in order to guarantee that the contracted price is appropriate in worth. If the appraisal is under the agreed-upon price, the buyer might be forced to make up that amount, if a contract does not call for 80% or more mortgage contingency, without assistance from the mortgage company. Be prepared that additional fees post-contract might apply, and have extra cash on hand in case.
2. A Need For High-Risk Insurance
Often based on location, some lenders may request that the buyer purchase a high-risk insurance plan in order to protect the property from natural disasters and other complicated conditions. Make sure to scour the area prior to purchasing and stay up to date on any location woes that might demand such a request. Plus, obtaining high-risk insurance can be tricky, so that can also lead to additional stress.
3. Mistakes In Legal Documents
Common errors can appear in the legal documents that will call for a re-print, thus delaying the closing process. Between misspelled words, erroneous information, mathematical issues, and tampering of pages, it’s easy for writing and printing issues to be imperfect. Be prepared for a few extra hours or days for a closing to end, in case you are met with document complications.
4. Last-Minute Requests
It’s common for lenders to ask for additional information at the very last minute, such as copies of rental agreements, deposit checks, and evidence of insurance arrangements. Because these little to-dos can be time-consuming, it can often cause delays in closing. Ask your loan officer well in advance for all the information required, and bring all documents and information that you have to the closing itself. Key documents to include are the homeowner’s insurance policy form, a photo ID, an insurance payment form, as well as finances for the closing cost.
5. Walk Through Terrors
Upon entrance for a home inspection prior to a closing, you might find that the home contains serious damages, termite or bacterial infestations, as well as other indicators of a poor living environment, such as roof impairment, leaky pipes, and hidden holes or stains (which can often be initially hidden by rugs, fixtures, and paintings). Decide whether extermination and other repair techniques can solve these problems prior to closing. Such issues can take time to clear and can delay the closing process. Additionally, if they are incredibly problematic, it can cause the deal to fall through. In order to save the closing despite minor walk-through issues, parties may agree on closing with escrow and the seller’s undertaking to fix the issues.
6. A Loan Falls Through
In life, it’s common to experience unexpected obstacles, especially with regard to money, career, and familial arrangements. Unfortunately, such major transitions can interfere with your ability to secure a loan. Even if the buyer is pre-approved for the loan, it’s possible for the lender to change the terms or void it entirely, which in turn will delay closing. Such reasons include: career change, debt-to-income ratio alterations, divorce and any abnormally large and sudden purchases.
7. A Lien Is Placed On The Home
Unfortunately, last-minute liens can be placed on a property right before a closing and can interfere with the process of money transfer during escrow. If a title company finds a problem with the sale during inspection, it can place a lien and delay the sale from going through in time for closing. Such issues might involve a seller’s inability to pay off mortgage costs or property taxes. Removing the lien can take a few extra days, but if you hired a reliable title service and both parties have decided to sign off on the selling agreement, then your title company should penny up the costs the remove the lien.
| Things That Can Go Wrong At A Closing | Description | Preparation Tips |
|---|---|---|
| Low Appraisal | Appraisal is lower than agreed price. | Have extra cash on hand in case of a low appraisal. |
| High-Risk Insurance | Lender requires insurance for natural disasters. | Research area risks, be prepared for additional insurance. |
| Mistakes in Legal Documents | Errors in documents cause delays. | Allow extra time, double-check for errors. |
| Last Minute Requests | Lenders ask for additional information. | Get required documents in advance. |
| Walk Through Terrors | Home inspection reveals serious issues. | Assess and decide if issues can be resolved before closing. |
| Loan Falls Through | Unexpected obstacles affect loan approval. | Have backup financial plans in case the loan falls through. |
| Lien on the Home | Last-minute liens delay closing process. | Hire reliable title service, ensure seller can pay off costs. |
Who Needs to be Present at Closing?
The closing holds immense significance as it signifies the shift of ownership during a real estate transaction. During this process, the buyer receives the deed or stock certificate for a cooperative (in case the property is a co-op) and other essential legal documents, while the seller receives the payment for the property.
