|
The following are frequently asked questions about the legal aspects of selling a home and general answers to those questions. The information given is intended for general informational purposes only. Answers to any specific problem may depend on particular facts at issue, and may change answers found here.
Why do I even need a lawyer for selling a home?
What will my lawyer be doing for me?
What are my obligations once I sign a contract?
What is the “attorney review period” of a contract?
What is title insurance and why do I need to pay for it?
Will I have to make repairs demanded by the buyer?
What if the buyer can’t get a mortgage?
What if the buyer backs out of the deal?
Do I need to come to the closing?
What happens at the closing?
Q: Why do I even need a lawyer for selling a home?
A: Here’s some refreshing honesty: you don’t have to have a lawyer. No law says you have to hire a lawyer when you’re selling your home. However, it’s a good idea to have a lawyer, for several reasons. First, you are entering into an intricate legal commitment, and having a lawyer who is representing your interests, as well as helping you understand your legal rights and obligations, in such an important transaction is vital. Second, most attorneys charge a very reasonable flat fee for representing home sellers, so the fear of an uncertain legal bill need not inhibit you (also, most lawyers will take their fee with your closing costs, which is an added convenience to you). Third, you will be called upon to deliver important legal documents connected to the sale (for instance, the deed, bill of sale, and affidavit of title) and make other legal arrangements (for instance, ordering and reviewing the title search), and this simply may not be the best time for home sellers to represent themselves legally. The fairly reasonable flat fee for this legal service, as well as these important legal protections, make having an attorney a wise decision for home sellers.
Back to top
Q: What will my lawyer be doing for me?
A: Your attorney will review the contract and raise points for modification during the attorney review period. Your attorney will be in frequent contact with the buyer’s attorney and coordinate with the real estate agents to help the process flow smoothly. Your attorney will order title insurance and review evidence of title to generate a title commitment. Your attorney will draft the necessary closing documents to transfer title to the buyer, including the deed, affidavit of title, and bill of sale. Above all, your attorney should be in frequent contact with you to let you know what is happening in the transaction and to answer your questions.
Back to top
Q: What are my obligations once I sign a contract?
A: Typically, the buyer will present the seller with a contract that the buyer has signed. This is an offer. Several aspects of the offer will need to be negotiated. Once the material terms – including, most importantly, the sales price – are agreed upon by the buyer and the seller, the seller will sign the contract. At this point, the seller and the buyer have entered into a binding contract. Your obligations, then, are to fulfill the terms of the contract. Your attorney will guide you in fulfilling your obligations, while also protecting your interests in the transaction.
Back to top
Q: What is the “attorney review period” of a contract?
A: Your real estate contract should have a provision that allows your attorney to modify the contract for you (usually it’s a 5 day modification period) – before you sign, make sure your contract allows this. When both the buyer and the seller have signed the contract, your agent will send a copy of the contract to your attorney. Your attorney will read the contract, and will contact the buyer’s attorney. Your attorney will propose modifications to the contract that favor you, and the buyer’s attorney will do the same. The attorneys will have the time during the “attorney review period” to agree on what modifications both sides will agree to. Your attorney should confer with you as this process is underway, so that you can agree with what your attorney is negotiating for you. Once both sides have agreed on the modifications the attorney review period ends.
Back to top
Q: What is title insurance and why do I need to pay for it?
A: The seller is required to provide evidence of good title to the property you’re selling – whether it be a single family home, a vacant parcel of land, or a condo. A title insurance commitment is the way this is done. Your attorney will order the title insurance for you, and review the evidence of title. In fact, your attorney will likely be an agent of the title company in the transaction, as well, and will be paid by the title insurance company for the work in reviewing the evidence of title. This arrangement benefits both the seller and the title insurance company inasmuch as the seller is able to provide evidence of good title and the title insurance company has someone working on the transaction assuring them that the land they’re issuing the insurance policy for is valid. The seller pays for the title insurance policy because the contract calls for the seller to pay for it. In fact, however, the buyer will likely have to pay for a separate title insurance policy that will cover the buyer’s mortgage company. So, in reality, both the seller and the buyer usually pay for title insurance.
Back to top
Q: Will I have to make repairs demanded by the buyer?
A: The buyer will probably have a home inspection done on the property. The inspector will probably come up with some items that need to be fixed. The buyer’s attorney will ask that these items be fixed, or that a credit be given at closing. This request from the buyer is a part of the negotiations during the attorney review period, and the requests are completely negotiable. If the items to be fixed are small, it’s probably easier to get them fixed by a professional (keeping a receipt for the closing). If the seller does not want to make repairs, the seller has the option of refusing to make the repair, or of giving a credit at closing – that is, basically, that a certain amount (equal to the actual cost of repairs) is taken from the seller’s proceeds at closing and given to the buyer. All reasonable requests for repairs made by the buyer have to be negotiated; the alternative is to let the buyer walk away from the deal with their earnest money refunded.
Back to top
Q: What if the buyer can’t get a mortgage?
A: The buyer is given until a certain date (the “mortgage contingency deadline”) to secure a mortgage. If the buyer cannot get a mortgage by that date, the buyer can then walk away from the deal or ask for more time to get a mortgage. The seller can agree to extend the time for the buyer, or agree to walk away from the deal. In most cases, both the buyer and the seller want the deal to go forward. In most cases, a seller will agree to an extension of time for the buyer. In most cases, the buyer is then able to get a mortgage commitment, and the deal goes forward. If the buyer does not ask for an extension of time, and then cannot get a mortgage, the buyer will be in breach of the contract.
Back to top
Q: What if the buyer backs out of the deal?
A: The buyer can back out of the deal only under certain limited circumstances. For instance, a buyer can back out if the inspection turns up a major problem that wasn’t disclosed; if he or she cannot get a mortgage as planned; or if the attorneys cannot agree on modifications during the attorney review period. The buyer cannot back out of the deal whenever he or she wants. If the buyer backs out of the deal, he or she is in breach of the contract. At the very least, the seller will be able to keep the earnest money, and probably be able to seek further damages.
Back to top
Q: Do I need to come to the closing?
A: No, you probably will not need to be at the closing. Your attorney can arrange for you to sign the closing documents ahead of time, and he or she will bring those signed copies to the closing. Also, you can sign a limited power of attorney that will authorize your attorney to sign closing documents on your behalf.
Back to top
Q: What happens at the closing?
A: By the time of closing, most of the work is done on the seller’s side. The seller’s attorney needs to bring the deed and other documents to the closing. Hopefully, attorneys for both sides have already seen these documents ahead of time and have agreed that they are acceptable. Most of the work at the closing is done by the buyer and the buyer’s attorney. The seller’s attorney will answer any questions posed by the buyer’s attorney, and sign any remaining documents on behalf of the seller. Last, the seller’s attorney will give the buyer the keys to their new home!
Back to top
|
