It is no secret that apartments in New York City are expensive. In 2018 the average price of a condominium unit in NYC was $2880000. However what many purchasers and sellers fail to consider are the additional condominium closing costs that are involved in every real estate transaction beyond the purchase price. Before making any decisions speaking with a reputable Manhattan condo real estate attorney is recommended. At Avenue Law Firm our condo real estate attorneys are well-versed in NYC real estate laws and can offer support throughout the purchasing process helping you understand the various closing costs and make informed choices. We can help you avoid unexpected expenses and potential legal pitfalls that can arise during the transaction. Contact us today at (212) 729-4090 to schedule a consultation. Various NYC Condo Closing Costs In New York City closing costs are typically paid by sellers and even buyers of real estate properties. These costs can vary depending on various factors such as the purchase price of the property the type of property being sold and the terms of the sale agreement. This article will discuss the closing costs of condominium purchasers in New York. Purchasers closing costs for a condominium unit in NYC typically range from 2% to 4%. The largest closing costs in NYC for purchasers are typically the Mansion Tax the Mortgage Recording Tax and Title Insurance premiums and fees. In New York City purchasers will also need to retain an attorney whose fees can generally range anywhere from $2500-$4000. Most condo buildings also charge application closing and move-in fees. Mansion Tax The Mansion Tax is a real estate transfer tax that is paid by the purchaser in property transactions with purchase prices equal to or larger than $1000000. The rates start at 1% of the purchase price for properties with purchase prices between $1000000 and $2000000 increasing all the way up to 3.9% for purchase prices of $25000000 or greater. For example if the purchase price of a unit is $2500000 a 1.25% Mansion Tax would be applied meaning an additional closing cost of $31250 will be due by the purchaser at closing. Mortgage Recording Tax If the purchaser is taking out a mortgage then the transaction will be subject to Mortgage Recording Tax in the amount of 1.8% on mortgage amounts under $500000 and 1.925% on mortgage amounts above $500000. This tax is only based on the mortgage amount not on the full purchase price. For example if you were to buy an apartment for $2000000 and your mortgage is covering 80% then you would be paying 1.925% of the $1600000 loan amount equaling $30800 for the Mortgage Recording Tax. Title Insurance Title Insurance protects purchasers and lenders against any future claims made against the title of the property for issues that were undiscovered and not removed at the time of the purchase when the title search was conducted by the insurance company. Such future claims may include minor issues like unpaid property taxes or liens against the unit or major issues like the seller knowingly selling a purchaser a property the Seller does not actually own. Although it is unlikely that the insured will have to call upon the insurance company for coverage it is still worthwhile to have title insurance because the value you stand to lose is much greater than the one-time premium fee. Further if a purchaser is taking out a mortgage their lender will likely require them to acquire title insurance for the property. The cost of title insurance varies depending on the provider. Purchasers will also have smaller additional closing costs as well in order to close a transaction. Those costs may include title search fees mortgage fees appraisals surveys move-in deposits application fees and recording expenses. Many of these additional fees are negotiable so it is never a bad idea to ask. Mortgage Fees In addition to mortgage tax condo buyers in New York will have other loan-related expenses which include application fees appraisal fees bank attorney closing fees lenders title policies etc. We always advise our clients to obtain a list of all the closing costs in writing from their mortgage brokers prior to submitting a loan application. Condominium Fees The amount you can expect to pay when purchasing a condo in New York City varies depending on the purchase price mortgage size and whether the property is new construction. For lower-priced properties under a million dollars with small mortgages buyers can expect to pay around two to four percent of the purchase price in closing costs. However for high-end or new-construction condos costs can exceed 5% of the purchase price. New York City real estate lawyer Compared to co-ops condos have higher closing costs due to the mortgage recording tax and title insurance requirements. When purchasing a condo with a mortgage youll need to pay a mortgage recording tax which is a percentage of the mortgage amount. The exact amount varies depending on the purchase price and location of the property. Furthermore buyers are typically required to purchase title insurance to protect against any ownership issues that may arise with the property. Most condominiums and management companies will even impose fees on buyers such as application fees credit report fees closing fees etc. Some condominiums may charge a flip tax. Flip tax is not a real tax and is not collected by the government but is a fee charged by the condominium. Usually this fee is a percentage