RESIDENTIAL REAL ESTATE
Legal information for consumers to know* to help them understand how to make
residential real estate transactions transpire more smoothly and with less stress:
Employ Professionals
Buying or selling residential real estate should be an exciting process with cooperation from all parties during the transaction up until closing and transfer of title. The employment of a skilled and experienced Real Estate Attorney and Real Estate Agent will facilitate the process and help to successfully guide buyers and sellers around the many potential land mines that arise due to the ever increasing complex nature of the challenges encountered during the buying or selling process. The Real Estate Attorney and Real Estate Agent provide the benefit of their professional expertise which they have acquired through years of education, experience and involvement with countless real estate transactions.
During the first encounter between the client and their attorney, the attorney should provide the client with a general overview of the entire real estate transaction and closing process.
Prepare the Contract
The Buyer’s Real Estate Agent prepares the contract for the subject property. This is a legal and binding agreement between the seller and the buyer. Upon agreeing to and signing the contract, both the buyer and the seller enter into a mandatory three day attorney review period. Should the Buyer elect to enter the real estate transaction without the benefit of working with a Licensed Real Estate Agent (as in the case of a direct sale between a buyer and seller) then the contract should be prepared by the Attorney for either the buyer or the seller.
Attorney Review
Each party has a three day period within which they must provide a copy of the contract to their attorney who must either approve or disapprove of the contract also within that three day period. Once one of the attorneys responds, within that three day period, with a review letter indicating changes are necessary to the contract, then the contract stays within the attorney review period indefinitely, until there is a mutual agreement of the parties to all of its terms.
Issues which come up during the attorney review period are usually discussed and negotiated between the buyer’s and seller’s attorneys, and followed up with clear written documentation between the attorneys as to the mutually agreed upon changes to the original Contract. Copies of all written documents exchanged between the attorneys should be provided to the Real Estate Agents involved in the transaction as well as to both buyer and seller by their respective attorneys.
Responsibilities Following Attorney Review
The buyer typically has three responsibilities:
1st - In accordance with the terms of the Contract, the buyer must tender the remaining deposit monies to their Real Estate Broker or to their Attorney to forward it to the Seller’s Attorney if a Real Estate Broker is not involved in the transaction. The monies are held in either the Broker’s or the Attorney’s trust account until closing.
2nd - The buyer must formally apply for a mortgage loan with a lending institution, wherein a written mortgage commitment must be obtained within the contract contingency date.
3rd – The buyer should contract an independent home inspection professional to conduct thorough home inspections. The inspections provide the buyer with an overview of the physical condition of the home, and a basis to ask the seller to make certain repairs to the home prior to closing or, alternatively, request concessions on the selling price in lieu of the repairs, providing all parties are in agreement.
Home Inspections should determine:
(a) The structural integrity of the home;
(b) The quality of the home’s operational systems (air conditioning, heating, and appliances);
(c) The functioning of the plumbing and electrical systems;
(d) The existence of any adverse environmental conditions (such as radon, mold, asbestos, or soil contamination due to an oil tank breach, or any other environmental condition);
(e) The presence of any wood destroying insects (such as termites, powder post beetles, carpenter ants/bees).
Some of the seller’s responsibilities include:
1st- To permit access to the home for the home inspection to be performed, and for the bank appraisal which the buyer’s mortgage company may require as a condition to lending the buyer money to purchase the home.
2nd- To consider addressing or remedying any of the buyer’s concerns which result from the home inspection assessment.
3rd- To obtain from the municipality, in advance of the closing, a Certificate of Occupancy, Smoke Detector and Carbon Monoxide Certificate which the town may require as condition of the sale.
4th- To make sure that the home is left free and clear of all personal property, furniture, and debris, and in broom clean condition, prior to the closing.
Set the Closing Date
Once the mortgage and home inspection contingencies are met, and the title commitment and property survey have been received and reviewed and any resultant issues resolved, a mutually agreed upon closing date can be scheduled. The closing generally takes place at the office of the buyer’s attorney. Immediately prior to the closing, the buyer should do a final walk-through inspection of the property accompanied by their Real Estate Agent, and the seller and/or the seller’s Agent should be present for the walk-through, as well. This inspection is to confirm that the property is in the same condition as of the date of contract, and that any agreed upon repairs as a result of the home inspection were completed by the seller to the satisfaction of the buyer, and that any personal property included in the contract (such as a refrigerator or window treatments) remain at the property.
The Closing
The actual closing process is divided into two parts. First, the buyer must close the mortgage loan by signing all of the documents required by the bank. The buyer also must tender to their attorney the monies due on the balance of the contract price plus monies to cover closing costs. Second, the seller signs the sale documents to transfer the Deed to the buyer. The seller is then paid the balance due them from the sale, and the keys are provided to the buyer. The buyer takes possession of the property from the seller, and may then move into their new home.
Recording the Sale
Immediately following the closing and transfer of title, the buyer’s attorney will record the Deed and Mortgage documents with the County Clerk’s office and ensure that all liens against the property are paid and subsequently discharged from the public record. Once this occurs, the title insurance company will produce the final title insurance policy covering the transaction which is sent to the buyer’s attorney who in turn mails it to the new homeowner. This legal document should be kept on file in a safe place by the new homeowner for future reference and future sale of the subject property.
* This document is designed for general information only. The information presented here should not be construed to be formal, legal advice nor the formation of a lawyer/client relationship. For a questions pertaining to this topic or a Free Legal Consultation, please call Jeffrey M. Adams Law Firm at 732 281 3005.
JEFFREY M. ADAMS