1) Is
a Binder legally enforceable on either the buyer
or seller?
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No, it is not a legally enforceable document against
either party. It is merely an act of "good
faith" on each party's side expressing an interest
to buy or to sell real estate.
2) When buying real
estate, what is the standard down payment and when
is it due?
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Normally, the down payment amount equals 10% of
the of the purchase price, due when the buyer signs
the real estate contract. For example, if the purchase
price is $175,000, the down payment would be $17,500.
However, by agreement between the parties, the down
payment may be less, but usually not below 5%.
3) What is the purpose of a Title Report?
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This document, prepared by a Title Insurance
Company, investigates to determine if any outstanding
liens or judgements are recorded against the property
and insures that the buyer will obtain good, clear
ownership title against any future adverse ownership
claim.
4) Do I lose my down payment if I cannot obtain
a mortgage from a bank?
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Normally, your down payment is not lost if
the bank declines to issue a mortgage and the seller
is promptly notified. The two most frequent exceptions
occur either if the bank declines a mortgage because
the borrower failed to comply with application requirements,
or if provisions of the contract made the purchase
not conditioned on obtaining a mortgage.
5) What is the role of the real estate broker, and
who pays their fee?
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A real estate broker is a "matchmaker,"
bringing together buyers and sellers. A broker's
day-to-day knowledge of the market - what sellers
have available, what buyers want - in a specific
price range, market value, neighborhood, property
type (apartment, private home, commercial) benefits
both parties. Normally, the seller pays the real
estate broker's fee.
6) What does a Survey do, who pays for it, and how
current must a survey be?
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A Survey is paid for by the buyer. It provides
to the parties and the bank precise measurements
of the property and plots the exact location of
any structure on the parcel. No bank will issue
a mortgage without a current Survey. While bank
requirements vary, customarily no Survey done more
than twenty years ago is accepted. All Surveys,
even recent ones, necessitate a Survey Inspection
to determine if any changes to the property or structure
have been made since the initial full Survey.
7) What is the distinction between a Mortgage and
a Note?
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While both documents are signed by borrowers
(usually the buyer), a mortgage is the lending institution's
(normally a bank) security instrument up to the
loan amount of the mortgaged property. A Note is
the obligation of the borrower to repay the loan
amount, on time, and according to the terms of the
loan, back to the lending institution.
8) What is a Right of First Refusal when I sell a
condominium apartment?
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A Condominium Board reserves the right to purchase
any apartment unit prior to its placement by the
condominium owner on the open market. A Right of
First Refusal, signed by an authorized Condominium
Board Representative, must be presented prior to
or at the closing by the seller.
9) In purchasing a co-op, why does my bank require
a Lien Search and UCC-1?
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A Lien Search is required by the bank to assure
that there are no judgements or liens against the
cooperative corporation, the seller, or the buyer
at the time of the closing. If either appears in
the search, it must be disposed of before the closing.
A UCC-1, filed with the County Clerk, puts the world
on notice that the lending institution has a pending
lien against the premises, up to the amount of the
loan.
10) What and why are the adjustments made at a closing?
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Adjustments represent monetary costs
pro-rated at closing between the buyer and seller
calculated on a per diem basis as of the closing
date, with taxes, common charges, water, sewer and
oil among the most frequently adjusted areas.
