Unit 2: Residential Purchase & Sale Flashcards
(27 cards)
Department of Buildings Safety Requirement
Important fact: If the Department of Buildings says a building is unsafe, no construction work should be performed WHATSOEVER, no matter how much you lose for each day that the building isn’t built.
This is because if you keep building, you could be liable for death or injury. If the owner of the building knew, they could be both civilly and criminally liable (wrongful death or manslaughter).
Minor holes/chips
May occur due to removal of personal property. Purchaser must take apartment with these minor damages.
When is there recourse for the buyer under a no survivability clause?
When there’s fraud.
Walkthrough
Client goes to the property on the day of the closing to make sure everything is there. This is when you discover when there are imperfections.
Maintenance increases in a coop
Seller often waives responsibility for maintenance increases. In a coop, the board and not the seller is in control of whether maintenance increases.
The paragraph also says that if there is a refund on the maintenance, it has to be held in trust for the seller. Otherwise, the buyer gets it as a windfall, and they have to pay taxes on it.
Who controls the documents in a coop?
The corporation.
Hidden defects
Buyer will only discover hidden defects after they possess the property, but obligations for seller to fix things don’t survive closing.
There would be no recourse for the buyer with no survivability unless there’s fraud, because this no survivability provision exists.
Responsibility for violations filed against coop unit
Seller is responsible for ALL violations that happened before the closing. If violations aren’t cleared up before the closing, must notify of it.
Second paragraph in this section, fifth line: “Such violations not to exceed”–if there is a violation against the unit, Seller’s job to make the violation go away unless it’s above a certain dollar amount. If it’s about that $ amount then the purchaser would have an option, not a requirement, to terminate the contract and get their down payment back.
What date should you always pick to close?
Always pick the 16th of the month to close. 15th of the month is the last day the seller is obligated to pay whatever expenses are for that particular apartment.
Representation in warranty
A statement of facts that another party is justifiably relying on.
Leaks
Into = possibly damaging the property
Out of = other properties could get affected
Bedbug provisions
“Seller certifies there are no bedbugs”
Apply to the whole building only apply in small coops. In larger buildings like 500 units, it’s not reasonable to make the seller represent that none of the apartments were ever investigated for bedbugs.
In large apartments, relevant for the unit itself. Not reasonable for the entire building.
Knowledge Qualifier: Actual Knowledge
Actual knowledge requires the relevant party to actually know of a particular item or event that causes a breach.
Knowledge Qualifier: Constructive Knowledge
Imputed knowledge. Defined as knowledge that any given individual would be expected to learn after some reasonable level of diligence.
Knowledge Qualifier: No Actual Knowledge Without Inquiry
Someone’s opinion is based on their conscious awareness of a situation, and no other investigation or inquiry has been made. For example, “to the seller’s actual knowledge” limits knowledge to what the seller actually knows, and doesn’t assume that the seller has made enough inquiries.
Do condos and coops permit AirBnBs and short term rentals?
No.
Title Insurance
Makes sure title to property is unencumbered.
You pay premium every year in title insurance for the quality of the title. Ex: If someone prevails against the buyer in a lawsuit for ownership rights, they lose the property or the quality of the property is diminished, the title company reimburses them as long as they hold that property.
It’s malpractice if you represent the buyer and they don’t get title insurance.
When do reps and warranties expire?
At closing.
Unfettered Good Title to Real Estate
You are the sole owner, and you have all rights to everything that you can do with the property without any exceptions–up to the. heaven and down to the core. So we have no encumbrances on the ownership rights of the property.
What are closing costs?
Attorney’s fees, appraisal fees, application fees, flood insurance fees.
Why is it so important to record title and mortgages properly?
If something regarding the title isn’t recorded, that doesn’t mean it’s not valid, that just means the priority is diminished. (Ex: Didn’t record a mortgage–but if anyone records a mortgage before them, they have priority.)
People don’t EVER make unrecorded mortgages on purpose. If the mortgage was not recorded, it was by mistake because someone was an idiot. A mistake that you might pay for by losing the property.
What does seller have to pay at closing?
Attorney’s fees at closing, flip tax (co-op), real estate broker’s fee, transfer taxes.
Letter of Intent
Letter from the buyer expressing intent to buy in commercial purchase & sale. Non-binding except for 3 things:
- Agree to remove the property from the market (exclusivity)
- Offer has an expiration (term)
- Confidentiality
Service Agreements
Ex: Maintenance agreement, cleaning service agreement, boiler service agreement.
Purchasers want these either terminable within 30 days or assignable from the seller to the buyer.
