Buying and Selling a Home at the Same Time on Long Island: What Needs to Line Up
Taub & Bogaty, PLLC | realestatelawny.com | (516) 531-2500
For Long Island homeowners relying on sale proceeds to buy their next home, the money for the purchase is locked inside the house they are selling. Some sell first and rent until they buy. Others want to move once, which means signing a purchase contract before the sale proceeds are available. Either approach works. The second one takes planning.
The Two Contracts Are Separate Agreements
Your sale contract and your purchase contract are separate agreements with different parties. Everyone involved may know you are doing both at once, and that knowledge alone changes nothing. Your sale falling through does not, by itself, give you the right to cancel the purchase or recover your deposit.
A sale contingency is what connects them, making your obligation to buy conditional on closing your sale by a stated date. A seller may refuse it, particularly when competing offers do not include that condition. Your attorney can tell you what is realistic for the specific deal. Without something in writing, the funding risk is yours.
Bridge financing is one option when a contingency is not available: short-term borrowing against the equity in your current home, repaid when the sale closes. Whether you qualify, what it costs, and how long it can run are questions for a lender before you make an offer.
Where the Deposit Comes From Before Your Sale Closes
The purchase deposit is typically paid at signing, subject to the terms you negotiate. That is often months before your sale closes, so it cannot come from proceeds you do not have yet.
Savings, a home equity line, borrowing against an investment or retirement account, and gift funds are all possibilities, and they are not interchangeable. Each carries different documentation requirements, and some affect how you qualify for the purchase mortgage. Ask your lender which sources work for your loan before you commit to an offer.
How Much of Your Sale Price You Actually Receive
The sale price and the amount you walk away with are different numbers. Plan around the second one.
Deductions: mortgage payoff, any home equity line or second lien, a bridge loan repaid from the sale, brokerage commission, New York State transfer tax, your attorney's fee, and any escrow holdback.
Credits: taxes, fuel, or other expenses you prepaid covering a period after the buyer takes ownership. Those come back to you.
The escrow holdback deserves particular attention. It comes out at the sale closing and is released under the agreement's release conditions after you vacate, which means it is not available for a purchase closing happening the same afternoon. If you are using a bridge loan, include its payoff in the estimate so you do not count the same equity twice.
Ask your attorney for a net proceeds figure early.
How the Money Moves on Closing Day
When both closings happen the same day, the sale goes first if you need its proceeds. Moving those funds to the purchase closing takes advance coordination among the attorneys, lenders, and title companies involved. Wire transfers run against bank cutoff times, and a morning closing that runs long can push the afternoon one to the next business day unless another funding source is already in place.
For loans subject to Fannie Mae's requirements, where sale proceeds are needed for the down payment and closing costs, the lender must obtain the settlement statement from your sale before or simultaneously with settlement on the new home, showing sufficient net cash proceeds. A sales contract or a listing agreement does not satisfy that. Your lender may want more, so ask early.
When the Dates Cannot Be Aligned
Same-day closings are convenient, not mandatory. Selling first and renting short-term, staying with family, or paying for storage all cost money, and all of them remove the pressure to force two transactions onto one calendar day. Closing the purchase first, where financing allows, means carrying both properties briefly. Price these out before you need them. A homeowner who already knows what a month of storage costs makes a calmer decision when a date moves.
If One Closing Gets Delayed
A delay on either side puts pressure on the other. A lender delay, a title issue, a walk-through problem, or a late payoff figure can each move a date.
Missing the closing date in your contract does not automatically put you in default. Under New York law, a residential closing date is generally treated as approximate unless the contract makes time of the essence or a party later does so by serving a clear and unequivocal notice fixing a new date and allowing reasonable time to perform.
A valid notice does not have to use the words time of the essence. New York courts have held that a letter naming a closing date and warning that failure to close will result in default can satisfy the requirement, and that the date may be set by one side without the other's agreement, provided the notice is clear and allows reasonable time to perform. Once a valid notice has been served, the new date is enforceable, and missing it can put your deposit at risk. Have your attorney read anything that sets a new closing date.
If You Need to Stay in the House After You Sell It
A use and occupancy agreement lets you remain after transferring title. The occupancy charge, the escrow holdback, and the conditions for releasing it are all negotiated, and release usually turns on the condition of the property and whether any payment disputes remain open.
The daily charge for staying past the move-out date should bear a reasonable proportion to the loss the buyer is likely to suffer, in a situation where that loss is difficult to calculate precisely. An amount grossly disproportionate to the likely harm can be treated as a penalty and refused enforcement. The buyer's mortgage interest, taxes, storage, or temporary housing are among the costs that may go into that estimate, depending on the circumstances. Building the figure is a drafting job for your attorney.
If a seller will not leave, the buyer cannot change the locks or shut off the utilities. Doing that exposes the buyer to treble damages under Section 853 of New York's Real Property Actions and Proceedings Law. Removing an occupant legally requires a court proceeding, and Section 713 of that law supplies the route for qualifying proceedings where no landlord-tenant relationship exists, including a former owner who conveyed title and stayed. Those proceedings require a ten-day notice to quit.
Confirm insurance and lender approval separately. Mortgages on owner-occupied purchases generally require the borrower to occupy within a set period after closing, so a long occupancy can conflict with the buyer's loan terms. Settle as well how the property and each party's belongings are covered while the buyer owns the house and you are living in it.
Coordinating Both Sides of the Move
At Taub & Bogaty, PLLC, we handle sale and purchase transactions for Long Island homeowners moving from one home to the next, representing the same client on the sale and the follow-on purchase. We coordinate with the attorneys and title companies on both, negotiate the terms that determine your options if a date moves, and draft use and occupancy agreements when the timing requires one.
If you are selling your home and buying another, call us at (516) 531-2500 or contact us at realestatelawny.com/contact before you sign either contract. The terms negotiated at that stage decide what options you have if one closing slips.
Related Reading
Primary Sources
NY Real Property Actions and Proceedings Law Section 713: nysenate.gov/legislation/laws/RPA/713
NY Real Property Actions and Proceedings Law Section 853: law.justia.com/codes/new-york/rpa/article-8/853
Zev v. Merman, 134 A.D.2d 555 (2d Dept. 1987): law.justia.com
Fannie Mae Selling Guide B3-4.3-10, Anticipated Sales Proceeds: selling-guide.fanniemae.com/sel/b3-4.3-10
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