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The buying and selling of a home represents the single most important investment of a lifetime for most people. It should, therefore, be approached with care.
The Listing Contract.
The first document a prospective seller may encounter is the real estate agent's listing contract, which is required, by law, to be signed by the owner before the agent may show the prospective customers the property.
A seller may sell his or her own property, but under an exclusive listing agreement, may still have to pay the real estate agent, and the agent has the right to place a lien against the property for payment. To avoid such problems, the question of what type of listing, and what terms the listing should include (including time limitations) are matters a seller may wish to review with an attorney at the outset.
Should an Attorney be Contacted before signing a Real Estate Contract?
An attorney should be contacted before signing any contract. A seller may wish to consult with his or her attorney on planning and zoning considerations, subdivisions requirements and restrictions, and other covenants or agreements which may affect the property before executing a listing contract.
Many real estate agents and brokers prepare an agreement which they ask prospective buyers to sign when giving a deposit or making an offer on a home. When the seller signs that agreement, it will be binding on both parties unless there is a defect in the agreement. Real estate agents and brokers have not had the legal training to recognize all the problems which may result from an imperfectly drawn agreement.
In addition, sellers are required to make, and buyers are entitled to receive certain representations about the property. Each party may wish to consult an attorney to fully understand his or her rights with regard to those disclosures.
The buyer's attorney, if contacted before the buyer signs the contract, will be sure that, to the extent applicable, the purchase is contingent upon the buyer being able to obtain mortgage financing, that all personal property included in the sale is listed in the contract, and that the buyer is not agreeing to assume encumbrances or liens which should be the obligation of the seller or which interfere with the buyer's use and enjoyment of the property.
The buyer may want engineering studies, termite inspections, or water quality tests, all of which may be listed in the contract as prerequisites to a transfer of title. The seller's attorney will want to be sure that the buyer has a limited time in which to acquire financing and to satisfy any other contingencies in the agreement to prevent the property from being held off the market for an extended period of time during which the buyer has the ability to cancel the agreement.
If a contract has already been signed, it should be immediately reviewed by an attorney who will explain the legal significance of the various terms of the contract as well as determine whether it contains any errors or ambiguities which the parties may want to correct.
What Else Does the Attorney do?
The lending institution providing mortgage financing for the purchase of the home may require its attorney to prepare the note, mortgage deed and other loan documentation. The buyer may request representation by the bank's attorney or obtain the service of a private attorney.
The buyer's attorney will discuss with the buyer the necessity of having a title search done and what type of survey may be required. Depending upon the custom in the area of the state where the property is located, either the buyer's attorney or the seller's attorney will examine the title to the property, although the cost of the title search is usually borne by the buyer.
The attorneys for the seller and buyer will prepare the closing documents, review adjustments for taxes, water, rent and oil, as applicable, and will notify their respective clients prior to the closing of the financial details of the transaction.
Related topics of interest
- Zoning Board of Appeals
- Buying A House At A Foreclosure Sale
- Mortgage Contingency Clauses
- Private Mortgage Insurance (PMI)
- Don't Burn That Mortgage!!!!
- Mechanic's Lien
What is a Closing?
A real estate closing is the occasion when title to real property is transferred from a seller to a buyer, and when a mortgage deed and other loan documentation are signed by the buyer in consideration of the loan of the money from the bank or other lending institution.
Customarily, the closing will be attended by the seller, the buyer, the attorney for both the bank and buyer, the real estate agent and sometimes a representative of the bank. The closing will be held at the lender's office or at one of the attorney's offices.
With federal regulations and the wide variety of mortgage loans available today there are often many other papers to be signed at the closing. Each attorney's role is to be sure the client is fully informed of the legal ramifications of each document and to attempt to protect the client's needs and legal rights. The client should have a full understanding of what is being signed and should feel free to ask the attorney to fully explain any aspect of the closing which is unclear.
At the closing, the buyer and seller will receive a closing statement which sets forth all the various closing costs and any adjustments between buyer and seller as well as the bank charges being paid by the buyer. The attorney will see that the closing statement and the other closing documents are executed by the parties, that the parties exchange proper documents, make required payments, and conclude the formal aspects of the transaction.
Following the closing, the attorney will see to the recording of appropriate documents on the land records of the town in which the property is located and to the disbursement of amounts paid at the closing
Is an Attorney needed when Purchasing a New Home or a Condominium Unit?
It is a common misconception that the purchase of a condominium or a newly constructed home is a less complicated transaction then the purchase of other residential property. In fact, there are special considerations related to each that require extra attention by the attorneys involved.
For example, in the case of a new home, the buyers attorney may recommend an escrow fund be established to protect the buyer if the builder has not completed construction of the home by the time of the closing. In the case of a condominium, many aspects of the purchase and sale are specifically addressed by state law which can best be explained and reviewed by an attorney.
How Much will it Cost to be Represented by an Attorney?
The fee of the attorney will vary according to many factors, including the time required, the nature of the work, the responsibility involved, the attorney's experience and availability, and the results obtained. An attorney is required not to charge more than a reasonable fee by the Code of Professional Responsibility applicable to the legal profession.
A client should discuss the fee arrangement with the lawyer at the initial interview and be satisfied how the fee will be determined. Once the client has retained the attorney, the client is entitled a written fee letter, setting forth the fee to be charged and the services it will cover.
How do I Find an Attorney to Represent Me?
If you do not have a family attorney, you may wish to call your local Bar Association's Lawyer Referral Service and have them refer you to an attorney or ask friends or relative for a recommendation. Also, attorney's are listed in the classified section of telephone directories. In any event, it is important, whether you are the buyer or the seller, to be represented by your own counsel.
Remember, any other lawyer involved in the transaction is representing someone else first. Your interests can only be protected if you have your own counsel.
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