Obtain a title report
Agency: Private Company
A title report is obtained from one of many competing private companies, regulated by the state. State regulators set fees for title insurance and those fees for services could vary. A title report is not technically mandatory but is routinely used to analyze the quality of the title. A title report is an essential prerequisite to securing title insurance. No title company would offer title insurance without a title report tracing the deed history and articulating the liens, covenants and, other limitations on the title. Lenders typically require a title report and title insurance. Most buyers purchase the title insurance to ensure that the title is clear (i.e. no defects in the title). One application for the title report and title insurance is enough. Thus, no additional procedure or time is needed. Banks usually require title insurance for a property to be accepted as collateral for a loan.
Time and cost: 10 days, USD 11,276 (11,276 (title report and title insurance))
Conduct an environmental review
Agency: Private Company
(According to the assumptions of the case study, it is assumed that no violation nor problem is found in the first phase of the review and that the whole Procedure does not take more than the 10 days that it takes to obtain the title report in Procedure 1)
A private specialized firm typically conducts the environmental review. It is not technically mandatory, but a prudent investor will routinely require an environmental review and no bank would ever advance a commercial mortgage without conducting an environmental study. The environmental review may have up to 3 phases: 1. The history of the property in the public records is analyzed to check if there was any record of contamination or any violation. 2. If yes, an inspection of the property takes place, where some samples are taken 3. Clean-up phase if needed.
Time and cost: 9 days, depends on nature and extent of contamination (if any)
The buyer obtains and fills the forms needed for the transfer
Agency: Office of the City Register
All NYC transfers should be done using ACRIS system. It generates all of the required transfer tax forms, i.e. NYS Transfer Tax Form TP-584 regarding real estate transfer tax, and the NYS Real Property Transfer Report (Equalization) Form RP-5217, as well as necessary documents as smoke detector’s affidavit, customer registration, etc. The state forms RP-5217 and TP-584 are available in many local government offices and on the Internet. Additionally, the property disclosure form is typically drafted by the attorney for the seller and given to the buyer before or at closing. The seller usually prepares the title deed. The fees for state forms RP-5217 and TP-584 are typically collected by the title company at closing, before recording, and must be paid to the state upon filing the deed for recording with the registry. It is common practice to obtain title insurance from one of the competing title insurance companies. The title insurance can only be acquired at closing after the transaction has been completed between buyer and seller and the price has been paid. Where financing is involved, the lender typically requires the purchaser to obtain insurance as a condition of the loan. There is a separate mortgage recording tax needed to be paid, in addition to the real property transfer tax. The seller pays real property transfer tax at rates 0.4% for NYS transfer tax and 2.625% for NYC transfer tax (of property value exceeding $500,000). The title insurance company will take the responsibility of recording the title at the county clerk.
Time and cost: 1 day, USD 96,128.81 (Filing fee for state form RP-5217 is $250 + Filing fee for state form TP-584 is $5 + 2.625% of property value greater than $500 000 (NYC transfer tax) + $2.00/500 of property value (NYS transfer tax))
The title is recorded with the County Clerk
Agency: County Clerk
The transfer deed (together with the applicable tax forms and payment) is then presented to the relevant public official, e.g. county clerk, for recordation in the public records of the jurisdiction. The date of acceptance of the deed by the clerk is the date which controls for transfer purposes. Nonetheless, it often can take many weeks (and even months) for the actual recordation to take place and become available on the public record. However, the transaction is valid and opposable to third parties on the date it is submitted.
Although the law states that title passes upon delivery of the deed, where there are competing claims the law recognizes the 1st recorded deed.
The title insurance company usually takes the responsibility of recording the title at the County Clerk, paying the fees for state forms RP-5217 and TP-584 .
The documentation shall include:
- Title deed
- NYS Real Property form TP-584 on real estate transfer tax
- Property Disclosure Form
- Real Property form RP-5217
- Title Insurance
Time and cost: 1 day, USD 97 ($32 + $5 cover page + $5 per page (assuming that the title consists of about 12 pages))
