We spoke with Donald Snyder, Senior Counsel at Harter Secrest & Emery LLP, who has more than 35 years of experience in real estate law. Don gives us his perspective on how COVID-19 has impacted first-time homebuyers from an attorney’s perspective.
Why is it important to work with a real estate attorney?
For most people, buying a home is one of the largest investments of their lifetime. It’s important to work with someone who’s experienced in real estate law and is familiar with the process and real estate contract forms. You do not just necessarily want to use some attorney who helped you or a friend get out of a traffic ticket.
How has COVID-19 impacted the homebuying process when working with a real estate attorney?
Some procedures are the same, some are different. Long before the pandemic, it was common practice for a real estate agent/broker to have electronic contracts forwarded to the client’s attorney for review—that process is still the same in today’s environment when working with our clients.
One area where time delays may be evident is with contract addenda being added due to COVID-19. These addenda may seek to grant time extensions to certain areas of the contract, but it is important to have a real estate attorney review these addenda because individual factors play in here. An experienced real estate attorney can help determine what’s best for your circumstances.
Another change due to COVID-19 is the process of recording documents like deeds and mortgages. Real estate transactions must be recorded in the county where the property is located. Typically, an abstract company would put a deed and the mortgage on record for you. E-recording is helping replace some of these services that are typically assisted in person.
For example, you would give documents to a certified e-recording company, which then sends the documents to the county clerk, and the county clerk records everything. In-person recordings just recently re-opened in Monroe County.
What does the typical process look like when working with a real estate attorney?
From the time you have an accepted offer up until closing, there are a series of steps throughout the process that your real estate attorney will help guide you through:
- Once you have an accepted offer, the first step is that the real estate attorney receives the contract for review. In New York, most real estate contracts have a contingency for an attorney approval window (typically a three-day minimum). During this period, the attorney can approve the contract with conditions or disapprove it. We typically give clients a phone call to make sure everything in the contract aligns with their understanding—I call this having a second bite at the apple. In this call, we discuss the importance of contingency dates (e.g., inspections, mortgage contingencies) and make sure the client understands they need to meet those dates or it may give the seller the opportunity to withdraw from the contract.
- Next is the mortgage commitment. This step usually takes some time—as much as 30 days from contract to mortgage commitment. Being pre-approved with your lender may help speed this timeline up because your lender has already started to verify your income and credit, but the lender’s appraisal may still take some time. One piece of advice I offer to clients is that you don’t have to accept a mortgage commitment right away if you have concerns about it. If you have any questions, a real estate attorney is happy to review it with you. Have us take a look at it to ensure you won’t have a problem satisfying any conditions.
- Your real estate attorney will then obtain title documents from the seller’s attorney, perform a title examination, and secure title insurance. These steps ensure the seller can deliver a good and marketable title. An experienced real estate attorney should be familiar with standards for the resolution of common title issues, such as liens, restrictions, easements, encroachments, boundary line agreements, and fence misplacements.
- Once the buyer has satisfied all contingencies and conditions, obtained a “clear to close” from the lender, and the seller is in a position to deliver a good and marketable title, the attorneys will work to schedule a time for closing. If additional time is needed to satisfy a contingency, a buyer may be able to negotiate this timing on a case-by-case basis.
- Once closing has been scheduled, your attorney will prepare a closing statement including tax adjustments and closing expenses. The buyer should arrange for the transfer of utilities and schedule the final walk-through of the property with the realtor to ensure everything meets expectations.
- Last, you’ll come to closing with photo identification, evidence of insurance, and the funds necessary to close. Your attorney will review and explain the closing documents to you. After closing, your attorney will make sure the appropriate papers are delivered to the abstract company for recording in the County Clerk’s Office.
What are the common questions you typically see when working with first-time buyers?
One of the most common questions I hear is “When will I close?” The date in the contract is a target date only. The seller will need to be able to provide a clear title and the buyer will need a “clear to close” from the mortgage lender. It’s important not to confirm movers until your attorney has confirmed a closing date. You want to have everything in order going into closing (having satisfied all aspects of the contract) and not be negotiating items at the closing table.
Another question that comes up frequently is “How much money do I need to close?” Lenders are required to provide buyers with a closing disclosure or a “good-faith estimate”, which will help estimate closing costs. We work with the client as it gets closer to closing to tell them exactly how much money they will need to close.
What’s your most important piece of advice for first-time homebuyers?
It takes a team effort to make the closing process go as smoothly as possible. You want to work with an experienced realtor, loan officer, and attorney. Together, you’ll work as a team to get to closing.
About Don
Donald Snyder, Senior Counsel, Harter Secrest & Emery LLP
Donald Snyder has over 30 years’ experience in real estate law, including extensive experience examining, certifying, clearing and underwriting title. He also has experience with commercial transactions and financings, leasing, development, environmental, and land-use matters. Don is an active member of the Monroe County Bar Association’s Real Estate Section and Real Estate Council. He is a frequent continuing legal education lecturer on real estate title issues and has presented to municipal leaders concerning development and planning issues. Don once served as senior title officer for First American Title Insurance Company of New York and as underwriting counsel for its subsidiary, Public Abstract Corporation. For more information, visit hselaw.com.
