The Whacky Method of Scheduling Closings in New York State
6/06
Nothing is more frustrating to buyers and sellers of real estate in this part of the State of New York than the uncertainty of the “on or about” closing date which appears in virtually every real estate contract. In fact, even where a real estate contract specifies a date certain, the Courts have deemed the date to be merely an “on or about” target date.
Unlike our neighboring State of Connecticut, where the practice is to plan to show up at the Seller’s attorneys’ office on the date and time specified in the contract, in New York, there is no such assumption and the Closing is only scheduled long after the contract has been signed and sometimes on very short notice.
Many buyers and sellers have experienced the frustration of trying to hire moving companies, who often want one or more week’s notice, when they were only given a couple day’s notice of their closing. When someone is selling a home and simultaneously buying another home, the stress level multiplies. Then there are two Closings to coordinate.
Part of the problem is the multiple parties that are involved in New York Closings. Unlike Connecticut and other States, where the Buyer’s attorney can represent the buyer, the lender and the title company, in New York these tasks are often handled by three separate entities. In addition, in the Southern part of New York State, there are numerous condominiums and co-op apartments and the scheduling of these closings also involves the participation of a Managing Agent which adds another person’s schedule to consider.
Because of the many schedules involved, New York Courts have held that each party to a real estate transaction is entitled to a “reasonable adjournment” of the target closing date. While what may be “reasonable” is always determined by the Courts on a case by case basis, the general consensus is that up to 30 days is a reasonable time period for an adjournment of the Closing date.
When the Closing date has passed and the parties cannot agree on a Closing date, a “time of the essence” letter may be sent. This is fairly easy for a Seller to do because the Seller merely has to show up at the Closing and tender a deed. When it is the Buyer sending a “time of the essence” letter, there is also the issue of whether the bank’s attorney will be able and willing to appear at the designated time and place.
When all parties have agreed to a date, time and place for their Closing, there is still the question of whether the bank will be ready. Once a bank clears its file and allows the scheduling of the Closing, it then has to get its loan package to the bank attorney. While this is now usually done by email, the bank attorney has to review, print, photocopy and collate the loan package so that it is ready for Closing. Banks rarely do this more than one day in advance of a Closing. In most instances, this loan package is emailed to the Bank Attorney on the date of the Closing. Thus it may take an hour or more to prepare the package and, if the Bank Attorney has to travel out of the office to attend the Closing, one can see why there may be delays. Of course, since hundreds of thousands of dollars of the bank’s funds are exchanged at Closings, it is rare that the wire transfer making such funds available would be available any time prior than the day of Closing because the bank wants to earn as much interest on its funds as possible.
While it is virtually impossible to remove the stress and frustration caused by the uncertainty of your Closing date, using an experienced real estate attorney can help alleviate some of the headaches you will go through. By accommodating the other parties’ schedules and by sometimes using Use & Occupancy Agreements, experienced real estate attorneys can often work around the inherent conflicts surrounding closing dates.