A residential closing in New York City is the final step in the home-buying process when the property ownership is legally transferred from the seller to the buyer. This process involves several steps, and various parties are involved, including the buyer, seller, attorneys, real estate agents, title company representative, and sometimes a mortgage lender representative. Here’s an overview of what happens at a typical NYC residential closing:
- Review and sign documents: The buyer, seller, and their respective attorneys review and sign various legal documents. The buyer signs the loan documents, such as the mortgage note, which is a promise to repay the loan, and the mortgage, which secures the loan with the property. The seller signs the deed, which transfers ownership of the property to the buyer.
- Final walkthrough: The buyer may conduct a final walkthrough of the property before the closing to ensure that the property is in the agreed-upon condition and that any required repairs have been completed. If any issues are discovered during the walkthrough, they should be addressed before proceeding with the closing.
- Title search and insurance: The title company performs a title search to ensure that the property’s title is clear and free of any liens or encumbrances. The buyer and lender (if applicable) also purchase title insurance to protect against any future claims on the property.
- Funds transfer: The buyer brings the necessary funds to the closing, either in the form of a certified check or a wire transfer. These funds cover the down payment, closing costs, and any prepaid expenses, such as property taxes or homeowners’ insurance. If the buyer is financing the purchase, the lender provides the mortgage funds.
- Payment of fees and taxes: Various fees and taxes are paid at closing, such as attorney fees, title insurance premiums, mortgage recording tax, and the New York State mansion tax (if applicable). These payments are typically handled through an escrow account managed by the title company or the buyer’s attorney.
- Distribution of funds: Once all the necessary documents have been signed and the funds have been received, the funds are distributed to the appropriate parties. This includes paying off any existing mortgage on the property, paying the seller their proceeds, and disbursing payments for closing costs and fees.
- Recording of documents: The deed and mortgage are recorded with the appropriate county clerk’s office, officially transferring ownership of the property to the buyer and securing the lender’s interest in the property.
- Handover of keys: After all the paperwork is completed, and the funds have been distributed, the seller hands over the keys to the property, and the buyer officially takes possession.
The residential closing process in New York City can be complex and may take several hours to complete.