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Adam Leitman Bailey and Andrew Jorges Speak at Town Residential

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Adam Leitman Bailey and Andrew Jorges were invited to lecture on Common Ways Deals Die and How Brokers Can Bring Them Back to Life for Town Residential.

Published in: Real Estate
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  • DOWNLOAD THIS BOOKS INTO AVAILABLE FORMAT (2019 Update) ......................................................................................................................... ......................................................................................................................... Download Full PDF EBOOK here { https://soo.gd/irt2 } ......................................................................................................................... Download Full EPUB Ebook here { https://soo.gd/irt2 } ......................................................................................................................... Download Full doc Ebook here { https://soo.gd/irt2 } ......................................................................................................................... Download PDF EBOOK here { https://soo.gd/irt2 } ......................................................................................................................... Download EPUB Ebook here { https://soo.gd/irt2 } ......................................................................................................................... Download doc Ebook here { https://soo.gd/irt2 } ......................................................................................................................... ......................................................................................................................... ................................................................................................................................... eBook is an electronic version of a traditional print book THIS can be read by using a personal computer or by using an eBook reader. (An eBook reader can be a software application for use on a computer such as Microsoft's free Reader application, or a book-sized computer THIS is used solely as a reading device such as Nuvomedia's Rocket eBook.) Users can purchase an eBook on diskette or CD, but the most popular method of getting an eBook is to purchase a downloadable file of the eBook (or other reading material) from a Web site (such as Barnes and Noble) to be read from the user's computer or reading device. Generally, an eBook can be downloaded in five minutes or less ......................................................................................................................... .............. Browse by Genre Available eBooks .............................................................................................................................. Art, Biography, Business, Chick Lit, Children's, Christian, Classics, Comics, Contemporary, Cookbooks, Manga, Memoir, Music, Mystery, Non Fiction, Paranormal, Philosophy, Poetry, Psychology, Religion, Romance, Science, Science Fiction, Self Help, Suspense, Spirituality, Sports, Thriller, Travel, Young Adult, Crime, Ebooks, Fantasy, Fiction, Graphic Novels, Historical Fiction, History, Horror, Humor And Comedy, ......................................................................................................................... ......................................................................................................................... .....BEST SELLER FOR EBOOK RECOMMEND............................................................. ......................................................................................................................... Blowout: Corrupted Democracy, Rogue State Russia, and the Richest, Most Destructive Industry on Earth,-- The Ride of a Lifetime: Lessons Learned from 15 Years as CEO of the Walt Disney Company,-- Call Sign Chaos: Learning to Lead,-- StrengthsFinder 2.0,-- Stillness Is the Key,-- She Said: Breaking the Sexual Harassment Story THIS Helped Ignite a Movement,-- Atomic Habits: An Easy & Proven Way to Build Good Habits & Break Bad Ones,-- Everything Is Figureoutable,-- What It Takes: Lessons in the Pursuit of Excellence,-- Rich Dad Poor Dad: What the Rich Teach Their Kids About Money THIS the Poor and Middle Class Do Not!,-- The Total Money Makeover: Classic Edition: A Proven Plan for Financial Fitness,-- Shut Up and Listen!: Hard Business Truths THIS Will Help You Succeed, ......................................................................................................................... .........................................................................................................................
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Adam Leitman Bailey and Andrew Jorges Speak at Town Residential

  1. 1. Adam Leitman Bailey, P.C. New York Real Estate Attorneys Common Ways Deals Die and How Brokers Can Bring Them Back to Life By Adam Leitman Bailey, Esq. Andrew C. Jorges, Esq.
  2. 2. Adam Leitman Bailey, P.C. New York Real Estate Attorneys DELAYS KILL DEALS
  3. 3. Adam Leitman Bailey, P.C. New York Real Estate Attorneys PREVENTING YOUR CLIENT FROM BEING REJECTED AS A RESULT OF SKIN OR RELIGION • Every broker has lost a deal because of an unexpected, unjustified board rejection. • Par. 6 of the Coop Form Contract makes the buyer’s obligation to close contingent upon “unconditional board approval.” 3
  4. 4. Adam Leitman Bailey, P.C. New York Real Estate Attorneys DELAYS KILL DEALS • Every broker has lost a deal at some point during their careers because the transaction went into the weekend (or multiple weekends) and they received a telephone call from their client on Monday morning advising that the deal was off. • Deals should not go into weekends because clients start having second thoughts: • Buyers think: they are paying too much for the apartment! • Sellers think: a higher offer is just around the corner! • 2 Major sources of delay: (i) unresponsive attorneys, and (iii) slow due diligence • A broker’s solution to speeding up contract negotiations: have the buyer’s attorney draft the preliminary contract.
