Who pays attorney's in NY?

Question

I have a potential deal in place to wholesale a property in NY. My attorney stated that end buyers use their own attorney's and that I would have to pay out of pocket for my attorney plus title search if the buyer doesn't want to use my attorneys title company? So in essence I'm paying a $500 EMD fee plus attorney and title search. All total nearly $2k. Not to mention if I back out of the deal go whatever reason I'm out my $500 plus attorney fee. Anyone else specifically in NY run into this issue?

Christopher Phillips · Answer

@Jessica Zolotorofe

Yes. It's important everyone understand the language on the contracts used in their area.

Dave McEvoy · Answer

Yes I meant 10%. I offered $500 as EMD. I would take the same or more from my end buyer when I assign the contract. I was just under the impression that the end buyer uses the wholesalers attorney. I wasn't expecting to have to pay for my own attorney since I was assigning it. I wouldn't want to risk $1500 if I had to back out for whatever reason. (EMD & attorney fee)

Jessica Zolotorofe · Answer

@Christopher Phillips, right, but only if you use the standard form of realtor's contract. Those words mean the same thing legally. They are interchangeable. So sellers should double check and not think when they see "earnest money" it  means non-refundable. In any attorney prepared contract, we use either one to mean the same thing. They are synonyms.

Christopher Phillips · Answer

@Jessica Zolotorofe

Yes. Earnest money is just another deposit. In areas that use earnest money, it's given along with the offer. Like 1-2% depending on the local customs. After the inspection period, that earnest money counts towards the deposit given at contract signing.

Difference is that if the buyer tries to back out of the deal, sellers might be eligible to keep the earnest money depending on the language in the contract. But buyers would get back the deposit money given at contract signing.

So, in areas that use earnest money, it's important that buyers understand the risk of losing their money if they back out of the deal outside of the contingencies in the contract.

Jessica Zolotorofe · Answer

Earnest Money is just another word for deposit. If the form realtor's contract calls the initial payment Earnest Money, then I agree with @Christopher Phillips and whatever they call the "deposit" when signing is what I was referring to as being the 10%. Then when you sign the assignment with your end buyer, they should be putting up the same 10% deposit with you, or replacing your deposit up with the seller. And yes, for clarity's sake, the seller, the contract purchaser, and the end buyer should all have their own counsel and all will typically pay for their own attorneys.

Mike Cumbie · Answer

"Who pays attorney's in NY?"

In my area it is customary for the person who is being represented by the attorney to pay for them. Nobody would want to be represented by an attorney that is paid for by the other side.

Christopher Phillips · Answer

@Dave McEvoy

In NY, many areas don't use earnest money when submitting an offer. Instead, a 10% deposit is put down at contract signing. If the deal falls through, you get your contract deposit back.

In NY, your offer isn't binding until contract signing. So, there's no reason to have earnest money.

In other areas, the offer paperwork might be with an actual purchase agreement, and it wouldn't be binding without "consideration", so you need earnest money. How much and if you can get back if the deal falls through depends on local customs.

In NY, a lawyer is required, so both parties have a lawyer and pay for their own lawyer. Buyers can also pick their own title company.

Dave McEvoy · Answer

You put down $10 EMD if you're wholesaling? What do you pay your attorney? Full closing price or basic price as he is only changing the contract vs creating one?

Who pays attorney's in NY?

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