Reiner, Reiner & Reiner, LLP
Attorneys at Law
80 Wall Street - Suite 1018
New York, NY 10005
(212) 269-2466 voice
(212) 269-2467 fax
info@reinerlaw.com e-mail

Seller's Checklist

[Please note that we intend the following material only to inform you of our methods. Some of the material is not in layperson terms. We do not offer the following as legal advice. To protect your interests, you should obtain legal counsel to interpret or apply any law or legal procedure.]

BEFORE CONTRACT:

-- Have client read Consumer Reports article (7-90) re brokers. Copy is in blank forms "Brokerage Agreements" folder. What marketing plan (with time frame) is offered by broker: advertising? how many open houses for other brokers? listing with employers? relocation service affiliation? How was listing price determined? Written comparables? Feedback? Ability to assist purchaser in dealing with co-op Board and Bank? Weed out unqualified buyers? Prequalification certificate from lending institution? Accompany buyer's engineer on inspection?

--Would an auction of the property yield a higher price?

-- If a co-op, is the price per share in line with recent sales?

--Run a credit search on prospective purchaser. Fidelifacts Metropolitan NY Inc. 50 Bway NY 10004 (425 1520) will charge $50 -- needs a letter from purchaser: Full name, address, previous address, DOB, SSN authorizing it to request credit information from TRW, Trans Union, and CBI and release the information to RR& R. (I\credit.ltr)

--If a condo, use Blumberg's form of condo sale prepared by Comm. on Real Prop of Asso of the Bar of the City of NY

--Review brokerage agreement. If residential real estate improved by 1-4 family dwelling (but not condos or co-ops in buildings of more than 4 families) then Brokers' Disclosure form must be signed. Real Prop Law Sec. 443. [See "Brokerage" blank forms]

--Confirm flip tax liability and computation if co-op.

-- Obtain existing deed, contract of sale, title policy, survey, (co-op cert & lease & any written modifications agreed to by Board)

-- Subdivision approval required? Ghosts?

-- INCOME TAX CONSIDERATIONS:

A) If mixed use (princ res/rental or prin res/office) consider 100% princ res use in yr of sale: If so, Rev Rul 82-51 & IRS Pub 587, no allocation of gain necessary & full postponement possible. Any capital improvements which can be added to tax basis? Pro-rata share of principal repayments on underlying co-op mortgage during period of ownership are additions to basis.

B) Taxes on Seller: NYS trsf tax is .4%; NYC RPT: dwellings or 1-3 fam 1% on sales of less than 500K, 1.425% on more than 500K sales; on other: 1.425% on less than 500K and 2.625% on over 500K.

Other costs: co-op doc stamps 25; co-op trsf fees 275; existing mortgagee's atty 350; recording sat 100.

FOR CONTRACT:

Address of Premises:

Purchaser:

SSN and Address:

Seller:

SSN and Address:

Any other names within 10 years?

Name of Purchaser's Atty:

Address, Phone & Fax:

Title Co.:

Price:

Cash:

On Contract:

On Closing:

Existing Mortgage:

PM:

Amount

Int. rate:

Term:

Self-Liq?

Exculp Clause:

Prepay't Penalty:

Due on Sale:

Escrow for Tax & Ins:

Pers Guaranty if Corp Note?

Closing Date:

Adjustments as of:

Broker:

Personal Property Included in Sale:

Info given by:

No. of Units:

Subj to Violations? Limit on cost of violations to be removed? $ 500? otherwise, seller has option to cancel contract.

Rent Roll:

Flip tax responsibility?

Financing Contingency Y N

Amt:

$ Lender:

Closing date:________________

Managing Agent:

Building Exec.:

Phone: Closing Coordinator:

Phone

-- If seller of co-op wants continued possession after closing, see form of Possession Agreement

--FIRPTA affidavit as to US citizenship of sellers to be signed by sellers simultaneously with contract. If not, begin process to obtain IRS consent to withhold less than 10% of sales proceeds per Sec. 1445. Obtain tax basis data from foreign seller.

--Downpayment in escrow. NAME OF BANK IN CONTRACT?--Seller's TIN shall be used for escrow deposit; however , the party ultimately entitled to the escrow deposit shall pay all the income taxes on the interest earned thereon.

--Premises as is - no rep as to asbestos, radon or other hazardous substances, and seller shall be under no obligation to take any action with respect thereto, if any, at any time.

--Contract may not be assigned

-- Seller, at any time prior to the delivery of the deed, shall have the option to declare this contract void and to return the deposit with interest if any, if the purchaser shall be the subject of any bankruptcy, reorganization or insolvency proceeding.

