New York Realty contract.........Need advice and knowledge (sale, real estate)

[firsttimeowner]

OK here is the situation. I know your not lawyers but maybe someone has experience in these matters and can help. My mother is selling her condo in NY. I just read the long detailed contract and can't understand all the legal wording but I do understand a few things. It says closing is to take place ON OR ABOUT Aug, 3rd. Ok so now its past Sept #rd and its not yet happened. She is getting the run around by her attorney and realtor and I am fed up with it. The attorney presented a commitment letter from the buyers lender on Aug 15th. Yes that took 45 days and so has now delayed the closing but what I want to know is..............how long does he get to close? This cant go on forever and the realor nor the attorney will give her a date by which this sale has to close according to the contract all I can find is the wording or or about. Also it says in the contract that he had 45 days to get the loan commitment and that he is now bound to take the condo except for certain legal provisions I dont fully comprehend. The realtor now says that the blame or delay is caused by my mothers condo board and they they dont have the funds in reserve to show the bank and therefor the bank will not give the loan. Well then why did he , the buyer, give a commitment to the sellers attorney if now the bank wont finance the loan. Who is at fault? Who gets the deposit thats in escrow? whats the time limits? what rights does my mother have to cancel and put her condo back on the market?


If anyone has been through any of these issues and can help please post or email me.


Thanks
Debbie

[jcoltrane]

It says closing is to take place ON OR ABOUT Aug, 3rd. Ok so now its past Sept #rd and its not yet happened. She is getting the run around by her attorney and realtor and I am fed up with it.

The problem may be your perception of "or about". I imagine that you feel "or about" s/mean within a day or two. That's not necessarily the case, and normally isn't the intention. It's 9/06, you're still in the "or about" stage.

The attorney presented a commitment letter from the buyers lender on Aug 15th. Yes that took 45 days

The "commitment letter" is the key. Nothing unusual about the time it took. Particularly since lenders aren't giving away money like toasters anymore. The process you're going through is normal. During the boom years---which were abnormal, Closing occurred at a faster pace, because little "due diligence" took place. Today, Lenders are more diligent, and this is normal.

This cant go on forever and the realor nor the attorney will give her a date by which this sale has to close according to the contract all I can find is the wording or or about.

There is NO specified date as you desire. Even if there was, what is it that you want? To get out of the contract, and lose the Buyer?

Do you understand the meaning of the Commitment Letter? It means that a Lender has committed to lend the Buyer the monies required to purchase the property.

If you review the Commitment Letter, you should find that the commitment expires after some period. That s/b the date information you are seeking. A period date at which the Closing will or won't take place. Even the period date for closing is not certain. As the Commitment can be extended at the Lender's discretion.

The realtor now says that the blame or delay is caused by my mothers condo board and they they dont have the funds in reserve to show the bank and therefor the bank will not give the loan.

Ahhhhh.....

Now you're getting down to the crux of the matter(s).

First, a Lender will only lend money (now that the period of insanity is over),

a) if the Lender feels secure that the Borrower has the means to pay the loan back---that is make the payments; and

b) the Lender must feel that the property used to secure the loan, is, itself "secure". In the case of a condo/co-op, the condo/co-op must be financially sound---as the Lender defines and requires.

I don't know what the actual situation and circumstance may be in your case, but from your comments, it appears that the Condo does not have sufficient funds!! to make repairs, fund the operation of the building, and/or most of all to pay taxes, which if not paid, can put the building/Condo into foreclosure. In which case, the property securing the loan would be in jeopardy. Of course, this may all be of opinion, BUT it is the Lender's opinion that matters. So the Lender MUST be satisfied.

I hope you comprehend that a Lender will not Lend in such a circumstance.

You see, after the Commitment is given and provided, the "due diligence" begins. That is the research begins to make certain that everything is as the Seller presented, and that the property is free and clear of encumbrances and can be conveyed. Also, again, the Lender will wish to be assured that the Condo/Co-op is financially sound.

Do you understand that all that takes time?

During sane times (pre Boom) and now, apparently we are, again, in sane times, it is not unusual for it to take 90 days (or even more) for a Closing to occur. So far, there appears to be nothing unusual in your case.

Well then why did he , the buyer, give a commitment to the sellers attorney if now the bank wont finance the loan.

The Buyer didn't give a "commitment". The Buyer obtained a "Commitment" from a Lender. The Buyer is usually obligated to obtain such, within a 45 (or a period agreed) day period from the date of the Contract. The Buyer provided a copy of the Commitment Letter to your attorney, as is normally required, as proof of meeting the contracted obligation.


The Commitment from the Lender ONLY obligates the Lender to make the loan, at the agreed terms, within the time period expressed, upon due diligence.

Due Diligence, in effect, means they look for any problems, and any problems will HAVE to be resolved BEFORE Closing can occur. Problems will be resolved by either the Buyer or the Seller, depending upon where the responsibility lies.

Who is at fault?

Fault? Fault for what?

