Real estate can be a complicated business; there are so many details and wrinkles you have to smooth out before you can actually move into a new home. From hiring an agent, to finding that perfect dream home, not to mention the process of financing and making an offer to purchase, finally getting to the contract stage can be time-consuming and complex. But when you do make a formal offer to buy the home you want to buy, you will end up reading and filling out a lot of paperwork specifying the terms and conditions of your offer. Aside from obvious items like the address and purchase price of the property, here are some more nuanced items you should be sure to include in your real estate purchase contract. In legalese, these are called contingencies that are written in to your real estate contract. A residential real estate purchase agreement is a binding contract between a seller and buyer for the ownership transfer of real property. The agreement outlines the terms, such as the sales price and any contingencies leading up to the closing date.
Duties of a Real Estate Lawyer
However, real estate transactions often represent the most expensive transaction that a person makes. Spending the extra funds to ensure that the job is done right is often a prudent choice. Real estate lawyers help in the following ways when you are purchasing or selling a home:
• Contract Drafting and Review: Real estate lawyers memorialize the terms of the agreement into a formal contract. They can ensure that certain provisions are contained in the contract that protect their client’s interests as well as to make sure that state laws are complied with. They can also address certain issues that may arise, such as purchasing a lease-back by the seller, handling existing tenants, using the property for certain uses in the future and include contingencies to protect the client. Many documents will manifest during the course of a purchase and sale of a home. Lawyers will carefully review all of these documents and not simply take the lender’s word for what the document is stating. If there is any troubling wording or legal issue that arises, he or she can address these concerns. Many home sales are based on a number of important contingencies. A seller may want to secure a new home and make the sale contingent on this ability, or the buyer may want to make the sale of his or her own home contingent on the transaction. There may be other contingencies as well that can be included in the purchase agreement.
• Drafting Amendments: There may be changes made in the original agreement based on new information. It may have taken longer than expected for certain stages of the process to be completed. There may be changes based on the home inspection and agreements reached regarding any defects. A natural disaster may strike, causing damage to the property. Real estate lawyers can draft such amendments to keep the purchase agreement intact but to account for this new information.
• Reviewing Liens: A real estate lawyer often conducts a title search on a property to determine if there are any encumbrances against it or anything that is clouding the title. This search helps clarify whether the seller has the legal right to sell the property and whether there is anything that may block the sale. For example, the seller may be required to pay off a lien or judgment before selling the home. A real estate lawyer can also secure proof that the judgment or lien has been satisfied.
• Transferring Property: A real estate lawyer helps to draft deeds to effectuate the transfer of real estate. Additionally, he or she can review any contracts related to the real estate transaction that have to do with a corporation, partnership or trust so that no terms of the charter agreement are breached. Without the proper legal protocol, the opposing party may be sued if the agreement is violated. When one or more parties are corporations, trusts, or partnerships, the contract preparation and the ensuing negotiations are complicated. An attorney understands these different types of business arrangements and their legal boundaries within your state’s law. The attorney will ensure that the contract is consistent with the law and the partnerships, trusts, or corporation’s charter agreements.
• Fulfilling Additional Legal Requirements: The purchase of certain properties may require additional steps. For example, there may be special requirements if a home is considered historical property. If a property is on wetlands and building permits are not secured, the entire structure may need to be rebuilt. If the property is ultimately going to be used for a commercial use, certain zoning restrictions may apply.
• Dealing With Discrimination: Lawyers can certainly help if you face discrimination during the home buying process. Even though most real estate lawyers do not specialize in that area, they will probably know an attorney who does. However, don’t let anyone convince you that you need to have lots of money or a high-priced legal team to respond to discrimination. Laws exist to protect everyone, regardless of income.
• Disclosures: State laws dictate what types of information must be disclosed about a property. Real estate lawyers can help requests these disclosures as well as prepare the disclosures if they are representing the seller. Without a real estate lawyer, the likelihood of being sued regarding a disclosure increases. A real estate lawyer can also be sure to put a home inspection clause in the buyer’s documents so that any unknown defects are realized before the transaction concludes. A good real estate lawyer can also review home inspections and other disclosures to help you spot any potential problems with the home before it becomes an issue down the road. You definitely do not want to be tricked into thinking that the home is safe and secure when there are actually serious problems that the previous owner hid from you.
• Recording: Property law is full of cases involving properties that were purchased but no deed was ever recorded, creating legal nightmares for buyers. A real estate lawyer can ensure that the deed is properly filed and recorded. If a deed is not properly recorded, the buyer may not be considered the legal owner. His or her income and estate taxes may be levied.
• Legal Assistance: To best protect their interests, many home buyers and sellers choose to retain the services of a competent real estate lawyer. He or she focuses on protecting the client’s interests and ensuring that all applicable rules are adhered to in order to avoid potential problems that could arise in the future.