--Liquidated damages

--Per diem penalty for any delay in closing except if S adjourns

--Financing contingency, if applicable. If the Purchaser's mortgage application is not approved in the amount set forth but is approved for a lesser amount, the seller shall have the option grant a junior purchase money mortgage for the difference between the required amount and the approved amount, to be self-liquidating for a term of ________months at an interest rate of________%, provided same is permitted by the first mortgagee, or, in the alternative, seller shall have the option of reducing the purchase price by the same amount as the mortgage has been reduced. Thereupon, the purchaser shall accept the mortgage at said reduced amount and shall complete the purchase for said reduced price. Studio apartments and walkups not likely to get financing. Purchaser to apply to lending instution, not merely to mortgage broker.

--Printed Para 10 to provide adjustment date.

--Possession shall be delivered at closing broom clean and free of tenancies (unless the contract is made subject to tenancies) or within 5 days thereafter, provided seller deposits $1,000 with his attorney in escrow to insure possession within said period, with the provision that $ 50 per day be paid to the purchaser for each day seller overstays said period. Adjustments, including interest on new mortgage, shall be made as of possession date.

--PM mortgage to be affixed to contract, including clauses in blank forms file. See, especially, Emigrant Funding commit letter 9-27-89 re xxx Atl Ave., including due-on-sale, attorneys' fees to collect any portion, right to receive statements of rent roll/collections and profit/loss statements. See Possession Agreement in Blank Forms under "Contract"

--See i\rider.sel for additional clauses for co-op sale.

--(Sale by Estate): Purchaser agrees that J.Q. Smith is acting as executor in connection with this transaction and agrees thtat this Contract is delivered by the executor in his capacity as executor and not otherwise. Executor will deliver c/l/t, state estate tax waiver, affidavit of domicile. Purchaser, for Purchaser, his successors and assigns, hereby waives, relreases and relinquishes all recouse against said executor, except in his capacity as executor and hereby agrees to look solely to the assets of the estate for satisfaction of any claim or demand of whatever nature he may have or ever have or assert under of by virtue of this Contract. This clause shall survive the Closing. [For form of closing affidavit by executor see i\estate.aff.

-- Closing Date: Some courts say that using "  "or sooner causes time to be of the essence. Even inserting a date into the standard contract may cause time to be of the essence if eventual action is at law (damages for breach (return of deposit) rather than an equitable one. Enter as closing date "on or about 1/1/98" 

--- Covering Letter for Contract Draft: State that transaction shall not bind seller unless and until all sellers have signed and delivered contract and Purchaser should incur no expense until receipt of a copy signed by all parties.

- - Adjournment; Making Time of the Essence: may be accomplished unilaterally after the contract closing date has passed if 1) letter is clear, distinct and unequivocal in establishing time of the essence, 2) time set for performance is reasonable under the circumstances, and 3) it must state that if the other party does not perform by that date, it will be considered to be in default. Caveat: the letter might be used by the other side. Respond to such a letter by stating that time set is unreasonable.

-- Contract Amendments: AThe agreement dated / / / between X and Y is hereby amended, effective / / /, as follows: ........ As so amended, the agrement will remain in full force.

FOR CLOSING

--Keys to building/apt, mail box

--Payoff letter re existing mortgage

--Letter to Tenants

--Letter from purchaser saving Seller harmless from any claims as to transferred rent security

--PM note and mortgage - including clauses in blank forms file, including clauses as to one-family or six-family status. Follow commit letter of ctt as to 1st month's interest, hazard policy, escrow for tax & ins; sec's cert of consent to mortgage, etc.

--IN REM card to be sent, if premises are in City of NY, and if there is a PM mortgage

-- Change of address card to be sent to City Collector if mortgagee is to collect escrow for taxes.

--Assignment of leases to purchaser, (including)(not including) arrears.

--Collateral assignment of leases back to mortgagee as add'l security?

--UCC-1 to be executed by purchaser if PM mortgage includes

personal property

--Bill for preparation of mortgage

--Fuel reading

--Affidavit of no-other-name

--Smoke Detecting Alarm Affid to be affixed to NYC RPT or to deed (if not NYC)

--NYC & NYS Transfer Tax forms

--Non-multiple dwelling affidavit needed if single-family house or vacant land.

--Multiple dwelling registration form needed?

--NYS Equalization form if property is outside NYC

--FIRPTA affidavit (see i\firpta)

--Form 1099 preparation priority: institutional lender's atty; atty for purchaser; then atty for seller.

--If seller is a corporation, recite in deed AThis conveyance is made iwth the written consent of all of the holders of all of the outstanding shares of the party of the first part and be prepared to prove that there are no liens for corporate taxes. Status report on Form 96A is issued by NYC Dept of Finance, Tax status report section, Gen Corp Tax, Third Fl, 25 Elm Pl, Bklyn 11201 for $5(?) fee and copies of returns and cancelled checks for past 5 years, power of atty, and Application form. See F. 1870.. Parallel NYS report on TP-310 is issued by Dept of T & F, Corp. Tax, State Campus, Albany NY 12227. Excelsior?

--In closing statement, include follow-up reminders as to a) cancellation of phone, electricity, gas and insurance, b) collection of escrows, if any, c) expiration dates of limitations on actions, and d) and as to tax consequences of sale.