of the purchase price and can sometimes be a significant amount. We always recommend our clients get the list of all condo fees from their real estate agent prior to submitting an offer on the apartment. Its critical to work closely with an experienced condo real estate attorney to understand all the costs associated with purchasing a condo in New York City. By being prepared and informed you can avoid any unexpected expenses and make the best decision for your financial situation. Real Estate Attorney Fees The rates for residential real estate attorneys vary and are based on the attorneys experience geographical area services provided etc. Most real estate attorneys in NYC charge a flat fee for residential condominium closings. If your attorney is charging you an hourly rate for a residential condo closing make sure to obtain an estimate from them in advance. A lot of lawyers focus on specific areas of law. Before retaining an attorney always ask them about their experience and whether they have closed similar deals in the past. Ask your real estate lawyer about the due diligence they will do whether they will read the board minutes review the offering plan discuss the buildings financials with you etc. At our law firm we always provide our clients with a due diligence report that summarizes all of our findings. It is also recommended to discuss all of the fees prior to retaining a lawyer. Closing Cost Description Mansion Tax A real estate transfer tax paid by the purchaser for properties with purchase prices equal to or larger than $1000000. Rates range from 1% to 3.9% based on the purchase price. Mortgage Recording Tax A tax imposed on mortgage amounts under $500000 and above at rates of 1.8% and 1.925% respectively. Calculated only on the mortgage amount not the full purchase price. Title Insurance Protects purchasers and lenders against future claims related to the propertys title that were undiscovered at the time of purchase. It covers issues like unpaid property taxes liens or ownership disputes. The cost varies depending on the provider. Mortgage Fees Loan-related expenses such as application fees appraisal fee bank attorney closing fee and lenders title policy. Obtaining a list of all closing costs in writing from mortgage brokers before applying is advisable. Condominium Fees The amount paid when purchasing a condo varies based on the purchase price mortgage size and whether the property is new construction. Real Estate Attorney Fees Rates for residential real estate attorneys vary based on experience location and services provided. In NYC most charge a flat fee for residential condo closings. Ensure clarity on fees upfront whether flat or hourly and inquire about their relevant experience. NYC Flip Tax When Does It Apply? A flip tax is essentially a transfer fee that is paid to the building typically when an apartment unit is sold. In New York City this fee is more prevalent in co-ops but is also found in some condominiums. The purpose of a flip tax is to provide financial support to the building community by using a portion of the profits from unit sales. This fee contributes to the maintenance and improvement of the building benefiting all residents by enhancing property values and sustaining the buildings financial health. Determining whether a flip tax is applicable to a property involves a careful review of the condos governing documents. These documents which include the proprietary lease bylaws and offering plan should clearly outline the specifics of the flip tax. They will detail the conditions under which the tax is imposed how much it will be and who bears the responsibility for its payment. A skilled condo real estate attorney can also review all relevant documents to confirm the presence of a flip tax and advise on how it may affect the transaction. Understanding when a flip tax applies is essential for making informed decisions and successfully managing real estate investments in New York City. Contact Avenue Law Firm today to speak with a Manhattan condo real estate attorney. Condo for Sale NYC With mortgage rates currently at historic lows it presents an opportune time to acquire an apartment in NYC. If you value convenience and flexibility owning a condominium in the city would likely be the best option. Here are the steps to guide you through the process of purchasing a condo in NYC: Determine Your Budget and Financing: Begin by evaluating your budget and seeking preapproval for a mortgage. Engage the Services of a Knowledgeable Attorney: Secure the services of a reputable real estate lawyer who will represent your interests throughout the process. Discover Your Dream Home: Utilize online resources and collaborate with your agent to explore available condos visit properties and select the perfect one. Prepare and Submit Your Offer: Determine an appropriate offer price based on market analysis then submit your well-prepared offer. Secure an Accepted Offer and Perform Due Diligence: Once your offer is accepted perform a thorough inspection and review the condos financial details. Formalize the Contract Signing: If everything checks out sign the contract and provide the earnest money deposit. Fulfill the Mortgage Closing Requirements: Work on completing your mortgage requirements secure a commitment letter and lock in the interest rate. Perform a Thorough Title Search and Acquire Title Insurance: Obtain a title report and acquire title insurance for added