New York

New York is among the most complex residential closing jurisdictions in the country. Three structural features distinguish practice here. First, a real estate attorney is required on every residential closing, not a customary practice, an actual requirement. Both buyer and seller retain their own attorneys, who handle contract drafting, title review, and the closing itself. Second, transfer taxes layer in multiple directions: state, NYC, mansion tax, and a separate mortgage recording tax. Third, co-op apartments are a different legal animal from condos and houses, with their own contract structure, board approval process, and tax treatment.

Outside New York City, residential real estate operates more conventionally, attorney-driven closings, standard transfer taxes, no mansion tax until $1M+ statewide. Within NYC, the layered structure adds material cost to most transactions.

The transfer-tax stack

The state-level transfer tax is $2 per $500 of sale price (about 0.4%), customarily paid by the seller statewide.

The NYC Real Property Transfer Tax (RPTT) layers on top within the five boroughs: 1.0% on residential under $500,000, and 1.425% above that threshold (paid by the seller for residential, with the buyer paying when the seller is a government entity or in a few other narrow cases).

The NY State Mansion Tax kicks in at $1M+ on residential and is paid by the buyer. Each rate applies to the entire sale price (cliff structure, not marginal):

The cliff structure produces sharp jumps near each threshold. A $2M buyer pays 1.25% × $2M = $25,000; a $1.99M buyer pays 1.0% × $1.99M = $19,900, the extra $10,000 in price triggers an additional $5,100 in mansion tax.

The mortgage recording tax in NYC is roughly 1.8% on the loan amount (paid by the buyer), one of the highest in the country. Buyers refinancing in NYC often use a CEMA (Consolidation, Extension, and Modification Agreement) to avoid paying mortgage tax again on the unpaid balance of the existing loan; the savings can be material.

Co-ops vs. condos

New York City's housing stock includes a large share of cooperative apartments, where the buyer doesn't own real estate but rather buys shares in a corporation that owns the building, with a proprietary lease for a specific unit. Co-op closings are different in three meaningful ways from condo or house closings.

The board approval process can take 4–8 weeks after the contract is signed, with the buyer submitting a financial package, references, and often interviewing in person. The board can reject without stating reasons, and rejections are not uncommon for buyers who would qualify for a comparable condo on financial metrics alone.

Financing rules vary by building, some co-ops require 25% or 50% down minimum, some prohibit financing entirely, and most have post-closing liquidity requirements (cash reserves the buyer must hold after closing).

Transfer taxes treat co-ops differently. The mansion tax and RPTT apply to co-ops, but the mortgage recording tax does not (because the loan isn't a mortgage on real property, it's a loan secured by the shares). This is one of several reasons co-ops have lower transaction costs than comparable condos in NYC.

What buyers should know

The buyer's attorney is the central professional, hired before signing the contract and involved through closing. Expected fees are $2,500–$5,000 for a typical residential transaction, more for complex deals or higher prices.

The standard NYC purchase contract is heavily negotiated by attorneys, with riders covering specific contingencies, board-approval clauses (for co-ops), and seller representations. The contract typically requires a 10% deposit at signing, held in the seller's attorney's escrow.

Title insurance is not state-promulgated in New York, premiums vary, and shopping the owner's policy is sometimes worthwhile on higher-value transactions.

What sellers should know

Sellers retain their own attorney for contract negotiation, attorney's escrow on the deposit, and closing. The seller's attorney coordinates the title commitment, prepares closing documents, and represents the seller at the closing table.

The seller's transfer-tax burden is substantial: state RETT (0.4%) + RPTT (1.425% above $500k) + the NYC additional 1.0%–2.625% in some structures. On a $2M Manhattan condo sale, the seller's transfer-tax line alone exceeds $30,000 before commissions.

State capital gains are taxed as ordinary income; NYC residents pay an additional city income tax on top. Combined federal + state + city + NIIT can push the effective rate on taxable gain above 35% for high-income filers.

How closing typically works

Closings happen at one of the attorneys' offices (typically the seller's attorney for residential transactions), with the buyer, seller, both attorneys, the lender's representative, and the title company representative present. The deed transfers, the mortgage records, transfer-tax forms get filed with the city and state, and funds wire. The full process takes 2–4 hours.

For contract-language and closing-mechanic questions, the buyer's or seller's attorney is the primary professional. For mansion-tax planning around the cliff thresholds (particularly when a deal is close to a threshold) both an attorney and a CPA may need to weigh in on the dollar consequences.