At the closing, each party plays a specific role in ensuring a smooth transfer of ownership. Several individuals typically gather, including:
- Buyer
- Seller
- Buyer’s attorney
- Seller’s attorney
- Buyer’s bank’s attorney
- Seller’s bank’s attorney (in coop transactions)
- Title closer (non-coop transactions)
- Real estate brokers
- Managing agent (for coop transactions).
Typically, the closing takes place at either the office of the seller’s attorney or the office of the buyer’s bank’s attorney. However, in coop transactions, the closing always takes place at the managing agent’s office, as they handle the administrative aspects of cooperative living.
Once the closing is successfully completed, you officially assume the rightful ownership of the property. This marks the completion of the transaction and the beginning of your new journey as a property owner.
It’s important to note that the specific individuals present at a closing can vary depending on the circumstances of the transaction and the preferences of the parties involved. It is suitable to consult with a New York real estate attorney to get information about who should attend the closing in your specific situation. Contact Sishodia PLLC to schedule a consultation.
Can a Loan Fall Through on Closing Day?
Yes, a loan can indeed fall through on closing day. Despite a buyer’s best efforts, last-minute hiccups can disrupt the financing of a home purchase, resulting in a deal collapse. Below are some key reasons why your loan might fall through after everything seems set.
Appraisal Discrepancies: Lenders require an appraisal to confirm a property’s value before finalizing a loan. If an appraisal values the home below the agreed selling price, the mortgage offer may be withdrawn unless the buyer can make up the difference or renegotiate the price. This is because lenders refuse to finance more than the appraised value, directly impacting the loan-to-value (LTV) ratio and potentially your interest rates and need for private mortgage insurance (PMI).
Home Inspection Issues: A lender may retract a loan offer if a home inspection reveals significant problems like structural damage or safety hazards. Unless these issues are addressed, either by repair or price negotiation, the lender may view the home as a bad investment and withhold financing.
Financial Instability: Lenders are wary of any last-minute financial changes in a buyer’s situation. Big purchases, new credit applications, or increased debt can all raise alarm bells, leading to a denied loan. These actions can lower credit scores and raise debt-to-income ratios, indicating higher lending risk. Even the sudden loss of employment can prompt lenders to revoke a loan, fearing the buyer’s inability to make payments.
Title or Deed Complications: Before approving a loan, lenders perform a title search to ensure there are no outstanding liens, claims, or legal issues with the property’s ownership. Any such problems must be resolved by the sellers before the property can change hands.
Working With a Law Firm Vs. An Individual Attorney
One thing is certain in opera, sports, and real estate: it ain’t over until it’s over. Even if you’re prepared, an intruder could set off a fire alarm at intermission. This could mean that your team loses the game, the buyers could leave, or even your home could go up for sale.
Hiring an experienced real estate lawyer will make a lot of difference. They will be familiar with the market and have the experience you need. You should be ready for any unexpected circumstances. However, you can prevent them from happening by double-checking every agreement and detail. Do not relax and let the process go by without checking that you have handed in your keys.
It is important that you are aware of how much real estate lawyer fees will cost and what resources and experience a company has in NYC. Although you can get a cheaper price working with an attorney individually or in a small firm, it may take longer to prepare documents or receive a callback. When deciding on which firm or attorney to hire, make sure you consider the cost of the service and the quality you want. This is especially important for complex or time-sensitive transactions.
The real estate lawyer fees NYC buyers have to pay are one of the smallest closing costs associated with an NYC purchase.
Vast changes and transitions in life are never easy, and purchasing a home can definitely fill this profile, as it marks a momentous step in a person’s life. From both a buyer and seller perspective, many things go into securing a sale and moving on to that next chapter, and so it’s important to be mentally prepared for problems that arise and to take each encounter with grace, patience, and strategic action.
For more information, please contact Natalia Sishodia, Sishodia PLLC, or email natalia@sishodialaw.com.
