Experienced real estate closing attorney James G. Dibbini knows that even one little change to your finances can negatively impact your mortgage closing. While expenses are sometimes unavoidable, it’s always in your best interest to maintain your financial status quo before you close on a piece of real estate. Below, we outline the top five mistakes you should avoid.

1. You Decide to Switch Jobs

Most mortgage lenders want to see two consecutive years of employment on your loan application. If you quit your job — especially if you change professions, become self-employed, or switch to a commission-only compensation system, the lender might be unwilling to finalize your home loan, even after they have already issued your loan commitment.

Sometimes, a job change is unavoidable. However, it can delay your closing and might kill your real estate deal. After you switch jobs — even if you’re making more money now — your lender will typically want at least a month’s worth of check stubs to confirm your new income. And, if you’re now self-employed, it might demand at least two years of tax data to confirm your income stability.

If you’re considering a new job or profession, consult with your mortgage broker, bank, real estate agent or real estate closing attorney before going forward with the change. Your real estate closing attorney may have suggestions on how to minimize the impact of your new career on your mortgage.

2. You Open a New Credit Card, Car Loan, or Other Line of Credit

Today, mortgage companies are more risk averse than in the past. When you apply for a mortgage, the lender will review your credit report — if you have too much debt or large minimum payments, it might impact your home loan. Typically, the mortgage company will run your credit report several days before the closing to make sure the home buyer still qualifies for the loan. If you open a new credit card or another line of credit, it might change your debt/income ratio — and the lender might deny the loan or refuse to fund the loan even after issuing your final approval or commitment.

A last-minute mortgage problem can kill a real estate deal and jeopardize your contract deposit. For this reason, you should never finance, co-sign, or increase a credit or loan balance before your real estate closing.

3. You Spend Too Much Money

Once you agree on a price and sign a real estate contract, it’s easy to get excited and start buying new items for the house. However, big purchases can put your mortgage at risk — even if you’re paying in cash to purchase the items.

The mortgage company doesn’t just check your credit report. Additionally, it will review your bank statements to make sure you have enough money to pay your down payment, closing costs, and other expenses. If there’s concern that you can’t pay these costs, it might delay or complicate your real estate purchase. Typically, your real estate closing attorney will suggest holding off on major purchases until after your sale is finalized.

4. Your Current Home Is Still on the Market

Frequently, mortgages are contingent on the sale of an existing home — especially if there’s concern that the homebuyer can’t afford two simultaneous mortgage payments. If your home hasn’t sold yet, you should check with your mortgage company to see if this will impact your home loan. Your real estate agent or real estate closing attorney might also have other solutions that allow your closing to occur.

5. The Real Estate Appraisal Is Too Low

During a real estate appraisal, a trained appraiser examines your home, assessing its value based on its condition and comparable sales. Problems can arise if the appraiser assigns a lower value to your home that the agreed-upon purchase price. If the loan-to-value ratio is negatively impacted, the mortgage company might not agree to finance the entire purchase. This can lead to delays while the parties renegotiate the price or obtain alternate financing.

Get Answers From a Real Estate Closing Attorney

Without guidance from a real estate closing attorney, purchasers can easily make mistakes endanger their real estate acquisitions. At James G. Dibbini & Associates, P.C., we guide real estate agents, sellers, and buyers through the complicated and frustrating closing process. Our goal is to identify potential risk factors in advance and reduce their impact — enabling smooth and pain-free closings. Contact us for more information.

For most people purchasing a home is very exciting. However, if a buyer is not adequately prepared it can become frustrating fast. Many people have bad experiences purchasing homes because they make common mistakes that can be easily avoided if a homebuyer is properly prepared. Below, please find a list of seven (7) of the most common mistakes purchasers make when buying a home.

1. Failing to confide in your attorney

• Experienced real estate practitioners, like the attorneys at James G. Dibbini & Associates, P.C., handle a multitude of transactions and can provide you with sound advice. Further, your attorney has a legal responsibility to represent your best interests. Failing to provide your attorney with all the information and failing to keep them in the loop with regard to important developments, such as your financing, can be detrimental to a deal.

– Whenever purchasers are having cold feet or cannot meet a lender’s requirements they should immediately discuss same with their attorney so that the attorney can protect their downpayment funds.