  5. 5. Adam Leitman Bailey, P.C. New York Real Estate Attorneys Broker’s Solutions to Speeding up Due Diligence: ▫ Make an appointment to review minutes on behalf of the buyer’s attorney (or review minutes yourself) ▫ Ask the buyer’s attorney for a copy of their questionnaire and submit it to management on their behalf ▫ Ensure that you have a complete set of the Offering Plan with amendments, financials from the seller (or ask management if the seller does not have them in their possession) at the beginning of the engagement
  6. 6. Adam Leitman Bailey, P.C. New York Real Estate Attorneys SAVING DEALS BY BUILDING YOUR TEAM
  7. 7. Adam Leitman Bailey, P.C. New York Real Estate Attorneys SAVING DEALS BY BUILDING YOUR TEAM • Brokers solution to avoid financing issues: ▫ Have buyers preapproved by your preferred loan officer, regardless of whether you are representing the buyer or seller ▫ When representing a seller, have your preferred loan officer written into the contract if there is a mortgage contingency. ▫ For example:  “In addition to an Institutional Lender of Purchaser’s choice, Purchaser shall submit a loan application to Brian Scott Cohen at Wells Fargo (“Wells Fargo”) on the Financing Terms set forth in Par. 1.22 of the Contract. In the event Purchaser’s Institutional Lender denies financing and Wells Fargo is able to finance the transaction per the Financing Terms set forth in Par. 1.22 of the Contract at a prevailing fixed interest rate and on other reasonable and customary terms generally being offered by Institutional Lenders, Purchaser shall not be entitled to cancel the Contract and must accept such loan terms from Wells Fargo and proceed in accordance with the terms of the Contract.”
  8. 8. Adam Leitman Bailey, P.C. New York Real Estate Attorneys BUILDING YOUR TEAM • Agents should have highly experienced, reputable referrals that have been personally vetted for every aspect of the transaction and beyond: real estate attorneys, loan officers, contractors, architects/engineers, expediters, dog walkers, child care facilities, local restaurants, etc. • ALBPC Tip: Using these referrals will reduce the risk that a closing is delayed, or worse, that the deal dies.
  9. 9. Adam Leitman Bailey, P.C. New York Real Estate Attorneys FAILURE TO UNDERSTAND MORTGAGE CONTINGENCIES KILLS DEALS
  10. 10. Adam Leitman Bailey, P.C. New York Real Estate Attorneys FAILURE TO UNDERSTAND MORTGAGE CONTINGENCIES KILLS DEALS • All-cash deals are slowing down, and mortgage contingencies are heating up. • Mortgage contingency provisions are the most misunderstood provision in the contract of sale. • Clients always think, “I have a mortgage contingency, so if I don’t get money from my bank for whatever reason I can get out of the deal and get my 10% deposit back.” This is not entirely true!
  11. 11. Adam Leitman Bailey, P.C. New York Real Estate Attorneys UNDERSTAND MORTGAGE CONTINGENCIES KILLS DEALS • A mortgage contingency is a very broad term that allows a buyer to cancel the contract and get their deposit bank under certain circumstances. • Mortgage contingencies are not all the same and should be broken down into three (3) separate sub-categories: ▫ 1) Financing Contingency ▫ 2) Full Funding Contingency ▫ 3) Limited Funding Contingency
  12. 12. Adam Leitman Bailey, P.C. New York Real Estate Attorneys FAILURE TO UNDERSTAND MORTGAGE CONTINGENCIES KILLS DEALS • Financing Contingency: a provision that makes a buyer’s obligation to close contingent upon receipt of a loan commitment letter (with a satisfactory appraisal) within (typically) 30 days of going into contract. If the buyer gets denied for almost any reason – negative credit history, job loss, low appraisal, building issues, the market goes into free fall – within the first 30 days, then buyers can get out of the deal and get the deposit back. • Full Funding Contingency: a provision that makes a buyer’s obligation to close contingent upon the lender funding the loan on the date of closing. It does not matter that a commitment letter is in hand because if the bank does fund the loan for any reason whatsoever, the buyer can cancel the contract. These are only negotiated in approximately 5-10% of all real estate transactions. • Limited Funding Contingency: a provision that allows the buyer to cancel the contract in the event the lender does not fund the loan on the date of closing for specific reasons (i.e. reason related to the building, seller, or apartment).