If what you have alluded is correct regarding the Condo's "reserve fund", everything regarding that lies with the Seller's responsibility----meaning YOURS! or more, correctly, your mother's.

Who gets the deposit thats in escrow?

What are the circumstances?

IF, again, as you have alluded, the issue is regarding the "reserve fund", and the Lender refuses to accept the property as security for the loan---then you will not Close, and the funds held in Escrow should be returned to the Purchaser. This assumption is based solely upon the information as you have presented or alluded it.

whats the time limits?

For what?

I presume you mean to Close?

Generally, in a Contract, there s/b some language defining some period in which the Closing should take place after the Commitment is obtained. Read the Contract. The date 8/3, as you defined it above, is ONLY a guesstimate. The limit s/b the period as described in the Contract.

what rights does my mother have to cancel and put her condo back on the market?

As long as the Buyer meets the obligations as outlined in the Contract, the Seller is obligated to meet his/her respective obligations.

From the information you have provided, one can only suspect that, again, the issue is on your side, and pertains to the building's/condo's "reserve fund".

Even if you could and were to cancel this agreement, you would most likely have the SAME issue with a new Buyer, or any Buyer. As there is, virtually, no Lender who would provide a loan with property that is not secure in all manners.

It would appear that you and/or your mother must resolve the issue of the "reserve fund" (with the Condo Board).

I suggest you contact your attorney and determine WHAT is the issue?

If it is the "reserve fund", then you need to know. If this is so, then I would suspect that,

a) the Lender informed the Seller and his/her attorney;
b) that the Seller's attorney has contacted your attorney (the Buyer's attorney);
c) that your attorney (the Buyer's attorney) has contacted your mother's Condo Board, inquiring regarding the "reserve fund"; and
d) that your attorney has contacted your mother advising her of the situation.

Has your mother received any letters from her attorney?

There s/b a paper trail of letters, as well as telephone calls, at each of the steps above.

Now, regarding the above, sometimes things can fall through the cracks, that is all the above has occurred, but there hasn't been any follow through. For example, the Seller and their attorney can only pass along the information re the "reserve fund" as provided by the Lender to you and your attorney. You and/or your attorney must follow through. If your attorney has already contracted the Condo Board, then he can only wait for a response.

If after an appropriate time period, and no response has been received then the attorney needs to attempt to re-contact the Condo Board and/or make phone calls; and/or inform his client you/your mother, the Seller.

The Buyer and/or his/her attorney s/b following up, after an appropriate time period, by contacting the Seller/Seller's Attorney. It would be inappropriate for the Seller to contact the Condo Board.

If effective contact has been made with the Condo Board, then it may be a matter of the Condo Board making the effort to resolve and/or provide proof to satisfy the Lender in regard to the "reserve fund" or whatever the issue may be. Condo/Co-op boards are notorious for slow actions; in which case, it may be up to the Seller to motivate the Board into quicker action.

The Buyer has no bearing whatsoever as to, if, when and to what degree the Condo Board effectively satisfies the Lender's requirement. It is entirely the responsibility of the Seller, your mother/you.

So, it may be prudent, if talking on the phone with your attorney has not been productive, to schedule a meeting, during business hours with him/her. I say business hours, so it may be possible, if necessary to conference in, the Buyer's attorney, and, again, if necessary, the Condo's attorney (if they have one, after all you're going to be paying their fee), as well as the Lender's attorney.

BTW, after a Buyer has been found, your Realtor has little to no input. So, calling the Realtor is useless.

May I inquire as to how you came to engage your attorney? Did your Realtor recommend him/her?

Luck!

[firsttimeowner]

wow.....Thank you for such a detailed and well thought out reply. Now if only the attorney for my mother was able to articulate by phone or email what you just said maybe I wouldnt be so frustrated and in the dark about this as I have been. The attorney I believe was referred by the realtor, neither of whom are very friendly or informative. I only came to find out about this condo reserve issue by writing several emails to the realtor demanding to know what is going on. She nor the attorney tell my mother whats happening other than to say that the condo should be closing soon.

My mother cant understand whats going on or why and has been packed and waiting in pain for weeks now to get this finalized. In the beginning it was all about them having a great buyer and that she should pack asap and be ready to leave and move out by august 3rd or maybe the 15th at the latest. Now its obviously dragging on and on and who knows if it will even close.


what if it doesnt and this issue isnt resolved and the buyer backs out? My mother has a reverse morgage on this condo and we are about to buy a house together.

what do we do with the condo? rent it? not even sure if we are allowed. It is supposed to be owner ocupied. Try to find a cash buyer? wait 90 days more for this to get resolved and keep it off the market? My mother has to pay hoa fees and taxes on it even if she leaves and moves in with me in our new house. This has become a major pain in the butt.

where I am in ca. you have 10-17 days to have all contingencies removed and have your loan and are able to close in 30 days after the contract is signed. why is it so complicated in NY?


I dont know what to do


Debbie

[jcoltrane]

No problem. It's what I do.

where I am in ca. you have 10-17 days to have all contingencies removed and have your loan and are able to close in 30 days after the contract is signed. why is it so complicated in NY?

