Getting to the Closing Table

So you have made it through the initial stages of home buying – you found the house of your dreams, your offer was accepted, and your loan was approved. 

But when does it officially become your house?  Getting to the closing table can be one of the more frustrating aspects of a real estate transaction for all parties involved.  Nothing can be more aggravating to buyers and sellers than the uncertainty of an “on or about” closing date, which typically appears in most real estate contracts in New York.  In fact, even where a real estate contract specifies a date certain, courts have deemed the date to be merely an “on or about” target date.

Many people assume that the terms in a legal document, such as a real estate contract, are set in stone.  A closing date however is not one of them.  This is because there are many factors and parties involved.  Unlike other states where the buyer’s attorney can represent the buyer, the lender and the title company, in New York these tasks are often handled by three separate attorneys.  In addition, where condominiums and co-op apartments are the subject of the transaction, the scheduling of these closings also typically involve the participation of a managing agent.  Because of the many schedules involved, the courts have held that each party to a real estate transaction is entitled to a “reasonable adjournment” of the target closing date.  Generally thirty (30) days is considered a reasonable time period for an adjournment of a closing date.  In addition, a buyer’s mortgage is often contingent on the sale of their existing home – so the closing date hinges on the progress of the buyer’s buyer.  And the seller is typically under contract for the purchase of their new home.  These other transactions can create a domino effect causing an even further delay than the typical thirty (30) day adjournment allotment.

In addition to scheduling conflicts, there are other factors that can delay closing.  These include delays in getting the clear to close from the lender – obtaining a mortgage requires a tremendous amount of documentation and verification of income and assets.  Once a bank clears its file and allows the scheduling of the closing, it then has to get its loan package to the bank attorney.  While this is now usually accomplished by email, the bank attorney still has to review, print, photocopy and collate the loan package in preparation of the closing.  Banks rarely do this more than one day in advance of a closing.

Title defects, such as errors in public records, unknown liens, undiscovered encumbrances and easements, boundary line disputes, and the like, are also common hurdles that can add days or even weeks onto a closing.  Most title issues however (but not all) can be remedied, but it takes time.

Obviously everybody wants their real estate deal to close as soon as possible, but the parties should be realistic.  Keeping in mind the potential delays just discussed, you should be careful that your purchase contract is structured in a way that will accommodate any bumps in the road you might encounter.  Setting an aggressive closing date for a real estate purchase is a great way to cause stress down the road.  While it is virtually impossible to remove the stress and frustration caused by the uncertainty of a closing date, using an experienced real estate attorney can help alleviate some of the headaches you will encounter.

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