  13. 13. Adam Leitman Bailey, P.C. New York Real Estate Attorneys NOT HAVING “COMPS” DURING AN APPRAISAL KILLS DEALS
  14. 14. Adam Leitman Bailey, P.C. New York Real Estate Attorneys NOT HAVING “COMPS” DURING AN APPRAISAL KILLS DEALS • Every broker has lost a deal at some point during their careers because of an unsatisfactory appraisal. • An appraisal is the opinion of one (1) person as to the fair-market-value of a property at a particular time and is almost always required by lenders to determine whether the home's contract price is appropriate given the home's condition, location, and features.
  15. 15. Adam Leitman Bailey, P.C. New York Real Estate Attorneys Broker’s solutions to avoiding appraisal issues: • When listing agents provide appraisers access to the property, they should be prepared to provide the following information to the appraiser: RECENT COMPARABLES THAT ARE SIMILAR TO THEIR TRANSACTION, surveys, deeds, HOA documents, floor plans, inspection reports, neighborhood details, detailed list and dates of upgrades and remodels, and energy-efficient green features, if available.
  16. 16. Adam Leitman Bailey, P.C. New York Real Estate Attorneys AGENTS MUST BE AWARE OF COMMON COST-SAVING TOOLS TO AVOID CLOSING DELAYS
  17. 17. Adam Leitman Bailey, P.C. New York Real Estate Attorneys COST SAVING TOOLS • Every agent has likely had a closing delayed because the buyer and/or seller did not timely avail themselves to certain closing cost saving tools that should have been identified early in the process. • Two (2) major closing cost saving tools: (i) purchase CEMAs, and (ii) 1031 like-kind- exchanges.
  18. 18. Adam Leitman Bailey, P.C. New York Real Estate Attorneys UNDERSTANDING THE REAL ESTATE ALPHABET •SROs 18
  19. 19. Adam Leitman Bailey, P.C. New York Real Estate Attorneys UNDERSTANDING THE REAL ESTATE ALPHABET •HDFC 19
  20. 20. Adam Leitman Bailey, P.C. New York Real Estate Attorneys COST SAVING TOOLS • 1031 Like-Kind-Exchanges Basics ▫ 1031 exchanges refer to the Internal Revenue Code section 1031 that allows a taxpayer to “defer” (not “avoid”) taxes that would ordinarily be due upon the sale of property if (i) the property being sold is an “investment” or property used in trade or business, and (ii) the property being purchased is an “investment”/”like-kind” property. ▫ Benefit: This tax provision offer a seller a great opportunity to build wealth and save on taxes.
  21. 21. Adam Leitman Bailey, P.C. New York Real Estate Attorneys COST SAVING TOOLS • 1031 Like-Kind-Exchanges Basics ▫ Example of a forward exchange using simple numbers: I own and rent a condo apartment that I purchased 30 years ago and the cost basis is $250,000. I am selling it today for $1,000,000. My tax liability is based on $750,000 worth of gain. If I purchase like-kind property of equal or greater value, I can defer the taxes I owe on the sale of the relinquished property.
  22. 22. Adam Leitman Bailey, P.C. New York Real Estate Attorneys COST SAVING TOOLS • Purchase Consolidation Extension and Modification Agreement (“CEMAs”)  A purchase CEMA is a well known process among experienced real estate professionals that allows purchasers of real property to reduce their mortgage recording tax.  New York State charges a mortgage recording tax of 0.5% of the loan, while purchasers in New York City pay a total of 1.8% on loans under $500,000 (NYS mortgage tax included), and 1.925% for those at or above $500,000 (NYS mortgage tax included).
