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Buying or Selling Real Estate? Get a Lawyer!
Buying and selling real estate is very complicated, and it can be even more so during these turbulent times. Whether you are buying or selling property, the sooner you get an attorney involved in the process the better. If you're not sure whether you need an attorney, then consider some of the ways a real estate attorney can help protect you in your transaction.
Real estate attorneys review all pertinent documentation regarding the transaction, including sales contracts, assignments, existing leases, deeds, etc. Although many real estate brokers/agents today use standard contracts, this practice is not standardized and in many localities only attorneys prepare contracts of sale. Even in jurisdictions where real estate brokers/agents prepare contracts, many of these standard contracts, especially in New York State, offer the respective parties an attorney review period.
Every contract contains contingency requirements: a period for inspections, a timeframe for obtaining a loan commitment, a deadline for sharing financial information if the property is for investment purposes, etc. Attorneys ensure that contracts contain provisions and contingencies that benefit the respective parties. They will take care to negotiate the inclusion of terms that are favorable to clients, or the elimination of terms that may be vague or unenforceable. Additionally, attorneys often act as escrow agents, holding on to downpayments, which encourages the parties live up to the terms of the contract.
Attorneys also perform a title search for the property and arrange for the issuance of title insurance. Attorneys will thoroughly search a property's title to make sure that there are no potential title defects, such as existing liens or judgments against the property as a result of unpaid taxes, lost or forged deeds, encroachments by neighbors over property lines, whether certificates of occupancies are missing or required, claims of undisclosed heirs, or even clerical errors. Any "defects" must be removed prior to closing. If not, they will hinder your ability to obtain financing (or refinancing) or to transfer the property in the future. Attorneys will also explain the necessity for securing title insurance to protect you. For example, if the title company that did the initial title search failed to uncover an existing lien as of the closing date, for which the homeowner now remains liable, title insurance will cover the loss.
Attorneys will also counsel you about the legal documents related to the transaction, including deeds, mortgages and closing statements. For example, if you are purchasing a home what type of deed will you receive? Not all deeds are alike. Will you be getting a Quitclaim deed or a Warranty deed? If it's a Quitclaim deed, then the seller is just transferring whatever interest he may have in the property. The Quitclaim deed does not warrant that the seller's claim is actually valid and it makes no warranty as to the rights that others may claim from the property. A Warranty deed, on the other hand, guarantees that the seller holds clear title to the property and has the right to sell it.
Attorneys will also prepare for closing and make arrangements for all parties to be present, including bank attorneys, title agents, transfer agents, etc. At this point, most real estate attorneys will also encourage their clients to do a final inspection of the property to ensure that it will be transferred in the condition required by the contract. Most importantly, attorneys will help you prepare for the closing by advising you as to what funds or documentation must be brought to the closing.
Real estate attorneys can also advise their clients about other important matters related to the buying or selling of property such as
- tax implications;
- zoning issues,
- landlord/tenant matters;
- seller financing;
- foreclosures; and
Buying and selling real estate can be very complicated and very expensive. Whether you are a buyer or a seller, make sure you consult with an attorney early in the process. Ask your friends to refer you to a lawyer they were satisfied with. You can also contact your local bar association for a referral. Real estate agents or mortgage brokers can also make excellent recommendations. Just make sure the attorney you retain specializes in real estate transactions.