Buying or Selling a Home? Make sure you know your options.
Buying a home will probably be the largest and most significant purchase you will make in your life. It also involves the law of real property, which is unique and raises special issues of practice, and problems not present in other transactions. Although it may seem to be a simple transaction, failing to take the proper steps can result in a financial disaster, costing many thousands of dollars. A real estate lawyer is trained to deal with these problems and has the most experience to deal with them.
BUYING A HOME
In the typical home purchase, the seller enters into a purchase agreement (often called an Earnest Money Agreement) with the buyer. Even if utilizing a real estate agent, a standard form earnest money agreement may not cover all circumstances. There are many issues that may need to be addressed in the purchase agreement; below are some common examples: If the property has been altered or there has been an addition to the property, was it done lawfully? If the buyer has plans to change the use of the property, may what is planned for the property be done lawfully? What happens if a buyer has an engineer or architect inspect the property and termites, asbestos, radon, or lead-based paint is found? What if the property is found to contain hazardous waste? What are the legal consequences if the closing does not take place, and what happens to the down payment? Is the closing appropriately conditioned upon the buyer obtaining financing?
Even if a lawyer is not needed during the course of negotiations, the buyer and seller each may have to consult with a lawyer to answer important questions, such as the tax consequences of the transaction. To a seller, the tax consequences may be of critical importance. For example, the income tax consequences of a sale, particularly if the seller makes a large profit, may be considerable. An attorney can advise whether the seller can take advantage of tax provisions allowing for exclusion of capital gains in certain circumstances. Most buyers finance a substantial portion of the purchase price for a home with a mortgage loan from a lending institution. The purchase agreement should contain a carefully worded provision that it is subject to the buyer's obtaining a commitment for financing.
After the purchase agreement is signed, it is necessary to establish the state of the seller's title to the property to the buyer's and the financial institution's satisfaction. Generally, a title search is ordered from an abstract or title insurance company. In some states, and in outlying areas of others, title insurance is not typical. In such cases, an attorney is essential to review the status of title and render an opinion of title in lieu of a title policy. The title search does not tell the buyer or seller anything about existing and prospective zoning. A lawyer can explain whether zoning prohibits a two-family home, or whether planned improvements violate zoning ordinances.
The closing is the most important event in the purchase and sale transaction. The deed and other closing papers must be prepared. Title passes from seller to buyer, who pays the balance of the purchase price. Frequently, this balance is paid in part from the proceeds of a mortgage loan. A closing statement should be prepared prior to the closing indicating the debits and credits to the buyer and seller. An attorney is helpful in explaining the nature, amount, and fairness of closing costs. The deed and mortgage instruments are signed, and an attorney can be assured that these documents are appropriately executed and explained to the various parties. The closing process can be confusing and complex to the buyer and seller. Those present at the closing often include the buyer and seller, their respective attorneys, the title closer (representative of the title company), an attorney for any lending institution, and the real estate broker. There may also be last minute disputes about delivering possession and personal property or the adjustment of various costs, such as fuel and taxes. Having your own lawyer present during the closing may help preserve your rights in the event of a dispute or disagreement.
DISCLAIMER. The materials available at this website are for informational purposes only and not for the purpose of providing legal advice. You should contact your attorney to obtain advice with respect to any particular issue or problem.