Common Mistakes to Avoid When Buying Property in NYC

Buying property in New York City is one of the most significant financial decisions most people will make in their lifetime — and one of the most legally complex real estate markets in the world. Between cooperative boards, mansion taxes, title issues, and contract contingencies, the potential for costly mistakes is enormous.

This guide covers the most common errors buyers make and how to avoid them with proper legal guidance.

Mistake 1: Not Hiring a Real Estate Attorney

In New York, having an attorney represent you in a real estate transaction is not optional — it is standard practice and legally advisable. Unlike many other states where title companies and real estate agents handle closings, New York requires attorney involvement.

Your attorney will:

Review and negotiate the contract of sale
Conduct title searches and resolve title issues
Coordinate with your lender and the seller’s attorney
Handle the transfer of funds at closing
Ensure all required documents are properly executed and filed

Attempting to navigate a New York real estate closing without an attorney is a significant risk that experienced buyers and sellers simply do not take.

Mistake 2: Skipping Due Diligence on the Building

For Co-ops and Condos

In NYC, the majority of residential real estate involves cooperative (co-op) or condominium purchases rather than standalone homes. Each comes with unique due diligence requirements.

For co-ops, you are not buying real property — you are buying shares in a corporation that gives you the right to occupy a unit. Before proceeding, you must review:

The proprietary lease and house rules
Board meeting minutes from the last 2–3 years (reveals building issues, disputes, upcoming assessments)
Financial statements of the co-op corporation (are reserves adequate? Is the building in good financial health?)
The underlying mortgage on the building
Subletting and renovation policies — many co-ops are highly restrictive

For condos, review:

Condo offering plan (for newer buildings)
Reserve fund balance — inadequate reserves often lead to special assessments
Pending litigation against the building
Common charges and their history — have they been increasing rapidly?

For new developments, review the offering plan carefully. Sponsor units may come with personal liability for the buyer if the building later faces construction defect claims. Attorney review is especially critical here.

Mistake 3: Misunderstanding the Co-op Board Approval Process

Unlike condos or single-family homes, co-op purchases require approval by the co-op’s board of directors. This process can take weeks and is notoriously unpredictable. Boards can reject applicants for almost any reason — and are not required to explain their decision.

What buyers must understand:

Board rejection is common and can happen even after you’ve invested in inspections and attorneys
Your contract should include a board approval contingency — so you can recover your deposit if you are rejected
Boards review detailed financial packages including tax returns, bank statements, employment history, and personal and professional references
A poorly prepared board package can lead to rejection even for qualified buyers

Your attorney will help you prepare the strongest possible application and ensure your contract is properly protected.

Mistake 4: Not Understanding All the Costs

NYC real estate has layers of costs that buyers from other markets often do not anticipate.

Transfer Taxes and Mansion Tax

New York State imposes a Real Estate Transfer Tax (RETT) on most property transfers. For purchases of $1 million or more, the Mansion Tax applies — a graduated surcharge that ranges from 1% to 3.9% depending on the purchase price.

For 2026, the Mansion Tax brackets are:

Purchase Price	Additional Tax Rate
$1M – $1.999M	1.00%
$2M – $2.999M	1.25%
$3M – $4.999M	1.50%
$5M – $9.999M	2.25%
$10M – $14.999M	3.25%
$15M – $19.999M	3.50%
$20M – $24.999M	3.75%
$25M and above	3.90%

NYC Transfer Tax

NYC imposes its own transfer tax on top of state taxes: 1% for residential sales under $500,000 and 1.425% for $500,000 and above.

Mortgage Recording Tax

New York charges a Mortgage Recording Tax (MRT) on new mortgages. In NYC, this is 1.8% to 1.925% of the loan amount — a significant closing cost that surprises many buyers.

Example: On a $1,000,000 mortgage, the MRT alone could exceed $19,000.

Other Costs to Budget

Title insurance (owner’s and lender’s policies)
Attorney fees
Bank fees and points
Move-in/move-out fees (in co-ops and condos)
Co-op flip tax (when you eventually sell — some buildings charge 1–3% of sale price)

Mistake 5: Waiving the Inspection

In competitive markets, buyers sometimes waive home inspections to make their offers more attractive. This is a costly gamble. A professional inspection can reveal:

Structural issues
Plumbing and electrical deficiencies
Roof condition
Environmental hazards (lead paint, asbestos, radon)
HVAC system problems

For co-ops and condos, while you cannot inspect the entire building, you can and should inspect the unit itself, including plumbing, electrical, windows, walls, and appliances.

Mistake 6: Not Protecting Your Deposit

The standard contract deposit in NYC is 10% of the purchase price. This is a significant sum — and in most contracts, it is at risk if you walk away for reasons not covered by a contingency.

Your attorney will ensure that your contract includes appropriate protections, including:

Mortgage contingency — allows you to exit if financing falls through
Board approval contingency (for co-ops)
Inspection contingency (if applicable)
Clearly defined conditions for return of the deposit

“We have seen buyers lose six-figure deposits because they failed to include the right contingencies — or because their attorney did not negotiate those terms properly.”

Mistake 7: Rushing the Contract Review

In hot markets, sellers want contracts signed quickly. But the contract of sale in a New York real estate transaction is a complex legal document that deserves careful review.

Never sign a real estate contract without attorney review. Among the issues your attorney will address:

Representation and warranties by the seller
Included/excluded personal property
Closing date and extension rights
Risk of loss provisions
Certificate of occupancy requirements

Conclusion

Buying property in New York City is exciting — but the complexity of the process is real. Working with an experienced real estate attorney from the moment you go into contract is not just advisable; it is essential.

Our real estate law team handles residential and commercial transactions throughout New York City. We guide buyers through every step of the process, from contract to closing, with the knowledge and attention to detail that NYC real estate demands.