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Blog
Feb 02

Real Estate Insights: What Due Diligence Should Buyers Expect?

Every few weeks, we’ll highlight a deal to show you what title insurance costs, as well as what happens behind the scenes to streamline the closing process.

Are investment sales in New York City, specifically Manhattan, coming back? Leading up to the third quarter of 2020, some reports indicated up to a 90%(!) drop in sales year-to-year. Thankfully, though, the third and fourth quarter showed a return of activity. Our friends at Ackman-Ziff have told us that more good news is to come (fingers crossed) and recently shared information on a new large (250k+ s.f.) mixed-used opportunity

The Deal

This Manhattan building was acquired for $145,000,000, with $116,000,000 in senior debt financing.

New York County (Manhattan)

Title Insurance
          Fee Policy: $388,851
          Loan Policy: $78,395
Title Fees: $1,000+
NY State Transfer Tax: $942,500
NY City Transfer Tax: $3,806,250
Mortgage Tax: $3,248,000
County Recording Fees: $1,000+
Title Grade: N/A

Cornerstone Insight

The larger the deal, the more important due diligence becomes. We would recommend the following for a potential investor:

Covenant and restrictions search to uncover what the buyer can or cannot do to a property based on any restrictions imposed on the property, such as permitted uses.

Judgment and lien search to reveal whether any potential disputes or arrears exist on the property or the current owner of a property.

Tax search to find what is owed in water and property taxes for the property.

Mortgage chain will list how many mortgages are on the property and how many of them have not been satisfied.

Deed chain shows the current owner of record.

Open permits search lists what permits exist on the property and which of those remain open (not closed out properly).

Violations search reveals what kind of violations exist on the property that need to be addressed.

CO (certificate of occupancy) search highlights the legal classification on record for the property.

Before beginning any real estate transaction, always confirm who will do the due diligence and what it will include.

If you have any questions about due diligence or title insurance, or if you would like to discuss an upcoming or potential transaction, please contact us.