Are you having a hard time finding resources on Real Estate subjects? We recently compiled a list of useful links for those looking to learn more about real estate processes, laws, and taxes. It includes both municipal resources and other helpful sites, such as Streeteasy and Oasis, a source for detailed community maps. We hope that they can be of use to you!

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The closing is the climactic moment in a Real Estate transaction, when the deal is finalized and the money finally changes hands. However, the big moment can be daunting, especially in New York, where the large cast of characters can include not just the seller, purchaser, and their attorneys, but possibly several brokers, a lender, the lender's counsel, a management company, and title company as well. But what really goes on, and what should a prospective buyer or seller prepare for to make sure that the final step goes smoothly? This article, originally published in the New York Times, offers a helpful guide for first-timers.

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Monday, November 7, 2016

What are HDFC Buildings?

HDFCs (Housing Development Fund Corporations) are essentially income-restricted cooperatives; they limit a potential purchaser’s ability to buy in based on whether their annual salary falls below the calculated income cap. The establishment of HDFCs were geared toward purchasers looking for a residential home to keep for a substantial period of time, with the possibility of passing it on to family members. They compose much of New York City’s affordable housing. HDFCs are further classified by the way in which the low income cap is calculated, either through a regulatory agreement with the city or without one. If the building does have a regulatory agreement, then the income cap is based on a percentage of the median income within the surrounding neighborhood. If the building does not have a regulatory agreement, then the income cap is generated by a formula based on the building’s maintenance charges and utilities fees. Usually, the standard is to bracket the income at about seven times the annual maintenance charge. Further, the income cap will mimic the economics of the surrounding area and increase when the area becomes more affluent. For instance, as a maintenance charge increases within an HDFC building, the income cap will follow suit and allow for a greater annual salary. While HDFCs require a purchaser to fall within the low income cap, there is no requirement as per the resale price. Thus, a seller has full discretion in determining the market price of the HDFC. Nonetheless, the resale price is often regulated by the high flip tax that HDFC buildings impose (often about 30% of the profit) and the relatively limited supply of potential buyers that fit the income requirements to purchase. The HDFC market is aimed to benefit purchasers, since a potential purchaser is able to acquire a high-profile residence at a price that is substantially lower than the market rate. The ideal purchaser is someone that has acquired a large trust or inheritance but has a low income. However, a purchaser trying to obtain funding may run into issues as banks tend to look less favorably on HDFC loans. This arises from the fact that HDFCs are seen as riskier investments, and thus have higher rates. Moreover, where a purchaser is unable to obtain bank financing, the HDFC is likely to require an all cash transaction. We would urge any HDFC purchasers to consult with a banker that has a proven track record of closing loans on HDFC projects, as the financing component of the transaction is often the piece of the transaction that has the most associated risk. For further information on HDFCs please check out the following links: http://www.nychdfc.org/#about http://www1.nyc.gov/site/hpd/owners/homeowner-hdfc.page http://uhab.org/homeownership

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Contracts are at the heart of buying and selling real estate. This is because, by law, no real property can legally change hands (with the exception of a lease lasting less than one year) except through a written contract. This law is called the “Statute of Frauds.” In order to be legally binding, a contract must contain certain basic information. First, it must explicitly name the parties involved in the deal. Failure to do this may make the contract impossible to enforce. Secondly, the specific boundaries of the subject property must be listed accurately, and with enough exactitude as to be easily identified. “By the long rock wall with a big oak tree at the north end,” unfortunately isn’t sufficient for the contract to be binding. Third, the purchase price for the property in question must also be listed and decided upon before the contract is signed, not after. Depending on the contract, it may also need to include such facts as closing date, the terms of the mortgage (if applicable), and information about the title of the property (amongst others). Provided that a contract has all of the necessary information, the form that the contract takes contains a great deal of leeway. The contract could be many documents pieced together, some terms legibly scribbled on a napkin, or even an email chain (provided, of course, that they are sufficiently connected and that the required signatures can be proven genuine—a subject of no small amount of controversy). There is even one exception to the Statute of Frauds: in some cases an oral recitation of the contract may pass muster, provided that is obvious that all parties’ actions explicitly refer to the deal. Hopefully, this tidbit of legal theory will help put the contract process into context. With any more specific questions, we would always recommend contacting a legal professional.

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