Log In   ·   Become A Member

When Buying Property In The Hamptons, "Buyer Beware!"

John A. Viteritti

  |   1 Comment · Print Article

Ocean and bay breezes will reward the fortunate buyer of a newly listed 6 bedroom traditional deep in Water Mill South embraced by 12 acres of reserve and just several hundred yards to Mecox Bay. Listed for $8.95M by Gary DePersia at The Corcoran Group. (Courtesy Photo)

New York is what is known as a "caveat emptor" State - "Buyer Beware!" In the Hamptons real estate market there are many often unknown or misunderstood issues with regard to the buyer's responsibility to exercise "due diligence" when purchasing real property.

In the normal course of events, the buyer's attorney will order a title search to determine if there are any liens or encumbrances against the property. The attorney will also order a survey to establish that no undeclared improvements have been made to the property and no tax issues exist.

The contract will require that the seller turn over the property to the buyer with insurable, marketable title, free of all liens and encumbrances, and require that all certificates of occupancy be furnished before closing.

The contract is also likely to include many other issues relevant to the sale of the property; these are only some of the more well known.

But what are some of the responsibilities of the seller? One is, to disclose to the buyer, any material facts concerning the property not easily discoverable by the buyer. If you buy a property next to a gas station, or backing up to railroad tracks, that would be considered easily discoverable. An underground fuel tank may not be.

New York has what is known as "The Seller Disclosure Law." It includes a forty-eight question questionnaire filled out by the owner and presented to the buyer before going to contract. If the seller does provide it, it does not relieve the buyer of the responsibility to perform its own due diligence. In the Hamptons, it is common practice for the seller to issue a $500 credit to the buyer at closing rather than fill out the form.

Under New York Law, if a property is located in an agricultural district, it is the duty of the seller to disclose this fact to the buyer. The buyer of a one or two-family house is also entitled to two years of utility bills if they request it.

What about the seller's obligation to disclose that a murder, suicide, or death by any cause other than communicable disease occurred on the site? Does that have to be disclosed? No. The buyer may ask the question but the seller is not required to answer. This is also true with regard to sex offenders. A New York Supreme Court ruled that a seller does not have to disclose that fact. According to another New York Supreme Court ruling, it does have to disclose that a house is haunted.

For residences constructed before 1978, for sale or rental, federal law requires the seller to disclose any knowledge they have of the presence of lead. Exceptions include rentals of fewer than one hundred days, housing designed exclusively for residents sixty two years of age or older, zero bed room apartments, studios, and loft buildings, and housing already certified to be "lead-free."

Another issue that is often misunderstood: When an appraiser appraises a property paid for by the borrower, and the property is overvalued due to an error in the calculation of the square footage of the property by the appraiser, adversely affecting the ability to refinance the property or recapture the purchase price in a re-sale, does the borrower have recourse against the appraiser? Not according to a New York Supreme Court ruling. The court stated: "Plaintiff's reliance on the misrepresentation of the size of the apartment was not reasonable or justified. Plaintiff could have easily measured the apartment for himself. Because the plaintiff "failed to do his due diligence," he could not blame the bank or its appraiser. The decision was affirmed on appeal.

John is a St. John's University graduate, licensed Real Estate broker, lecturer, teaches real estate license classes at LIU, NYU, and Cook Maran Real Estate School, and is a well-respected consultant to the real estate industry. www.johnaviteritti.com

Guest (howard banks) from boca raton,florida says::
buyer beware, everything that glitters, isn't gold.
Jun 11, 2014 7:50 am


Submit Your Comment

Please note, you are not currently logged in. Your comment will be submitted as a guest.
To submit your comment as a member, please click here.
Your Name:
* Comments will be reviewed and posted in a timely fashion
* All fields are required
What color is a firetruck?
(For spam prevention, thanks)
Gary R. DePersia, Corcoran Real Estate
With over $2 billion in transactions on the East End and since 1995, Gary DePersia is consistently ranked among the top producers in the Hamptons. A year-on-year member of The Corcoran Group President’s Council, he has qualified as a national list maker since 2007. In 2008 he was Corcoran's top broker on the East End by sales volume and rental units; and ranked as the nation’s 4th top broker. In the 2017 REAL Trends & The Wall Street Journal list of America’s top real estate professionals, he was designated #26 nationally, #4 in the Hamptons and #3 at Corcoran overall by volume with nearly $200 million of transactions for the past year. His office operates with four licensed assistants allowing him to build a business stretching from Southampton to Montauk and Sagaponack to Shelter Island. gdp@corcoran.com

East End Tick Control
The East End's only New York State licensed dedicated tick and mosquito control specialists!

Bridgehampton National Bank
For over 100 years Bridgehampton National Bank has been the East End's hometown bank. Many success stories...one bank, BNB!

Advertise on Hamptons.com - Have your business be seen by over 2 million viewers including NEW searches
Hamptons.com- Our exclusive online magazine has 2.6 million Page Views YTD for 2015. Contact us to join our elite group of clients that benefit from having a presence on the Hamptons award winning publication www.Hamptons.com

Hamptons Carpet One Floor & Home
We pay less,and so do you.With over 1,000 stores in our buying group, we can get the lowest prices from the best flooring manufacturers — and pass the savings on to you.Visit our other locations: Hamptons Carpet One Floor & Home, 675 North Sea Road,Southampton, NY 11968

Southampton Masonry-Visiting the Southampton or the Wainscott locations is an exciting experience.
Southampton Masonry has been serving Long Island's masonry and tile needs since 1975. Delivering quality products from Manhattan to Montauk for over three decades. The company's continued success is due primarily to their number one priority: customer satisfaction, with a promise of prompt and courteous service from the professional, knowledgeable staff. Southampton Masonry has the largest inventory on the east end. As direct importers they can offer a large variety of the finest quality products at the most competitive pricing for both your interior and exterior projects.

CP Complete- Landscape Design & Construction
Paul Guillo And Chris Hall Two Of The Most Respected Names In The Community Together, they are partners in CP Complete. They bring their years of experience and integrity to creating and renovating luxury backyards.

CP Complete- Landscape Design & Construction
Paul Guillo And Chris Hall Two Of The Most Respected Names In The Community Together, they are partners in CP Complete. They bring their years of experience and integrity to creating and renovating luxury backyards.

D+J Concepts is known for a high-end cutting edge approach to design.
D+J Concepts is known for a high-end cutting edge approach to design with a balance between functionality and imagination. We skillfully and tastefully transform ordinary spaces into classic modern styles, which are understated, and luxe. We’re known for our modern transitional style incorporating antiques and modern elements for an unexpected edge.