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Educational Brochures
Your Home: A Buyer's & Seller's Guide
Buying or selling a home may be the most important business transaction you make in your lifetime. A real estate agent's job is to bring a purchaser and seller together and to help the buyer find a suitable home or to find a buyer for the seller's home. Your attorney's job is to help you obtain what you expect to receive, whether it be clear title to the property or proper proceeds from the sale. Your attorney further helps to protect you from costly mistakes which may occur when you sign a contract lacking terms which should be included or containing terms which you do not fully understand.
Listing
As a seller, you may hire a realtor to find a buyer for your home. The realtor will desire that you sign a listing or multiple listing agreement. Since this is a binding contract with the realtor when signed, an explanation by a salesperson may be self-serving and therefore a review of this agreement by your attorney prior to signing may not only clarify its terms but may result in suggestions and/or negotiations which may more fully protect your interests. He or she may save you from a costly mistake.
Contract/Purchase Offer
The so-called "Purchase Offer" is an offer to contract, but becomes a binding contract when it is accepted by the other party. It contains in final form the obligations of both the buyer and the seller and also gives rights to the real estate broker. Any verbal agreements or assurances not written into the contract are not binding.
The signing of the purchase offer or contract is a critical stage of the transaction. The contract should be on a form approved by the Bar Association of Erie County, but the form may have to be modified to fit your specific situation. A few minutes spent in reviewing the offer or contract with an attorney BEFORE signing can save you unexpected obligations which were concealed by technical language that your lawyer can explain. In addition, your lawyer can draft additional clauses or terms needed to ensure that you will get what you want, but this must be done before the offer or contract is signed. Such clauses may deal with the purchase or sale of another property, possession, intended use, and similar issues.
When you are contracting for the construction of a new home or for the purchase of a condominium or town house, great care should be taken. These types of transactions involve many complex details and possible headaches such as: adequate specifications, financing arrangements, building restrictions, zoning ordinances and health department regulations, construction delays, mechanic's liens, assessments, and liabilities assumed with membership in homeowners' associations. As a buyer, you may be dealing directly with a seller or developer whose interests conflict with your own. It is essential that you seek the advice of your own attorney before signing one of these contracts.
Financing
This is an area which has and is undergoing many and varying changes. No longer are there only fixed rate mortgages pr governmentally-insured mortgages. There are now mortgages with private mortgage insurance, variable rate mortgages of different types and charges to buyer and/or seller. Mortgage programs can change rapidly, so a qualified attorney can lend valuable assistance to you and your real estate agent.
Those with little cash available may find that a guaranteed mortgage such as a government guaranteed VA or FHA mortgage or a non-governmentally guaranteed mortgage may be attractive or necessary; however, an attorney should be consulted about the possible long delays, extra costs to seller and/or buyer and the special problems which these mortgages involve (for example, repairs to the property required by the lender).
Closing Costs
Federal laws such as the Truth-in-Lending and Real Estate Settlement Procedures Act (RESPA) now require that the bank fully compute and disclose to the mortgage applicant in advance all of the closing costs. The buyer who is not seeking a new mortgage and the seller may ask their attorneys to compute these costs in advance.
Title Examination
The most important function of the buyer's attorney is to determine if the property being bought is owned by the seller and whether it is free and clear of any liens, encumbrances, or taxes. In order to do this, the necessary tools are the search and survey which are normally provided at the seller's expense. Examination of the search and survey are made for liens and mortgages, taxes and assessments, judgments, estate tax liens, and encumbrances such as easements and building restrictions. The evaluation and interpretation of the legal effect of these various matters requires specialized legal training. The buyer should not depend on examination of title by the bank attorney alone. The bank's attorney is hired primarily to protect the bank's interest. The buyer's own attorney should make an examination to protect his or her interests, which differ from those of the bank.
It is the responsibility of the seller's attorney to clear title or correct any problems or defects which are detected by the examination of title. This sometimes requires a considerable effort on the part of the attorney for the seller.
Title Insurance
Although a proper title examination is standard procedure in this area, title insurance is required in that small percentage of closings when the seller's attorney is unable to properly rectify a problem with the title. Title insurance may also be required by the bank making a mortgage loan to facilitate the bank's ability to sell or transfer the mortgage at a later date to an outside party, who may be unfamiliar with the practice of closing real estate without title insurance.
Title insurance is not a substitute for title examination by the buyer's attorney. The terms, conditions and exceptions in the title policy may exempt from coverage exactly those problems which will adversely affect the buyer's ownership. The title insurance policy should be examined and analyzed by the buyer's attorney.
Closing
In addition to arranging closing with the attorney for any financial institution involved, and with other attorneys, your attorney will obtain necessary documents for closing. He or she will prepare, review and explain other papers involved and will arrange for proper filing and recording of papers where necessary.
Delays in Closing and Possession
Even a simple closing may be unexpectedly delayed because one of the parties is attempting to coordinate a simultaneous sale or purchase of another home, unanticipated title problems, delays in obtaining financing, repairs required by the lender necessitating a reinspection and similar situations. Because unexpected delays are common, the form of contracts in use locally provide for a flexible date for closing. This often benefits both parties. However, if for any reason you need a firm closing date, you will need to see that the contract contains a "time of the essence" clause which must be carefully considered by you and your attorney before signing the contract.
A smooth closing often requires a sense of humor as well as considerable flexibility on the part of both the seller and the buyer. Close and early communication by each with his or her attorney is essential.
NOTE: This material, based on New York State Law and local practice and customs, is intended to inform, not to advise. No one should try to interpret the law without the aid of a lawyer who knows the facts, since the facts may change the application of the law.
If you would like assistance in finding a lawyer, you may call the Lawyer Referral and Information Service of the Bar Association of Erie County at 852-3100.
Find these pamphlets in PDF form here.