If a buyer needs a mortgage the contract make sure you contract contains a mortgage contingency clause.  This gives the buyer a certain amount of time (usually 30 -45 days) to submit an application and get an answer from his lender.  If the application is approved a mortgage commitment is issued, the contingency is satisfied and the buyer must purchase the house.  If at the end of the contingency period the lender has not made a decision (approval or denial), the buyer must ask the seller for more time to get the answer and the seller can decide to give more time or cancel the contract and refund the deposit.  When the mortgage application is denied the contingency allows the buyer to cancel the contract and receive a return of his contract deposit.

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Being a real estate attorney in Staten Island sometimes I am approached with the following question: “My contract date has passed and I want to close.  How can I force the other party to close?”

The contract should detail what actions (or omissions) will cause an event of default.  When a party breaks the contract (event of default) it triggers rights including cancellation of the contract and/or a suit for monetary damages.  Missing the closing date by an unreasonable amount of time can be cause for seeking to declare a default.  When a default is declared it is good practice to put the other party on notice that a default is being declared so that you can enforce your rights to cancel the contract and start a lawsuit. Most NY contracts have a closing date clause which is written “ON OR ABOUT” date.  This is a target date and allows either party to wait a reasonable time after the date before being obligated to close.  REASONABLE is always a term of art but most case law calls for a minimum of 30 days after the ON OR ABOUT date.  If it gets beyond the reasonable (30 day) mark and you want to close you must give the other side notice of your intention to force a closing.  This is done by sending a Time of the Essence (TOE) letter demanding a closing date upon the threat of a default.  If the party receiving the TOE letter fails to close a default can be declared.

You must first make sure a reasonable amount of time has passed and then send a Time of the Essence letter.  This will force the other side to respond and if their response is not what you want be prepared to declare a default and enforce your contract rights.

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Since a buyer will be doing the inspection anyway a prudent seller can save himself time, money and aggravation by putting his house in proper working order.  The little items that he didn’t have time to fix will probably become an issue when a buyer’s engineer does his report.  Besides painting, cleaning and general sprucing up of the house the small touch ups like dry water stains from old leaks, surface cracks, small sheetrock holes and other minor things should be resolved BEFORE you put the house on the market.  It will make the buyer more comfortable before he makes his offer and it will make the engineer’s report look better.  Remember until the contract is signed the buyer can ask for anything he wants or simply walk away, by removing as many potential obstacles before the inspection a prudent seller can make his sale much smoother.

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Homeowners want to sell their homes with the least amount of work possible. Since they live in the homes they do find troublesome many issues that a new buyer and her engineer will find objectionable.  A seller will always try to sell their homes in AS IS condition to avoid paying for repairs or lowering the price.  Usually a buyer makes an offer on a house she has seen only once or twice.  She expects the house to be in working order and is not always aware of the state of the major mechanical systems.  A major question that usually runs across the buyers mind at this point in the purchasing process is “Do I need an engineers inspection when buying a home?”.  So after a binder is signed (but before the contract), buyers do an engineer’s inspection.  Scheduling an inspection can take several days which leads to quite a bit of frustration for sellers.  “What do you mean the buyer won’t sign the contract until he has an engineer’s inspection, I am selling the house “AS IS”.  Then after the inspection the buyer’s attorney sends a list of repairs the buyer’s wants completed. “But I’m selling AS IS”, laments the seller.  While a seller is certainly within his rights to say no inspection he must remember that until the contract is signed he has no deal.  The condition of the house is an important deal term.  Sellers must be prepared for an inspection because even though the seller may have told him broker “AS IS” this does not mean that the buyer will agree.

When selling your home in Staten Island, a seller must be aware of current market conditions.  With the bad economy and record number of foreclosures now is certainly a buyer’s market.  During the boom times in 2004-2006 a seller could say AS IS and stick to it.  With homes receiving multiple offers sellers could tell buyers to take the house AS IS and sign the contract quick or risk losing the home to another buyer.  Usually when a buyer asked for repairs or a reduction in price a seller could say no and be fairly certain that another buyer could be found quickly who would take the house AS IS.  In the current climate buyers have much more leverage to demand (and receive) repairs and/or price reductions.  Today a seller must be prepared to make his house as attractive as possible and to eliminate any reasons a buyer may have to reject his house.  Before putting the house on the market a prudent seller will try to remedy as many defects as possible.

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Most buyers purchase homes with the assistance of realtors and develop a good relationship with their agent but many are not aware that the broker is still working for the seller.  This does not mean that the broker is not being helpful or getting the buyer a good deal, but it does mean that his primary loyalty is to the seller.  Before selecting your realtor discuss this with your attorney and sure your agent is doing her best for you.

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