2. Failing to meet with a qualified loan officer or mortgage broker to determine the amount of financing you can obtain

• Meeting with a lender at the beginning stages will help purchasers in determining (1) how much they will be able to borrow, (2) how much they will need for the downpayment, and (3) how much their monthly payments are likely to be. Looking for a home will, thus, become easier because the purchasers will know if they can obtain financing and the price range they can consider when purchasing a property. Further, a lender can advise a purchaser on what documents/information it will need so that the purchaser can start gathering said documents/information. This will most likely speed up the application process later on when the purchaser finds a home.

• James G. Dibbini & Associates, P.C. works with only very qualified and competent mortgage brokers and loan officers and can certainly recommend someone to you if you need assistance with the loan process.

3. Failing to go to the Building Department

• The Building Department in the local municipality where the property is located should have a file on the property. This file should contain several important documents that can assist you later on, including: a copy of the certificates of occupancy/completion for the building, a copy of a survey for the premises, and information on whether there are any violations or permits on the property. Your real estate agent may help you with the review of the Building Department documents. Failing to go to the Building Department and obtain copies of these documents can significantly delay, and in some cases, prevent a closing altogether. This is because if you are obtaining financing to assist in the purchase of a home your lender will require certificates of compliance for the building and all improvements to the property, such as a deck or a basement that was finished after the original construction of the house. Further, a lender will oftentimes not clear a file to close if there are open permits or violations on a property. When the title company produces its report these issues will all be brought to the forefront and will need to be addressed.

Additionally, if you are obtaining financing a lender will usually require a survey of the premises. If a purchaser is able to locate one in the Building Department’s file it can end up saving the purchaser the cost of ordering a new survey (several hundred dollars!).

4. Failing to account for additional expenses, such as taxes, insurance, utilities, etc.

• Purchasers should always look into all possible costs and expenses they may incur prior to signing contracts and consider increases in these estimates over time. To get an idea of how much you will be paying in property taxes it is a good idea to call the local assessor’s office or talk to people in the neighborhood. Additionally, a realtor may be able to assist you in obtaining copies of a seller’s property tax bills and other utility bills. You should also be able to get a quote on homeowner’s insurance from an insurance company and see if they can determine if the property is in a flood zone, as that will additionally require flood insurance.

5. Failing to get an engineering (home) inspection

• Before signing contracts it is advisable that you hire an engineer or qualified home inspector to inspect the home so that you are aware of any defects. An inspector can check to ensure there are no structural or mechanical defects, in addition to determining if the home has a mold, lead paint, termites or s radon problem. Furthermore, the inspector can determine if an underground oil tank exists on the property. If so, said tank should also be tested by an experienced professional. A leak in an underground oil tank is an environmental issue that by law must be dealt with immediately and which can be extremely costly. If the property you are purchasing has well water or a septic tank these systems should also be tested. Failing to hire an inspector in an effort to save some money can end up being more costly later on.

6. Failing to realistically estimate all closing expenses

• Oftentimes, a purchaser does not take into account the various lender and title charges that accompany the purchase of a home. At closing these charges are all due in addition to attorney’s fees and the balance that needs to be paid to the seller, if any. In an effort to realistically estimate all of your closing expenses you should remember that all lender fees and short term interest will be subtracted from the loan amount prior to receiving any funds from the bank. Thus, you will need to make up this difference at closing. Furthermore, if you are escrowing for taxes and insurance at closing (which most lenders require) you will need to pay any taxes that will be due within sixty (60) days of the closing at the closing. These taxes will be added to your title insurance bill. The title insurance bill will also contain all fees related to recording the deed and mortgage with the County Clerk and the mortgage tax charged by the State, in addition to the title charges for the title and loan policy and for the title searches.

7. Failing to do an adequate walk-through prior to closing

• Purchasers should always do a careful inspection of the premises immediately preceding a closing. Generally, this will be your last chance to bring up any issues, such as an inoperable appliance, damage to the property, or a missing chandelier that was supposed to be included in the sale. It is generally too late if these issues are discovered after closing and a purchaser could get stuck purchasing a new appliance, replacing the missing chandelier, or clearing out the seller’s property, which was left behind, at the purchaser’s own cost and expense.

Buying your first home can definitely seem overwhelming and stressful at times. But if you go into the process having already done your homework and with a competent and trusted attorney, you can protect yourself from all of these mistakes. Please contact James G. Dibbini & Associates, P.C. to discuss these mistakes and other issues that may arise when purchasing a home. Our firm has over nineteen years experience with real estate transactions and would be happy to assist you in the purchase of your new home.

