Contract for Deed in New York: What You Need to Know
Navigating Real Estate Transactions: A Guide for New Yorkers3 min read
For many New Yorkers who are looking to buy, sell, rent, or otherwise invest in real estate, signing a “contract for deed” is a common legal transaction. But do you really know what’s involved in a contract for deed? Do you have an understanding of the pros and cons? And what about the relevant local regulations in New York?
The purpose of this article is to provide an introduction to contracts for deed in New York state. We’ll go over the basics and provide insight into the local regulations that apply. We’ll also discuss the fees you can expect to pay, potential risks of signing a contract for deed, and how to find an experienced lawyer who could provide additional advice.
What is a Contract for Deed?
A contract for deed, also referred to as a “land contract” or “conditional contract”, is a legal agreement between a buyer and a seller in which the buyer makes a down payment and agrees to make monthly payments for a property until they own it. This agreement is beneficial to the buyer because it provides an opportunity to purchase a home without having to qualify or pay the high costs associated with traditional financing like a mortgage.
The seller retains the title to the property until the buyer has made all of the payments. Typically, there is an “acceleration clause” in the contract, meaning that if the buyer fails to make payments, they would be in default and the seller can take back the property.
Local Regulations in New York
New York law has specific provisions regarding the legal dealings associated with a contract for deed. The most important regulation is that a contract for deed must be in writing and can be used only when the property purchased is a one- or two-family residential home. It also must be recorded in each county in which the property is located.
In addition, the contract for deed must include a provision allowing the buyer to recoup payments that they’ve made if the seller defaults. In New York, these payments must be deposited into an escrow account (usually at a bank or title company) within 10 days of signing the contract.
Fees and Potential Risks
Like with most real estate purchases, there are fees associated with signing a contract for deed in New York. These include the fees associated with the escrow account, closing costs, title and deed fees, and any other applicable legal fees.
Another potential risk when using a contract for deed is that the buyer could face a deficiency judgment if the seller does not complete the payments. This means that the buyer would still owe the seller money for the remaining balance on the mortgage.
Finding an Experienced Attorney
It’s important to work with an experienced attorney when negotiating a contract for deed. You want to ensure that your interests are protected and that the agreement meets all of the legal requirements in New York.
UpCounsel is the perfect place to find experienced attorneys who understand the local regulations and could provide the legal counsel you need. Whether you’re looking for a one-time consultation or a team of freelance attorneys, UpCounsel has the right legal professionals for your real estate investing needs.
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