  23. 23. Adam Leitman Bailey, P.C. New York Real Estate Attorneys COST SAVING TOOLS • Purchase Consolidation Extension and Modification Agreement (“CEMAs”)  The mechanics of a purchase CEMA are fairly straightforward: the seller of real property assigns their existing mortgage to a purchaser upon closing. As a result, the buyer is required to pay mortgage recording tax only on “new money” (loan proceeds to the buyer that exceed the seller’s principal balance being assigned), rather than the total amount the buyer is financing in connection with the purchase. The result is what every purchaser of real estate wants to hear: lower closing costs and substantial savings.
  24. 24. Adam Leitman Bailey, P.C. New York Real Estate Attorneys COST SAVING TOOLS • Purchase Consolidation Extension and Modification Agreement (“CEMAs”)  The following is a basic example illustrating the significant savings:  Sales price: $2,000,000  Seller’s unpaid mortgage principal: $1,000,000  Buyer’s total financing: $1,500,000  Mortgage recording tax with CEMA: $9,595 (based on $5000,000 “new money”)  Mortgage recording tax without CEMA $28,845 (based on $1,500,000)  Total savings: $19,250
  25. 25. Adam Leitman Bailey, P.C. New York Real Estate Attorneys COST SAVING TOOLS • Purchase Consolidation Extension and Modification Agreement (“CEMAs”) ▫ In addition to reducing mortgage recording tax, a purchase CEMA also has the potential to significantly reduce a seller’s transfer taxes by taking advantage of the “continuing lien deduction” whereby the seller may only have to pay transfer taxes on the amount of “new money”, not the full sale price.
  26. 26. Adam Leitman Bailey, P.C. New York Real Estate Attorneys COST SAVING TOOLS • Purchase Consolidation Extension and Modification Agreement (“CEMAs”) ▫ Note, certain types of property (i.e. co-ops) are not eligible, not all lenders agree to participate in a purchase CEMA, not all assignments allow sellers to reduce transfer taxes, and lenders for both parties to the transaction usually charge additional fees to accommodate the purchase CEMA. ▫ Potential for delay: lenders
  27. 27. Adam Leitman Bailey, P.C. New York Real Estate Attorneys NOT COMPLYING WITH RPL § 443 CAN KILL A BROKER’S COMMISSION
  28. 28. Adam Leitman Bailey, P.C. New York Real Estate Attorneys NOT COMPLYING WITH RPL § 443 CAN KILL A BROKER’S COMMISSION • Every broker has heard rumors about the penalties for not complying with agency disclosure laws, including the possibility of losing your commission. • The Real Property Law (“RPL”) is a set of laws covering real property issues, including the relationship between real estate brokers and clients engaged in real estate transactions (sales and leasing). The NYS Disclosure Form for Buyer and Seller is required by a RPL § 443.
  29. 29. Adam Leitman Bailey, P.C. New York Real Estate Attorneys NOT COMPLYING WITH RPL § 443 CAN KILL A BROKER’S COMMISSION • Important Definitions: ▫ Relevant parties subject to the disclosure requirement: agents, listing agent, seller’s agent, and buyer’s agents. It DOES NOT reference (therefore does not apply) to the brokerage, company, or firm. ▫ The disclosure obligation resides with you, the agents. ▫ Residential real property: the disclosure requirement covers property used as a home or residence in (i) 1-4 family homes, (ii) constructed condo and coops (not unimproved land where it is to be constructed).
  30. 30. Adam Leitman Bailey, P.C. New York Real Estate Attorneys NOT COMPLYING WITH RPL § 443 CAN KILL A BROKER’S COMMISSION • RPL § 443, 3(a) – listing agent must provide the disclosure to a seller or landlord prior to entering into a listing agreement and obtain a signed acknowledgement from the seller or landlord. • RPL § 443, 3(b) – seller’s agent or landlord’s agent shall provide the disclosure form to a buyer, buyer’s agent, tenant, or tenant’s agent at the time of the first substantive contact (NOT DEFINED) with the buyer or tenant and obtain a signed acknowledgment form the buyer or tenant. • RPL § 443, 3(c) – the buyer’s agent or tenant’s agent shall provide the disclosure form to the buyer or tenant prior to entering into an agreement to act as the buyer’s agent or tenant’s agent and shall obtain a signed acknowledge form the buyer or tenant.
