Buying and Selling a Home
"The buying and selling of a home represents the singe most
important investment of a lifetime for most people. Therefore,
it should be approached with care."
The Listing Contract.
The first document a prospective seller may encounter is the
real estate agent's listing contract. The law requires this
agreement to be signed by the owner before the agent may show
the property to prospective customers . 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
Should an Attorney be Contacted before signing a Real Estate
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, subdivision requirements and
restrictions, and other covenants or agreements which may affect
the property before executing a listing or sales 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 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'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
The attorneys for the seller and buyer will prepare the closing
documents, review adjustments for taxes, lease payments and
other similar items as applicable, and will notify their
respective clients prior to the closing of the financial details
of the transaction.
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 is signed by the
buyer inconsideration 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 closing attorney, the real estate agents and
sometimes a representative of the lender. The closing is
customarily held at the office of the closing attorney.
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 lender's
charges being paid by the buyer and/or the seller. 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 county in which
the property is located and to the disbursement of amounts paid
at the closing
Is an Attorney needed when Purchasing a Newly Constructed
It is a common misconception that the purchase of 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 buyer's 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.
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.