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June 3, 2020

Many NYC real estate lawyers are familiar with coop and condo transactions, but our practice also includes representing clients with their house purchases. We have seen a recent uptick in house transactions in today’s changing market. If you are currently navigating this process, here are some initial tips to protecting the client’s interests.

First, it’s important to have a home inspection before proceeding with a house purchase. In addition to working with a qualified and experienced home inspector, we recommend being present for the inspection so that, in addition to the report, you can hear the inspector’s firsthand suggestions and insights. Remember to check that any systems (heating/cooling and electric but also those unique to the premises like sprinklers, alarm systems, pools, and/or home entertainment systems) are in working order. The inspector can also advise if a more specialized inspection is needed, like a termite inspection, radon inspection (depending on the neighborhood), and/or the likelihood of an underground oil tank.

Second, ask if the seller or any prior owner performed renovations to the house. More extensive renovations will require building permits, which are sometimes left open or incomplete. If uncaught, this will become the problem of the new owner of the property. Open permits can lead to costly headaches, especially if the purchaser plans future renovations of their own. On occasion, a seller may not even know that an open permit exists on the property, especially if it is relating to work done by a prior owner and was not found when the seller bought the house.

Third, it is also helpful to check the certificate of occupancy for two or three-family homes to ensure that the property is listed correctly. Sometimes a purchaser may think that they are buying a two-family home, only to find that it is really an illegal three-family home! If purchasing a multi-family home, it is also important to ask to see any existing leases in advance. A purchaser may want to see the rental history to determine if any issues exist with the tenant(s), and that may also help them decide whether they wish to buy the house with the existing tenant(s).

Before a purchaser signs the contract, their lawyer can run a preliminary title search on the property that includes a permit search and certificate of occupancy search. A preliminary title search can also uncover any outstanding violations. It may take a few days for the searches to be returned, but conducting this due diligence before signing the contract (and thus becoming locked into the transaction) allows a prospective purchaser to work out a solution, such as renegotiating the price or consulting an architect.

Lastly, check for any local rules that would affect the municipality where the property is located, such as the presence of a homeowners association, or any laws relating to that area, such as special taxes levied in parts of the Hamptons.

Even during these extraordinary times, we are speaking with purchasers looking to buy houses in NYC and surrounding areas. We hope that these tips will be helpful to prospective purchasers, and we are always happy to set up a call to discuss your specific circumstances and transaction.