protection. Complete and Submit Your Condo Board Application: Fill out the condo board application and provide the necessary financial documents. Obtain Clearance for the Closing: Secure a clear-to-close letter from your mortgage lender paving the way for the closing process. Ready Yourself for the Closing: Carefully review the closing disclosure statement and arrange certified checks cashiers checks or wire the closing funds. Conduct the Final Walk-Through: Conduct a final inspection of the condo to ensure everything is in order before closing. Finalize the Closing Process: Participate in the closing meeting with all involved parties sign the required paperwork and finalize the purchase. Generally the timeframe to close a condo in New York City ranges from 30 to 60 days. However this timeframe includes the duration spent in the home search phase. Buyers usually allocate an extra month or two for exploring NYC condos available for sale through online listings attending open houses and scheduling private showings. Thus the entire process usually takes anywhere from two to six months to buy a condo in NYC. Purchasing a condo comes with various advantages particularly if you desire flexibility or if youre a foreign buyer. Condos offer benefits such as accommodating sublet policies being friendly towards foreign buyers and investors and having a tendency to appreciate in value. Moreover NYC condos generally involve lower monthly common charges and maintenance fees compared to co-ops. If youre in search of a condo for sale in NYC a Manhattan condo real estate attorney can be your guide. At Avenue Law Firm our attorneys can guide you through the complexities of the process. From handling legal intricacies and contracts to negotiations they can ensure a seamless and secure transaction. Contact us to schedule a consultation and find your dream condo with confidence and peace of mind. Learn More About Condominium Closing Costs Real estate in NYC is expensive and closing costs for sellers can be substantial. The average price of a condominium apartment in Manhattan in 2018 was $2880000 and closing costs paid by sellers can reach 8% of the sale price. This post will discuss typical condominium closing costs for sellers in New York City. You can check out our other article for a condo purchasers closing costs. NYC Condo Closing Costs Closing costs for sellers of a condominium apartment in New York typically range from 8% to 10% of the purchase price. At the closing sellers typically have to pay for real estate broker commissions NYC and NY State Transfer Taxes building fees and real estate attorney fees. Real Estate Commission The Real Estate Brokers Commission is usually the largest expense for the sellers of apartments in New York. It is typically 6% of the purchase price paid by the seller and split between the sellers broker and the purchasers broker. The brokers commission percentage is always fully negotiable and should be negotiated with the brokers prior to hiring them. We also suggest our clients negotiate things like the duration of the agreement termination rights how the commission would be paid in case the sellers themselves procure a purchaser etc. Transfer Taxes The New York State Transfer Tax is 0.4% of the purchase price up to $3000000. For transactions over $3000000 the New York State Transfer Tax is 0.65%. The New York City Transfer Tax is 1% of the purchase price for transactions of $500000 or less and 1.425% for transactions above half a million. Condominium Fees Most management companies and condo boards charge sellers closing fees move-out fees etc. In rare cases condominiums may impose a flip tax on the sellers. It is not a real tax but a fee charged by the condominium itself. Usually this fee is a percentage of the purchase price and can be as high as a few percent. You should obtain a list of all condo closing fees prior to listing your apartment for sale. FIRPTA Foreign sellers are subject to FIRPTA. Under the Federal Withholding Tax (FIRPTA) 10% of the purchase price for properties between $300000 and $1000000 and 15% of the purchase price for properties over $1000000 is withheld if the seller is a non-exempt foreigner. FIRPTA is not a tax but a withholding. The sellers actual tax liability will be determined once the seller files his or her tax returns. In a lot of cases we can help our foreign clients lower the amount due at the time of sale under FIRPTA by obtaining Withholding Certificates from IRS prior to the closing. Real Estate Attorney Fees Rates for real estate lawyers in New York vary and are based on the attorneys experience location services included etc. Most real estate attorneys in NYC charge a flat fee for residential condominium closings. If your attorney is charging you an hourly rate for a residential condo closing make sure to obtain an estimate from him or her in advance. A lot of lawyers focus on specific areas of law. Before retaining an attorney always ask them about their experience and whether they have closed similar deals in the past. It is also recommended to discuss all of the fees prior to retaining a lawyer. Planning To Buy An Apartment? Contact Us For A Free Consultation With An Experienced NYC Real Estate Attorney Disclosure: This is a law blog by an NYC real estate attorney. This blog is for general informational purposes only and does not express or provide a legal opinion. via Avenue Law Firm https://www.avenuelawfirm.com/condominium-closing-costs-nyc/