  31. 31. Adam Leitman Bailey, P.C. New York Real Estate Attorneys NOT COMPLYING WITH RPL § 443 CAN KILL A BROKER’S COMMISSION ▫ Putting RPL 443, 3(a)-(c) requirements into plain English: agents/brokers need to have the agency disclosure form signed by both buyer and seller, regardless of which side of the delay they are on, at the first contact with the client and/or other party.
  32. 32. Adam Leitman Bailey, P.C. New York Real Estate Attorneys NOT UNDERSTANDING PAR 6.3 OF THE STANDARD FORM COOP CONTRACT KILLS DEALS
  33. 33. Adam Leitman Bailey, P.C. New York Real Estate Attorneys UNDERSTAND PAR. 6.3 • Every agent needs to be aware of a little known provision in the coop standard form contract of sale that allows either party to cancel the contract due to delays or ineptitude by the coop’s board of directors. • Par. 6.3 of the Standard Form Contract of Sale: “Either Party, after learning of the Corporation's decision, shall promptly advise the other Party thereof. If the Corporation has not made a decision on or before the Scheduled Closing Date, the Closing shall be adjourned for 30 business days for the purpose of obtaining such consent. If such consent is not given by such adjourned date, either Party may cancel this Contract by Notice, provided that the Corporation’s consent is not issued before such Notice of cancellation is given. If such consent is refused at any time, either Party may cancel this Contract by Notice. In the event of cancellation pursuant to this ¶ 6.3, the Escrow shall refund the Contract Deposit to Purchaser.”
  34. 34. Adam Leitman Bailey, P.C. New York Real Estate Attorneys UNDERSTAND PAR. 6.3 • Example of a potential risk: On January 15, 2018, Sally Seller accepts an offer from Barry Buyer (who needs financing) to close on a coop apartment as quickly as possible. Their agents, eager to meet their clients’ needs, put “February 1, 2018” on the deal sheet for the target closing date, which is reflected in the final contract. Barry does not get a commitment letter and submit the board package until February 20, 2018. ▫ If the board does not make a decision on Barry’s board package by March 16, 2018, either party can cancel the contract at which point Barry would be entitled to a refund of his 10% deposit.
  35. 35. Adam Leitman Bailey, P.C. New York Real Estate Attorneys UNDERSTAND PAR. 6.3 • Broker’s Solution to avoiding contract cancellation due to Par. 6.3: the deal sheet should identify the closing date as follows: “On or about 60 calendar days from the date a fully executed contract is received by the Purchaser’s attorney.”
  36. 36. Adam Leitman Bailey, P.C. New York Real Estate Attorneys PROBLEMATIC LIENS AND ENCUMBERS (A/K/A TITLE ISSUES) KILL DEALS
  37. 37. Adam Leitman Bailey, P.C. New York Real Estate Attorneys PROACTIVE WAYS TO SAVE DEALS
  38. 38. Adam Leitman Bailey, P.C. New York Real Estate Attorneys PROACTIVE WAYS TO SAVE DEALS • In the event you are concerned the coop board may unlawfully discriminate against a purchaser on the basis of sex, marital status, pregnancy, family responsibilities, sexuality, race, disability, political or religious belief, or age, then the application should include a letter in support of the applicant pointing out that they are financially stable. 38
  39. 39. Adam Leitman Bailey, P.C. New York Real Estate Attorneys COST SAVING TOOLS • Purchase Consolidation Extension and Modification Agreement (“CEMAs”) ▫ ALBPC Tip for Brokers - Prudent contract provision:  “Notwithstanding anything to the contrary, Seller agrees, at no cost to Seller or delay in the Closing, to cooperate and execute any and all documents reasonably necessary for the Purchaser to effectuate a purchase Consolidation Extension Modification and Assignment (“CEMA”) in connection with this transaction.”
  40. 40. Adam Leitman Bailey, P.C. New York Real Estate Attorneys 40 THE END ONE BATTERY PARK PLAZA 18TH FLOOR NEW YORK, NEW YORK 10004 (212) 825-0365 WWW.ALBLAWFIRM.COM

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