Real Estate FAQ 3 - Documents

Let’s take a look at the documents that get a closing done.

The Deed

The Deed is the piece of paper showing you own the property. There are several different types of deed, here are the primary ones:

Bargain and Sale Deed. The type commonly used in southern New York State. It transfers the property to the buyer but the seller does not make any specific warranties that he actually owns the property. However, it usually comes with a covenant that seller has not encumbered the property in any way other than what has been already disclosed.

Warranty Deed. The type more commonly used in upstate New York. In this deed the seller specifically warrants that he owns the property and will do whatever it takes to resolve any claims that come from the time he owned the property

Quitclaim Deed. This is the most basic of deeds. The seller only states that he transfers whatever interest he owns in the property to the buyer. There is no representation that he owns the property or that it doesn’t have any claims against it.

Executors/Administrators Deed. This deed is used when the property owner has died and the executor or administrator has to transfer the property.

The Note

When you get a loan to buy property you sign a note. This is the document that sets out the terms of the loan. How much, the interest rate, when payments are due and so on.

The Mortgage

The mortgage goes along with the note. It is the lender’s security. The mortgage says, if you don’t pay the note, we can take the house and sell it to get our money back.

HUD-1 When you borrow from a bank, at the closing they provide you with a settlement statement known as the HUD-1. This is a form set forth by the department of Housing and Urban Development. It is supposed to make a clear report of where the money you borrowed went. It is not always clear, but your accountant will want this come tax time.

Transfer Documents

Of course the government has to get involved. Each county in New York State keeps track of who owns real property in that county. When you buy property you record the deed with the county clerk. This puts everyone on notice that you own that property. Likewise, the lender will record the mortgage to let everyone know that they have an interest in the property.

When you file a deed, it must have transfer documents along with it.

TP-584. New York State Real Property Transfer Tax Return. A seller must pay a transfer tax of $2 for each $500 of the price, (or 4%). Id the property is more than $1,000,000, then the buyer also pays a “mansion tax” of %1.

If the property is in the five east end towns of Long Island there is a Peconic Bay Region Community Preservation Fund tax of 2% paid by the buyer.

RP-5217, often known as the reconciliation form. This is a New York State form that reports the property and price. The state uses this to keep track of property values in the state.

In New York City the closing documents are more complex and need to be filled out online through ACRIS, (Automated City Register Information System).

Some other cities and counties have other forms and taxes as well.

Thanks to the title company we have worked with for over 20 years, Abstracts Incorporated for the links to some documents.

Hubert Plummer