• Review Sales Transactions: Some real estate attorneys are involved only in reviewing and providing advice on real estate transactions. Clients will negotiate their deals, sign a contract and then ask the lawyer to perform the due diligence on the deal. This means the lawyer will examine legal title issues, environmental issues and reports and any of the contracts or other documents involved in the transaction. Real estate lawyers have training that allows them to spot problems that their clients do not recognize. In this role, the real estate lawyer plays guardian for the clients to make sure the clients don’t fall into any unseen legal traps.
• Handle Foreclosure Proceedings: Many real estate attorneys specialize in mortgage and trust deed foreclosure, particularly during difficult economic times. Some lawyers represent lenders while others represent borrowers. The lawyers representing lenders help guide lenders correctly through the foreclosure process, which may include filing a lawsuit in court. The lawyers representing borrowers, on the other hand, try to make life difficult for the foreclosing lender by challenging any mistakes made in the foreclosure process, and by negotiating with the lender for a settlement agreement to stop the foreclosure process.
• Addressing Liens and Other Title Issues: An attorney can help you with the title search process. A title search will help you discover any problems with the title before you purchase a property. For example, if the person selling the property does not have the legal authority to do so, the entire transaction can be voided. A title search will also allow you to determine if there are any encumbrances on the property, including judgments or liens. A seasoned real estate attorney is your best option. He will explain everything you need to know and walk you through your issues, because he has the in-depth knowledge and experience with real estate transactions that many lawyers lack. If any issues come up in a title search, a real estate attorney can help you address them. You may be able to have the liens removed or negotiate a lower price for the property based on potential issues with the title.
Types of Real Estate Contracts
There are several types of real estate contracts, and it is important to know that contracts are necessary for real estate deals. A contract is a legally enforceable document between two or more people. The contract consists of an offer, acceptance, consideration, legal capacity, and legality of purpose.
A purchase agreement is the most common type of real estate agreement. This contract specifies the details regarding the sale of property. It will include the address of the property, the price, names of both parties, signatures of both parties, and the closing date.
There are several kinds of purchase agreements as follows:
State/Association Purchase Agreement, which is the standard agreement between a purchaser and seller when a real estate agent is involved
General Purchase Agreement, which is a simply a shortened version of the above-mentioned contract, and is used usually when no real estate agent is involved in the transaction
Property-Specific Purchase Agreement, which could be used for vacant land or a mobile home
Real Estate Assignment Contract
A Real Estate Assignment Contract is used in a wholesale investment purchase. This could include distressed properties that are secured and then assigned to another buyer. There are certain terms added to this type of contract, as the term “assigns” is the common word used to differentiate it as an assignment contract.
This is a contract that binds an owner and a renter to the property. Therefore, the proper owner (referred to as a landlord) enters into an agreement with a tenant (the lessee) to reside in the home at a specified monthly rate. Additional items to be included in this agreement include payment of utilities and the security deposit. It’s important to ensure important items are mentioned in the lease agreement to prevent future legal disputes.
Power of Attorney
While a Power of Attorney is generally not used in a real estate contract, such documents could be used in situations if a party is unable to sign the contract, i.e. party is not physically in the country to sign, or has a mental disability. In this case, the party can hire another party to act as the power of attorney to sign on his or her behalf. This type of contract can also be beneficial if you are the property owner of several investment (rental) properties or if you are carrying for an older parent or family member who might not have the ability to sign the contract.
Real Estate Lawyer Requirements:
• Bachelor’s degree in Law (essential).
• Admitted as a Notary Public (essential).
• Strong experience in real estate law and industry knowledge that includes litigation, lease transactions, property management, and purchase and sale transactions.
• Solid experience in title insurance underwriting, curative and claims.
• Good understanding of Foreclosure.
• Analytical thinker with strong conceptual and research skills.
• Natural leader who displays sound judgment and attention to detail.
• Ability to work under pressure and meet deadlines.
• Capable networker with excellent interpersonal, communication and public speaking skills.
• Proficient with Microsoft Office programs.
The Pros Of Hiring A Real Estate Lawyer
First of all, they help you protect yourself. When you’re signing contracts, you want to know just what you’re getting yourself into. Unless you have a legal background, you’ll likely need professional assistance from an attorney. Additionally, an attorney can be a great source of advice. They can help with negotiations, getting a better deal, and closing the property with ease. This is often much-needed peace of mind since they can provide more legal insight than your real estate agent.
Finally, an attorney can guard your title to the property. When you purchase title insurance, for example, the insurance provider usually maximized exceptions to coverage. An attorney can work on your behalf to limit your own liability when it comes to your title. Ultimately, an attorney is a great way to ensure you have extra support throughout this process.
Individuals who are considering drafting a trust or a will may wish to consult with an estate planning lawyer. He or she can explain the advantages of using a trust as well as a will. He or she can make recommendations based on the specific considerations of the client. He or she may even recommend using both documents, such as by using a pour-over will that places any property owned at the time of the testator’s death into the trust.