Are you looking to buy or sell a house? Get legal advice
The current market is a great place to sell or buy a home, as mortgage rates are at an all-time low. However, home purchases are legal transactions. The law is involved in every stage of the process.
There are thousands of dollars at stake and sometimes hundreds of millions more. You owe it yourself to find someone to represent your interests. Jane Bryant Quinn, personal financial expert, suggests in Making the Most Of Your Money that your lawyer should work exclusively for you …. Local lawyer you can trust to know the local laws and protect your rights.
Your lawyer will help you negotiate the various legal documents necessary and secure the best possible arrangement.
The best rule of thumb is to never sign anything without your attorney’s consent.
The Brokerage Agreement. You will need to sign a listing contract if you plan on selling your property through a broker. A listing agreement is a legally binding document that you must have reviewed by a lawyer. This is just one of many protections you can get from having a lawyer working for your case.
These agreements can be used by brokers, but they do not have to be preprinted. All brokers who are members the Multiple Listing Service will use them. These agreements, like all legal contracts are subject to negotiation.
There are several points that can be negotiated. The due date of the commission (when the sale is completed or when the broker finds a willing and able buyer). ; the commission percentage (which may sometimes be reduced); whether the broker is able to represent a buyer or seller; and how long you have been listing with the agent (less is better if your satisfaction is not met).
Selling by owner? Selling your property by yourself can help you save significant money but it will also require more work. To get a clear idea of the value of your property, you will need to hire an appraiser. Your attorney can advise you throughout the process. He/she will help you to comply with the laws that govern real estate transactions. If you’re the buyer, you will want to have your own lawyer to protect all your interests.
The sales contract. It is also known as a bid, binder or offer to buy, but it is legally binding and sets the terms for the entire transaction. It is important to note that the purchase price does not have to be the only thing in the contract. This makes it essential that your attorney reviews the contract.
Many sellers and buyers sign contracts before their lawyers review it. As long as the contract states that the contract is subject to approval by both parties within a set period of time (often five or 10 days), there are many places in the country where this happens. Among other important legal topics, the contract covers
- Provisions concerning earnest cash (amount of earnest or initial payment; who holds the money; rate of interest; terms under which it could be returned/forfeited).
- How will the balance be paid? Cash, cashier’s or assumed mortgage, cashier’s checks, assumption of existing loan, purchase contract where monthly payments are made directly at seller
- Contingency clauses can include financing (usually the contract can be canceled if financing is not available at a particular rate or for a specified time period), inspection (for how long, and what happens if there are problems), and, of course, legal review
- Legal description of property (may be required) and Povisions regarding what to do if property is not delivered at closing.
- “Good title” provisions (good titles to be furnished by the seller as per policy of title insurance, or other means).
- If any, imitations on the title, which includes easements and covenants, as well as liens and encumbrances
- Buyer or seller may pay or get a credit for property tax, condominium special assessments, or other similar expenses.
Which party is at greatest risk for fire, or other hazards before closing?
You can add language to your contract.
Financing. It is great to have so many financing options, from VA and FHA loans, to adjustable rate loans, hybrid loans, shared appreciation loans, special low downpayment loans, etc.
Lender terms can differ greatly, so it is important to shop carefully and ask lots questions.
Remember that home buying has a lot of legal aspects. This includes whether you should use an agent to assist you in your search, the contract you have with your broker if you do, your rights to lenders, the provisions against discrimination and the right to know your annual percentage rate (APR). These include the tax consequences and the effects on financial planning, including estate planning.
The promissory notice you will sign is a contract that sets out the terms of your loan. The mortgage itself, also known in some locales as a “deed to trust”, is a legal document giving security to the lender. This gives the lender an ownership interest in the property while the loan is being repaid. You could lose your property to foreclosure if the loan is not repaid.
Buyers and sellers may agree to an arrangement that allows the buyer to move into the house, make payments to the seller over time, and then take title after all payments are completed. These complicated arrangements, as you can imagine, should be thoroughly reviewed by the lawyers on both sides.
Closing. The closing is when the transaction is concluded. The closing is the meeting where all parties and their attorneys meet to conclude the transaction.
- All terms and conditions of the sales contract must be followed
- All other relevant documents, including the promissory notes and mortgage, are signed
- All payments are made, and all credits are granted.
- The property is officially conveyed from the seller to buyers.
Closings come with many costs. Buyer and seller will be responsible for recording fees, transaction tax, appraisal fees and survey fees. They may also have to pay title fees, title costs and insurance costs. Seller and buyer have the option to negotiate which party pays what fees in the sale contract. If they don’t, the local custom will often dictate who pays what fees.