On October 21, 2016, Governor Andrew Cuomo signed a law passed by legislators in Albany which imposes fines of up to $7,500.00 on anyone who advertises the occupancy or use of an apartment subject to the New York State Multiple Dwelling Law for short-term rentals on a home-sharing websites such as Airbnb or Wimdu.  In response, the home-sharing website Airbnb has filed a federal lawsuit contending the new law would cause it “irreparable harm,” and claims the law violates their constitutional rights.

The rise of home-sharing websites and their use by New York renters who seek to turn their often rent stabilized rental apartments into mini-hotels raises many legal and practical issues for landlords, such as illegal subletting rights of tenants and  property owner exposure to liability.  In this article we will discuss the new law’s application, and some issues landlords should be aware of.

This recent change in the law highlights a new and growing trend of tenants looking to sublet their apartments to supplement their income and pay a share of their rent. Short-term subleases, especially those arranged without the Landlord’s knowledge and consent, present unique issues for Landlords.

Under the New York State Multiple Dwelling Law, generally, buildings with three or more apartments may only be used for “permanent resident purposes.”  This means landlords, or individuals seeking to sublet, are prohibited by law from offering rentals for any period less than 30 days. Additionally, most Lease Agreements include a provision that the Tenant may not sublet the premises to another party without first obtaining the Landlord’s written permission.  .  Landlords should take such violations of leases seriously and consult an attorney to discuss options to correct the breach and evict the wrongdoer tenant.

Covenants, conditions, and restrictions (CC&R’s) of condominiums and proprietary leases and by-laws of cooperative apartments may also restrict the right to sublet.  Where the right to sublet is restricted, and no notice of the sublet is provided to the landlord, tenants and subtenants may be evicted.

Landlords should further consider the effect of short-term rentals on their insurance policies.  Homeowner’s policies could be invalidated by failing to notify the insurer of a tenant or subtenant. Landlord’s policies also may not provide coverage for claims brought by subtenants of whom the Landlord was unaware.  Landlords should check their insurance policies to determine if they have coverage for claims by subtenants.

Landlords must be wary of illegal sublets and tenants who turn their apartments into illegal hotels.  Fortunately, New York State eviction law can protect Landlords from the significant liability exposure caused by such tenants.

If you need to evict a tenant or subtenant, or have any questions or concerns about your property being used for home-sharing purposes, please contact our office.

James G. Dibbini & Associates, P.C., collectively, has over 20 years of experience in Landlord/tenant law. If you want have any questions about how home-sharing could affect your property, give us a call at (914) 965-1011, or email us at jdibbini@dibbinilaw.com to schedule a consultation.

Are you going to be unavailable to attend your real estate closing? Will you be going into a complicated surgery and want to ensure someone will be able to act on your behalf?  These are common situations in which people execute power of attorney (POA) contracts.

A POA is a legal contract where you, the principal, grant an agent the authority to make decisions on your behalf.  A POA creates a “fiduciary relationship” where an agent is bound by law to act in your best interest.  You choose the scope of authority given to an agent and you should always take precautions to define this clearly in any POA contract.

Before September 1, 2009, there were different forms a principal would have to execute depending on when he/she wanted the POA to go into effect, the scope of the POA, whether or not it would be revoked if the principal became incapacitated, etc.  Now there is one form, the New York Statutory Short Form Power of Attorney, you as principal need to fill out and execute in order to grant a POA.  On this form you can modify it in several ways including limiting the agent’s power, controlling when the POA goes into effect and whether it stays in effect in the event you become incapacitated.  However, under the NY Statutory Short Form POA, the agent cannot make health care decisions for you. In order for the agent to make such decisions, you and the agent will have to execute a Health Care Proxy.

Usually, in New York, a POA does not need to be recorded with the County Clerk’s office unless it is being utilized in a real estate transaction.

POAs can be a very helpful and effective estate planning tool but they must be drafted carefully and it is crucial that each principal have a clear understanding of his/her rights under the POA.

James G. Dibbini & Associates, P.C., collectively, has over 20 years of experience preparing and executing POA contracts. If you need help with your POA or other areas of life and estate planning, give us a call at (914) 965-1011 or email us at jdibbini@dibbinilaw.com to learn more.