© 2013 All rights reserved. 1 Chapter 7.2 Title Closing New York Real Estate for Brokers, 5th e By Marcia Darvin Spada Cengage Learning

© 2013 All rights reserved.

1Chapter 7.2 Title Closing

New York Real Estate for Brokers, 5th e

By Marcia Darvin Spada Cengage Learning



Chapter 7

Conveyance of Real Property and Title Closing

Part II: Title Closing


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Chapter 7 Key Terms Abstract of title Accretion Acknowledgment Actual notice Adverse possession Assessment Bundle of rights Chain of title Closing statement

Constructive notice Conveyance Credits Debits Dedication Delivery and acceptance Erosion Escheat Executor/executrix

Chapter 7.2 Title Closing



Chapter 7 Key Terms (continued)

Full covenant and warranty deed

Habendum clause Intestate Involuntary alienation Lien foreclosure sale Marketable title Proration Quitclaim deed Real Estate Settlement

Procedures Act (RESPA)

Reconciliation Survey Tacking Testate Title Title closing Title insurance Title search Voluntary alienation



Those Present at Closing Seller Buyer Real Estate Agent Title company rep Lender’s, buyer’s and seller’s attorney


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Deed and Other Closing Documents

Deed

Survey

Title insurance

Mortgage approval

Homeowner’s insurance

Structural inspection/other tests

Title search-evidence of marketable title



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Wood Eating Insects



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Role of Licensee Before ClosingBuyer has a final walk through on the day before closing or immediately before closing

The buyer agent (if there is one, or seller agent usually accompanies the parties

Broker

commission

generally paid at

closing



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NYS Commission Escrow ActThe Commission Escrow Act (2009) applies

to one-to-four unit residential properties

And individual condominiums and cooperatives sold by real estate brokers and sales agents

Protects the broker’s real estate commission when a seller does not pay the full commission upon closing



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Homeowner’s Insurance

Protects home or income/business

against damage or loss in case of fire,

theft or vandalism

Two types of property insurance

Section I covers property

Section II covers liability



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Standard Homeowner’s Policies Homeowners-1 (HO-1) insures home

and contents Homeowners-2 (HO-2) insures home

and contents from additional perils Homeowners-3 (HO-3) covers home

for most risk of physical loss Homeowners-5 (HO-5) same as HO-3,

plus personal possessions covered for most losses



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Standard Homeowner’s Policies Homeowners-8 (HO-8) provides actual

cash value coverage in place of replacement cost coverage for a building

Tenants or Coop Owners (HO-4) reimburse tenants for increases in living expenses if home becomes inhabitable

Condo Unit Owners (HO-6) insure against damage to contents of apartment plus liability




Real Estate Settlement Procedures Act (RESPA)

Settlement cost

disclosure

Settlement cost

disclosure

HUD Form No. 1

HUD Form No. 1

Buyer’s Guide to

SettlementCosts

Buyer’s Guide to

SettlementCosts Good

faithestimate

Good faith

estimate

Preventabusive

practices

Preventabusive

practices

Provide information

Provide information

Eliminate kickback/Referral

fees

Eliminate kickback/Referral

fees

Residential federallyfinanced

properties

Residential federallyfinanced

properties

RESPARESPA


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Possible Seller Closing Costs

Condo/

coop

fees

Satisfy

existing

property

liensRecording

documents to

clear title

Attorney

fee

Broker

commission

FIRPTA Certificate

Real estate

transfer tax

COSTS




Existing Liens

Mortgages

Real Property tax liens

Mechanic’s liens



Possible Purchaser Closing Costs Appraisal/credit report fees Structural and other tests/inspections NYS Mortgage Recording Tax Returns Title Insurance Attorney fees Lender fees (escrow account,

discount fees, loan origination fees, mortgage insurance)

Survey (sometimes paid by seller) Homeowner’s insurance


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Purchaser Closing Costs for a Condominium

Real Estate

Tax

TaxDeductions

Common Charges

Mansion Tax

MortgageRecording

Tax

Right of First

Refusal




Debits and Credits



Calculating Prorations

A closing is held

September 15th. The

annual property taxes of

$6,000 have been paid.

What will the entry for

the seller be on the

closing statement?

6,000 ÷ 12mos = $500

8 mos x $500 = $3,500

500÷2 = $250

$250 + $3,500 = $3,750

Credit to seller: $3,750



Prorations at Closing A sale is closed August

23, with the real estate

taxes of $600 per year

unpaid. What is the

entry on the closing

statement?

$600 ÷ 12 = $50 per month

$50 x 7 mos = $350

$50 ÷ 31 days =$1.6129032 per day

$1.6129032 x 23 days = $37.096773 =$37 rounded

$350 + $37 = $387 debit to seller