Careful Terms In Real Estate Contracts Can Prevent A Difficult Closing
Updated: 08/06/2012 12:01 AM
By: Jill Urban
The last NY1 Real Estate report offers expert tips on how to approach a deal when working with a difficult buyer or seller, and now this second half of the series deals with legal advice on how a contract can help make the trip to the closing table as smooth as possible. NY1's Real Estate reporter Jill Urban filed the following report.
Buying and selling real estate is a complex process; even more so when one are dealing with a difficult buyer or seller. Once the offer is accepted, it is then time to negotiate the contract, and real estate attorney Ron Gitter, the founder of CoopAndCondo.com, has plenty of advice.
First, he says the closing date is the number one issue that creates problems…
"'One or about a certain date' for closing is a vague component to the contract and parties can be significantly disappointed when 30 days goes by and the closing still hasn’t taken place," says Gitter. "The parties have to investigate each side’s ability to close and not just rely on the date."
Gitter says the only way to insure a closing will happen on a certain date is to build penalties into the contract if the closing doesn’t happen on that date, or to make the closing “time is of the essence,” which means if it doesn’t take place on that date, the party is in default.
He also warns buyers to be cautious if their seller needs board approval to purchase a new place, because that is often a cause for delay.
Often, the all-cash foreign buyer is a trophy for a condo seller, but Gitter warns such a buyer can present a problem if the seller do not cover the bases in the contract.
"The all-cash foreign buyer can sometimes present unexpected problems because they don’t have U.S. tax returns or Social Security numbers. Make sure your foreign buyer is willing to provide whatever document is requested, including a deposit for common charges, if that’s the only way the waiver will be issued by the board," says Gitter.
The contract should be clear in terms of the condition of the apartment and what is included.
Also, Gitter suggests requesting certain financial representations from the other side before the contract signed, which will help eliminate surprises once the deal is locked in. The bottom line is it is all about due diligence.
"There’s no magic formula to avoiding a difficult buyer or seller in a coop or condo contract," says Gitter. "Parties are well-advised to do their due diligence before signing the contract because parties will behave exactly the same way after the contract is signed as they did before."
So from the beginning, people who feel in their gut they are dealing with someone who could play dirty should do everything in their power to try and play it safe.
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