Every state is different, with different laws, and protections. NY is one of the better states in that the law is designed to protect all parties, particularly the Buyer. Other states have much more relaxed laws. I shudder sometimes when I see the way things are done in some other states.

Moreover, it is not a matter of things being different in NY. You would have the SAME problem in CA or anywhere in this country. If the condominium is broke w/o money, no one will lend against it, and anyone with the money to buy cash, would not.

Your example of how things are done in CA, I imagine is based upon a "house" sale. Condominiums are different than houses. Not a lot of condos in CA, lots of condos in NY.

Also, you must be aware of the housing crisis in CA, correct? Well, the process as you described it is the reason. So, doing things that way is not what anyone wants anymore.

Curious, do you and your mother plan to purchase a house in NY or CA?

The attorney I believe was referred by the realtor, neither of whom are very friendly or informative. I only came to find out about this condo reserve issue by writing several emails to the realtor demanding to know what is going on. She nor the attorney tell my mother whats happening other than to say that the condo should be closing soon.

I asked you that question, pretty much knowing the answer.

Realtors will often steer their clients to lawyers that they have a relationship with. I would suggest that people shop for an attorney rather than be steered by a Realtor.

If you are unhappy with your present attorney, then it may be prudent to find another.

You don't necessarily need someone who is "friendly", just an attorney who is competent, experienced and capable of doing the job. Not all attorneys are thus, and in my experience Realtors rarely recommend such a person.

My mother cant understand whats going on or why and has been packed and waiting in pain for weeks now to get this finalized. In the beginning it was all about them having a great buyer and that she should pack asap and be ready to leave and move out by august 3rd or maybe the 15th at the latest. Now its obviously dragging on and on and who knows if it will even close.

Realtors always paint the rosy picture, which is not always reality.

what if it doesnt and this issue isnt resolved and the buyer backs out? My mother has a reverse morgage on this condo and we are about to buy a house together.

As I attempted to outline for you in my previous post. IF the facts are as you have alluded, it is NOT a matter of the Buyer "backing out", but of YOU/your mother addressing the issue(s) at hand, specifically the "reserve fund".

a) You should speak with the Condo Board and inquire if they have been contacted by your attorney regarding the issue or any issue.
b) You can call the Buyer directly and inquire regarding his/her progress in closing.

If you are not satisfied with your present attorney, it may be prudent to find another. You don't necessarily have to make a change, but you can consult another attorney. Have a second attorney review your situation.

I simply strongly suggest that you find an attorney that is very experienced in dealing with real estate. Some attorneys will present themselves as 'jacks of all trades', but it is rarely the case when someone can be expert in all things. For example, all doctors are smart and intelligent, but you wouldn't have your Eye Doctor operate on your heart would you? If you have a heart problem you want a heart doctor. With lawyers it is the same, there are specialist. You want a real estate specialist---someone who works solely on real estate.

what do we do with the condo?

Well, before you worry yourself about future whats, deal with the present.

not even sure if we are allowed. It is supposed to be owner ocupied.

Another reason why you need to find a competent attorney. He can advise you.

Try to find a cash buyer?

If you don't close, because of the "reserve fund". No intelligent buyer, cash or not, will purchase the apartment and buy-in to an financially unsound condominium. You must address the issue of the "reserve fund"---it cannot be avoided.

Again, you must find a competent attorney. Shopping for an attorney is like shopping for anything else, except you're not looking for a bargain, but the best quality you can afford.

If you wish you can DM me.

Luck!

[bluedog2]

This is just to confirm and second the sound advice of jcoltrane.

I very recently refinanced my apartment which I bought less than 2 years ago, so I just went through all of this .The banks are extremely slow and deliberate in every step of the process.

I started the refi in April when the rates went to 4.25. It took until mid June( 2 months) to get the commitment even though I was using the same bank as when I purchased and my building is on their A list.The commitment and my lock in at 4.25 had an expiration date of July 30th.Well,with all of their investigating and double checking everything and just being swamped with people buying and refinancing it didn't happen.I was in a panic the last week of July and finally they gave me an extension until Aug 15th.

Guess what? There was still no closing scheduled by August 10th so I was in a panic again.I started calling everyone involved 3 times a day.Finally,on Aug 14 they scheduled the closing for Aug 19 and gave me another extension.Even then,on the 18th( day before the closing),they called me and said that they were having trouble with their "final confirmation" of my employment status when they had already checked my employment status twice earlier in the process. They had called my school and no one answered and there was no machine. I explained that there wasn't necessarily anyone in any given school on a random day in August and tracked down my principal and put him in touch with them.
All eventually ended well but a "simple refi" with the same bank took 4 months !

As to the insufficiency of the condo's reserve fund,this could well be a major problem with this buyer or any buyer.The bank I dealt with will not close on a loan in a building if they find out that a single owner of a coop or a condo in the building has been in arrears on their monthly maintenance within the last year!