What Can a Real Estate Lawyer Do for Me When Buying a Home?
- Protection Against Unfair Terms Imposed by Sellers
- Advice On What to Look For in Buying a Home
- Drafting “Out” Clauses
- Discovering and Preventing Hidden Surprises or Problems in a Home
- Protecting Your Financial Investment
My realtor has a contract form they use for a home purchase contract. Why do I need to have the realtor’s form reviewed by a lawyer?
Real estate lawyers draft, review, and comment on contract terms in residential real estate transactions. These terms are not set in stone. There are as many different ways to write a purchase contract as there are homes to buy in our area. Attorneys are experts at wordsmithing. That is, they draft language to include in purchases, but most importantly, they are doing so with an eye to protecting and advising their client, not in making a deal happen at the least expense and quickest possible route to a settlement table.
Most real estate attorneys get their “magic language” from prior experience. When a purchase transaction goes bad, there is usually litigation involved. Most real estate attorneys have been through many such lawsuits, and have learned important lessons to avoid in future deals. Using that experience, they can anticipate what could happen if a mortgage loan is not approved, if termites are found in the property being purchased, or other defects and problems too many to mention are discovered before or during a home purchase.
Attorneys also help resolve title insurance and environmental issues. During the settlement preparation process, what happens if a seller is discovered to owe more than the home is worth in liens and mortgage debt? How does an HOA violation get resolved, and who pays for it?
When things go wrong in real estate transactions, real estate lawyers are the ones to file suit or defend lawsuits in court to resolve the disputes. Some real estate lawyers specialize in conducting foreclosure proceedings for lenders when a homeowner is in default on the payments, while other lawyers try to help borrowers defend against foreclosure, or file bankruptcies to give more time to catch up on missed mortgage payments. All of these roles provide important lessons to a real estate lawyer that he or she can draw upon to advise a home buyer even if they have a real estate agent helping them to draw up a contract to buy the home. Often, these problems only begin to appear after the contract is signed, and settlement is pending.
The most important role a real estate lawyer has to perform is drafting documents. Real estate attorneys prepare contracts that spell out what has to happen to complete a home purchase or sale. They also can draw deeds for conveyance transactions, leases and rental agreements and seller financing agreements or contingencies for inspections and loan approvals as part of any sale agreement. State law only allows real estate agents to fill out these types of documents. Only licensed lawyers are allowed to draft and revise deeds, and provide legal advice about what the document says and how to interpret or enforce it.
Negotiating Addenda to Sale Agreements
Because real estate lawyers have sophisticated experience with many types of real estate transactions, clients often ask a real estate lawyer to negotiate changes, known as addenda, to existing terms and conditions of real estate deals after discovery of a hidden problem. This involves working with other attorneys, developers, brokers and investors, and getting proper parties to sign the changes.
Transaction Review – Due Diligence Studies
A real estate attorney will often be asked to review and provide advice on real estate transactions before clients sign the contract forms. Often, the lawyer is called in for consultation when a dispute arises after the contract is signed, and the parties don’t agree to what the terms mean or how they should be applied.
Clients may also choose to negotiate their own deals, sign a contract and then ask the lawyer to perform the “due diligence” on the deal – which means prepare and complete the steps required by the contract and law for a final settlement on the transaction. These steps could include examining legal title issues, environmental cleanup issues, and HOA or condo documents and government zoning reports, as well as production and review of other documents involved or required in the transaction. Real estate lawyers are trained to identify issues that their clients do not have the experience to find on their own. In some cases, the real estate lawyer plays guardian for the clients to make sure the clients don’t fall into any unseen legal traps.
Litigation over Real Estate Contract Defaults
Real estate contracts don’t always result in a problem free settlement process. When they don’t, it is common to see the parties file a lawsuit. These disputes often relate only to return of an earnest money deposit as liquidated damages, but sometimes can ask a court or order a buyer to pay general damages such as loss in market value or to compel a seller to convey title to the property pursuant to the contract. Real estate lawyers’ services in these types of lawsuits involve drafting and filing pleadings to file with the court, conducting written and oral discovery, participating in hearings and trial with the judge or jury, and filing appeals if necessary. It may also involve negotiations with opposing counsel to work out settlement agreements.