Along with the pandemic came a dramatic increase in the purchases and sales of upstate New York properties. Our banking department rapidly began to receive upstate closing files and quickly began to learn the defining differences between upstate and downstate (NYC and surrounding counties) real estate closings. Let’s explore some of these differences.
Downstate closings traditionally utilize the title report to search the property, the buyer, and the seller of a particular transaction. The title company, chosen by the buyer or buyer’s attorney, will compile a report to circulate to all interested parties and then issue a title insurance policy at closing. At closing the title company will prepare a final title bill with the insurance premium, search fees and recording fees. The final title policies will be distributed at closing with recording info to follow.
As we quickly learned, this process is quite different upstate NY. The seller, rather than the buyer, traditionally orders and pays for an Abstract of Title. This is a search of the available county clerk records. A local title company will guarantee this search. The final title policy will not be issued until post closing when all recording information is finalized and can be included.
Another difference we have been coming to terms with are the customary searches. Downstate, we order several municipal searches. The title co. will facilitate this order and compile the searches to send for review. Specifically, we are looking for a valid Certificate of Occupancy and street reports to determine if there are any open violations against the property. We also run a bankruptcy and patriot search. From the title co.’s perspective, these searches are ran for info only and will not affect the title policy. The searches are for the benefit of the purchaser and the lender.
These various municipal searches are not customary in the upstate NY area. Instead, the buyer and the buyer’s attorney perform their own due diligence.
We have also come to learn that even the search method for recorded documents is quite different between upstate and downstate NY. In NYC as well as other surrounding downstate counties we can search records with an online database (such as ACRIS). We simply plug in the section, block and lot of a property and all recorded documents may be accessed. The title company will compile their findings and list any open documents which still affect the property as exceptions in the title report. The attorneys will review this report to determine how to clear the open items for closing.
In upstate NY the abstractor will instead search all the names in the chain of title in an index system. The abstractor will then compile a report to advise what a seller will need to clear to convey marketable title.
Now let’s discuss recording. Traditionally, a continuation search is ran on the morning of closing in downstate NY to determine if there are any changes to title since the initial report was ran. If it is clean, recordable documents are executed at closing and given to a title closer who in turn delivers them to the title company’s recording department. This department will compile the recorded documents and submit to the county clerk for recording. The clerk will give a receipt confirming the documents have been received but not yet recorded. From that point the clerk could take days, weeks and sometimes even months to review the documents and officially approve them for recording. The clerk could also reject the documents and return for correction now delaying the recording process even longer. Title companies downstate must implement strict follow up procedures for document recordings to make sure documents are sufficiently recorded as they have already issued a title policy at closing. If not, they will likely receive several follow up inquiries from sellers, buyers and lenders.
Upstate NY has a much quicker recording experience. Rather then run the continuation search the morning of closing, instead the recordable documents are executed at closing and then immediately delivered for recording. It is then a continuation search is ran and if all is in order the documents are presented to the county clerk who reviews on the spot and will give a recording receipt immediately, assuming all documents were prepared and signed correctly.
Lastly, lets discuss the deed. Downstate, the Bargain and Sale Deed is typically utilized while upstate we see the Warranty Deed. What is the difference? The Bargain and Sale Deed conveys good title which a seller has not interfered with but does not warrant that the back title is clear of defects. A Warranty Deed conveys marketable title free of potential litigation.
I am sure we have only just scratched the surface of the differences between upstate and downstate real estate closings but are constantly learning more and more each day.
