Real estate transactions are governed by a wide body of federal and state statutes, common law and state law. The requirements established by state law often differ significantly from one state to the next.  In Manhattan (New York), where 75% of the homes are held as private corporations (“co-ops” or “cooperatives”), it is important to engage the services of an attorney knowledgeable in local traditions and law.

Real estate brokers are employed as the agent of the seller in order to obtain a buyer for their property (these agents are also known as listing agents).  The relationship between the seller and real estate broker is governed by the law of agency.  Simply stated, agency law is concerned with any "principal" / "agent" relationship -- that is a relationship in which one person has legal authority to act for another. Such relationships arise from explicit appointment, or by implication.  (The law of agency is based on the Latin maxim "Qui facit per alium, facit per se," which means "he who acts through another is deemed in law to do it himself.")

The contract between the broker and seller is called a listing agreement. The agreement may be an open agreement whereby the broker earns a commission only if he or she finds a buyer. A listing is exclusive if the broker is entitled to a commission for finding a buyer no matter how the buyer may be introduced to the property and may be entitled to a payment even if the seller finds the buyer without the broker’s aid. Real estate brokers and salespersons are licensed and regulated by local state laws.

The Federal Fair Housing Act prohibits discrimination in real estate transactions on the basis of race, color, religion, sex, or national origin. See 42 U.S.C. §§3601-3651.  Real estate brokers are specifically prohibited from discriminating.   

New York City’s Human Rights Law, considered to be the most protective in the United States, prohibits discrimination in housing and public accommodations based on race, color, creed, age, national origin, alienage or citizenship status, gender (including gender identity and sexual harassment), sexual orientation, disability, marital status, and partnership status. Additional protections are afforded for housing based on lawful occupation, family status, and any lawful source of income.

Real estate salespersons and brokers in New York must abide by the disclosure laws required for one to four family dwellings.  At this time, cooperative and condominium apartments in Manhattan are exempt from this requirement though this firm recommends that the form be used in all residential real estate transactions.

The agreement to sell between a buyer and seller of real estate is governed by the general principles of contract law. The Statute of Frauds requires that contracts for real property be in writing.

It is commonly required in real estate contracts that the title to the property sold be marketable. This requires that the seller have proof of title to the property being sold and that third parties not have undisclosed interests in the title.

A title insurance company is recommended to investigate whether the title is, indeed, marketable. Title insurance companies insure the buyer against losses caused by the title being invalid.

The most common method of financing real estate transactions is through a mortgage for real property, or what is called a loan for cooperative apartment purchases.

The Law Offices of Michele A Peters P.C. are ready to assist you with any further questions.