United States: Real Estate Check List For Purchasers

When buying a piece of real estate on the East End of Long Island, a number of issues which do not necessarily play a role in real estate transactions in other parts of the state must be considered. The location of homes in coastal areas, on former farm land, and in sensitive ground water recharge areas subject to special Suffolk County Health Department rules, involve special consideration. Purchasers of residential properties on the East End should go through the following check list when making a decision about whether to buy, and these issues should be properly covered in a contract of sale, preferably drafted by an experienced real estate attorney.

Contracts will typically state that the property being purchased is subject to all of the rules and regulations of local municipalities regarding the construction, use and maintenance of buildings and other structures on a property. If you are considering buying a property with a view toward adding accessory structures such as a pool or tennis court, or simply expanding an existing building, you should obtain local professional advice to make sure that the property can be developed in a way that you wish. Also, you will want to make sure that all existing structures have proper certificates of occupancy allowing their continued use.

In this rural community, it is common to have covenants or easements that burden property, which can only be discovered upon a proper title examination. Often they prohibit certain uses of property and further development. Sometimes they provide for rights of way for others across a property, either for access to beach front, or to certain roadways. A contract of sale should provide protection for purchaser in this regard.

It is important to have an up to date survey showing the location of existing structures, driveways, fences, hedgerows, and any encroachments or areas that are "out of possession" of the current owner.

Typically, contracts of sale will state that the property is to be purchased in its "as is condition", with no representations or warranties as to the condition of the structures or any appliances. Nevertheless, it is important that a contract provide that the cesspool, plumbing, heating, electrical systems, and appliances be in working order, and that the roof and basement be free from leaks. Proper engineering inspections should be obtained before the contract is signed.

It is important to have the proper termite inspections conducted before the contract is signed, or for the contract of sale to provide for the desired resolution of a situation in the event of termite infestation and/or damage is discovered after signature.

The contract of sale should make sure that the transaction is subject to and conditioned upon the purchaser's ability to secure conventional casualty insurance, including coverage against wind damage for the full replacement value of all structures.

Likewise, depending on the location of the property, a contract should be contingent upon the purchaser being able to obtain the necessary flood insurance to cover structures.

If you are purchasing vacant land to build your "dream house", you must make sure that the contract of sale specifically states that it is subject to being able to obtain confirmation that one can build a single family home and accessory structures under that zoning code, and all applicable environmental regulations over the property. Some lots that are extremely beautiful because of their location suffer from severe constraints, for example, due to set back requirements from tidal wetlands or dunes. Purchasers sometimes discover that while there may be enough space to construct a house, there is not enough room for the desired swimming pool, tennis court and/or garage.

Many communities on the East End do not have municipal water, and the drinking water for the property is derived from a well. The contract should allow the purchaser to have the water supply tested for determining whether it meets Suffolk County Department of Health standards.

Purchasers should be cognizant that sometimes there are additional taxes imposed on the purchase of properties on the East End such as the Community Preservation Fund Tax which is a 2% tax collected by local municipalities for their open space acquisition programs. On purchases of homes in excess of $1 Million, there is an additional 1% "Mansion Tax" payable by the purchaser.

Obviously if a purchaser does not have sufficient cash to pay for a property outright, the contract must be properly conditioned upon the purchaser applying to a bank or through a mortgage broker for the requisite financing, and obtaining the desired financing in a timely fashion.

Very often a purchaser will want to assign a contract for estate planning purposes to one or more family members, or to put it into a particular corporation or trust. The contract of sale should protect the purchaser's right to assign the contract.

There are fairly traditional terms utilized throughout the East End for the escrow of a downpayment, but a purchaser should make sure that the clause for the escrow in a contract of sale comports to local practice and protects the purchaser.

Houses are typically sold unfurnished, but with existing fixtures. Nevertheless, if there are certain fixtures that are of particular concern to the purchaser, such as a chandelier, or certain "built-in" wall fixtures, it is best to list them specifically as part of the deal and to include a specific list of furniture included in the sale.

If there is any indication that there may be an environmental problem nearby (such as a gas station), the contract should be conditioned upon the purchaser obtaining a "Phase I Audit" through a professional environmental consultant and the ability to proceed to a "Phase II" if necessary, and ultimately to drop out of the contract if problems are revealed.

If the purchaser is buying what is essentially a newly constructed home, it is important to make sure that the purchaser does not waive any guarantees and warranties afforded a purchaser under the General Business Law for new construction. If there are particular guarantees and warranties a purchaser wants, they should be included in the contract.

If the property is an older one, the purchaser should be concerned about whether there could be some type of leakage or soil contamination from an underground fuel tank. A contract of sale should provide for the testing of soil around a tank and the possible testing of a tank itself. Suffolk County is rigorous in its enforcement of the law with regard to leaking tanks.

If a property is close to a waterway and access to that waterway is of importance to a purchaser, then the contract should provide that it is contingent upon the purchaser determining that the desired beach rights, dock access or other form of access are in fact part of the bargain, and can be conveyed to the purchaser by the seller.

Again, in older structures, certain issues are of greater concern than others; asbestos is one of them. In a particularly old home, this should be part of any engineering inspection. Asbestos removal can be extremely expensive and must be done carefully.

The contract must allow the purchaser to have the number of pre-closing inspections the purchaser needs to properly assess the property, or to make preparations such as measurements for furnishing the property.