Well, its done. We officially own a building as defined by the Chicago Title Company and the note was signed to the bank. There is something ominous in the fact that the word mortgage is a French term meaning “death contract”, meaning that the pledge ends (dies) when either the obligation is fulfilled or the property is taken through foreclosure. I try to think of this as little as possible and focus more on the excitement of owning our first building. We signed so many forms yesterday that our pen actually ran out of ink. Incredible.

The closing went as well as could be expected with a couple of unforeseen hiccups that were missed by our lawyers, the sellers lawyers and even the Chicago Title Insurance Company. The closing costs, in particular the transfer taxes owed to the city, typically paid by the seller were miscalculated. Apparently any property in NYC that is a 4-family or greater is considered a commercial property and not a residential property for transfer tax purposes. Only 1 to 3 family properties are considered residential through the tax code of NY. Because the property was a 4-family and considered commercial by the tax code, we the buyers did not have to pay the mansion tax and fell into a lower tax rate which reduced our overall tax considerations by more than $7,000. Most certainly a windfall for us. In turn the sellers transfer tax rate went from a paltry 1.425% to a staggering 2.625% almost doubling the transfer tax paid by the seller.

While this tax situation was unfortunate and should have been disclosed prior to closing, it was the Chicago Title Insurance Companies responsibility to resolve the issue. We the buyers fully understand that this transfer tax will be our obligation when we sell which is why we were unwilling to negotiate on the issue even if the sellers had wanted to. Thankfully we all kept our cool and were still able to close even though this wrinkle appeared. Luckily the representative from Chicago Title Insurance Company was fantastic and able explain the issue with relative clarity.

Also of note, we were instructed by our lawyer that we the buyers had to give the agent for the Chicago Title Insurance Company a tip. Not sure that anyone else has dealt with this, but we were told that it was common practice and courtesy. We obliged, but we wrote the check prior to the issue of the transfer tax arising within the process of the closing. When the issue arose i was certainly irritated that the Chicago Title Insurance Company had missed the issue, but the skill of the agent assigned to the purchase in resolving the matter, made the tip well worth the money spent.

Closings are stressful and exciting at the same time and you must be prepared to think quickly on your toes while juggling interests from multiple parties. The bank, the sellers, the sellers attorney and the buyers attorney along with the title company. Be prepared and be ready.