Buying or selling your home can be a daunting task. Often the purchase of a new home is the most substantial purchase in your lifetime. In addition to the emotional issues associated with buying or selling your home, there are a host of legal issues involved. A new home purchase can be exciting, but there are a lot of potential pitfalls in the process, which is why it is important to obtain adequate legal advice.
Working With a Real Estate Broker
In most circumstances a buyer or seller of real property will engage a real estate broker or agent to assist with the sale or purchase. A broker can provide helpful insight into the local real estate market, up-to-date listing information, marketing advice and assist in negotiating a fair price for your home.
Even if you utilize a real estate broker, you may want to consider engaging a real estate attorney. When you engage a real estate broker you typically sign a brokerage or listing contract with the broker. When a buyer makes an offer that is reasonable to a seller, the parties enter into a formal buy-sell agreement.
Once the parties agree to the price and terms of the buy-sell agreement, the buyer will obtain a preliminary title commitment. If the title commitment is acceptable then the parties will proceed to address any contingencies. Once the contingencies are released the parties can proceed to close the sale. At every step of this process there are potential problems and areas for dispute.
A real estate attorney can review any listing agreement and the buy-sell agreement to ensure that all of the potential legal issues are addressed. An attorney can also help you to understand the commissions and closing costs you will be required to pay. Oftentimes, realtors use standard forms that may not address a unique issue relating to the specific property. Moreover, a real estate attorney can review the title commitment to ensure that you are aware of and adequately address any title exceptions that may cause a problem in the future.
However, whether or not you decide not to engage a real estate agent, an attorney can assist with all aspects of the sale or purchase of real estate from the initial offer through closing. More specifically a real estate attorney can provide assistance in the following areas:
Document Drafting & Review
A real estate attorney can draft or review every written document involved in the sale or purchase of real property. Attorneys can prepare offers, buy-sell agreements, financing documents, deeds, and other documents for conveyance. Even if an attorney does not draft these documents, a real estate attorney can provide review and essential insight into the terms of the documents to ensure that the contract and associated sale documents are correct, do not omit essential terms, and that you understand the terms contained in the agreement.
Examine Status of Title & Resolve Title Issues
Most real estate sales require the buyer to obtain a preliminary title commitment for the property. A title commitment will show any encumbrances on the property, such as easements, or legal restrictions, such as restrictive covenants, that may impact the property. Advice of an attorney within this process can be especially valuable. An attorney can explain what certain title exceptions might mean and how they might impact your property.
For example, one of the most common types of encumbrances on real property is an easement. By definition, an easement is a “nonpossessory” interest in the land of another individual that gives the easement holder the limited right to use the land of another. Many people living outside of the city limits may have some type of road or utility easement either on their property, or used to access their property. If you are considering purchasing or selling property it is important that you adequately review any easements and related agreements to ensure that you understand and agree to the terms. If the title commitment raises any potential issues with adjoining property, an attorney can help to resolve the potential issue before you purchase the property.
Explain Zoning Restrictions & Subdivision Regulations
If you plan to purchase a home to use for a particular purpose, such as a home business or farm, a real estate attorney can explain the zoning restrictions on a particular property. A real estate attorney may also advise you as to whether you are able to subdivide the property and the process required to subdivide.
Examine Water Rights & Environmental Issues
A water right is a type of property right, which means it can be bought, sold or transferred. Water rights are normally transferred with real property, but sometimes the previous owner reserves the water rights from the conveyance. A reservation of water rights must be specifically written into the deed. If a seller does not reserve the water rights then a water right transfer certificate must be filed to ensure the water right documentation is updated with the state. An attorney can review the language of conveyance in the deed and associated documentation to ensure the water rights are properly transferred with the land, and assist in determining the nature and extent of water rights associated with a particular property.
Similarly, a real estate attorney can assist in determining whether there are any environmental issues that may impact the property. If there is existing environmental issues, such as previous spill or other environmental contamination, an attorney can explain how this might impact ownership or future development. An attorney can also provide advice in how to address an environmental issue within the sale process.
Resolving Disputes & Litigation
Even if you thoroughly address all potential legal issues in advance, real estate transactions do not always work out as planned. If a sale falls through an attorney can assist in attempting to resolve a dispute and negotiate the best outcome for you. Ultimately, if attempts to resolve the situation are not successful, an attorney can assist with the litigation associated with the transaction and related agreements.
Seek Legal Advice at the Beginning of the Process
If you are interested in buying or selling real estate consider engaging a real estate attorney at the beginning ofthe process to help reduce potential problems with the transaction. Even if you work with a real estate agent, a real estate attorney can assist in navigating the entire process to ensure you understand and agree to all the terms of the agreement, and if not, can negotiate better terms or resolve potential issues prior to the property sale.