Transcript WHY DO I NEED A WILL, HEALTH CARE PROXY AND POWER …

Real Estate Closings for the
Non-Real Estate Attorney
Graig Zappia, Partner
Tully Rinckey PLLC
441 New Karner Road
Albany, New York 12205
518-218-7100
[email protected]
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About Your Presenter
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Overview of Real Estate Closing
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Overview / Introduction
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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.
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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.
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Typical Private Client Closing Forms
& Issues
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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.
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Purchase Price
– Tax Adjustments (Different Municipalities =
Different Tax Periods)
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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.
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Water & Fuel Readings
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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.
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Purchaser Deposit
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Again, check the contract to be sure the
purchaser receives credit for the correct
deposit amount. Some contracts call for
more than one deposit.
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Realtor Commissions
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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.
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Title Insurance Costs – Search
Fees, Premiums, Endorsements, etc.
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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.
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Mortgage Tax vs. Transfer Tax/Deed
Stamps
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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.
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Recording Fees: Deed, Mortgage,
POA, etc
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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).
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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.
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New and improved HUD-1?
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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 700-1400: closing fees involved with
the transaction for both buyer and seller.
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Comparing your Statement of
Sale to the HUD-1 at the Closing
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Purchasers on the left, Sellers on the right
Sellers Concession/Contribution Issues – FHA caps the
amount of concessions
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TP-584
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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).
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E&A Form / RP-5217
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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.
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School Tax Relief Forms for
Purchasers
– 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.
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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 postclosing 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.
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Important Bank Documents
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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.
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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.
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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.
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.
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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.
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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.
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Questions?
Graig Zappia, Partner.
Tully Rinckey PLLC
441 New Karner Road
Albany, New York 12205
518-218-7100
[email protected]
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