Real Estate FAQs
I’ve signed a Real Estate contract, NOW WHAT?
Whether you’re a Buyer or a Seller, the purchase and sale of residential property is a complex transaction involving several participants performing different roles in a team effort. The degree to which your transaction proceeds smoothly, and with the least amount of conflict, depends in large part on the interaction of your team and its interaction with the other party’s team. You have, most likely, acquired your pre-approval from a Lender and have been diligently working with a Realtor. If you have not already discussed representation with a Real Estate Attorney, this will be your immediate next step. You have only 3 business days to enter Attorney Review after delivery of a signed contract.
What does the Real Estate contract include?
Some elements of a purchase/sale contract are:
- Closing Date
- Mortgage contingency
- Home Inspection rights
- Personal property to be included/excluded from the sale
- Representations from the Seller
Who else will be involved with my transaction?
The purchase and sale of a one-family home or condominium now typically involves some or all of the following participants:
- Real estate agents
- Home inspector
- Mortgage broker
- Title search and insurance company
- Fire official
- Building Inspector
- Hazard insurance agent
- Condominium association
You are best served by each of these players when each knows his/her role, performs it professionally and does not attempt to usurp the role of another. The Attorney not only provides advice to his/her client, but serves as the pivot point for the team.
What is the Attorney Review process?
The contract is the initial document between the Buyer and the Seller and determines the rights and obligations of the parties throughout the transaction. All contracts in which a real estate agent is involved must, by law, contain an Attorney review clause. That review must commence within three business days of the date both parties receive a fully signed contract, although it need not conclude within that period.
This is the stage at which your Attorney typically first gets involved in the transaction. Your Attorney should advise you as to the terms of the contract, discuss any issues involved in the transaction and negotiate changes to the contract.
What are Contingencies?
The contingency most often affecting a purchase contract is the mortgage contingency. This protects the buyer and allows the cancellation of transaction with refund of deposit, if buyer cannot obtain a mortgage. Other contingencies may include the purchase of a new home for a seller or sale of buyer’s current property, flood zones, wetlands, etc.
What if I need to sell my current home before purchasing another?
Closing dates can be complicated by one party’s need to coordinate that date with the closing date on another contract to purchase or sell another property. However, that is not an unusual situation and your Attorney will coordinate closing dates with all parties to ensure a smooth transaction. Sometimes, the parties enter into a use and occupancy agreement (U&O) allowing the Seller to stay in the property after the closing, or the Buyer to enter into the property prior to closing, although these agreements present special concerns.
What if the property I am buying is a 2 or 3 family home?
Multiple dwellings present special concerns as to tenant leases, security deposits and obtaining possession of rental units. If the property has 3 or more units, there are additional considerations. Your Attorney will discuss the specifics of your transaction during Attorney Review.
What happens after Attorney Review?
After Attorney Review is concluded, the Buyer needs to send their deposit monies, conduct inspections and apply for the mortgage. The Seller will need to provide access as needed, apply for any municipal certificates of occupancy and acquire the state required Fire and Smoke certificate. Our Contract Date letter that follows Attorney Review will further describe the process.
Do I need a Home Inspection?
Yes, it is highly recommended and almost always obtained. It is best for the Buyer to be present during the inspection so that they have an understanding of any concerns over the condition of the property. The inspection should be performed by a licensed inspector. All inspections relevant to the particular property should be performed. These almost always include building, wood-destroying insect and radon. Other inspections such as UST (underground oil tank), asbestos, well water, septic, etc., may also be considered. Your Attorney should discuss items of concern as to which you may be entitled to make a request for repairs and then negotiate those requests for you. The real estate agent often also participates in this process. Although most times the parties will come to an agreement as to repairs or a repair credit, contracts can be cancelled over these issues.
When should I apply for my Mortgage?
Upon conclusion of Attorney Review, the Buyer needs to apply for a mortgage as soon as possible in order to provide lender sufficient time to process the application and provide a written mortgage commitment by the contract required date. If the Buyer is unable to do so within the specified contract period, the contract may be cancelled. This is usually one of the last contingencies to be satisfied and accordingly neither party knows for certain when, or if, the transaction will close until the commitment is obtained. The lender is required to give you a good-faith estimate of the closing costs involved in closing the transaction.
What is a Title Search?
If you are purchasing a property, your Attorney will order a title search of the property. The search should disclose any liens or defects in title. It is the duty of the Buyer’s Attorney to examine the title report and demand that any title defects be cured, liens be satisfied, or other appropriate action be taken. The Attorney for the Seller will attempt to cure any title defects and assist the Buyer’s Attorney in paying off any liens at closing. It is the Seller’s obligation to deliver marketable title to the property.
Should I have a property survey done?
The Buyer’s Attorney should also obtain a survey of the property. The survey will not only show the dimensions of the property, it will provide the information for a legal description of the property, show the location of improvements on the property and show any encroachments on the property. The survey can be performed with or without the placement of stakes.
What about Title Insurance?
The Buyer will also purchase title insurance for the property. Title insurance protects the Buyer and the lender from title defects which may be discovered or arise after the closing. The cost of the title insurance will be paid at closing and is a one-time charge for as long as you own the property. The insurance is ordered by your Attorney and is purchased from the company that performs the title search.
Am I required to acquire Home Owner’s Insurance prior to closing?
The Buyer should arrange for home owner’s insurance prior to closing and will need to present proof that the property is insured against fire and other hazards.
What if I am buying this house with someone else?
It is not unusual for two or more unmarried people to purchase a property jointly. Whether you are considering a purchase with a significant other, a parent/child, or with a business partner, special consideration will be needed for all situations when two buyers are not married or in a civil union. Your attorney will be able to complete the transaction per your situation.
What if I have a unique circumstance?
Every purchase of property is unique and your Attorney should discuss any special issues with you. At Petriello Law, our Attorneys will advise you on the necessary precautions to take while negotiating the purchase or sale of your home.
Who is responsible for the CCO and Fire/Smoke Certificate?
Typically the Seller will obtain a certificate from the local fire official as to smoke detectors, carbon monoxide detectors and fire extinguishers. This is a state requirement and applies to all municipalities. In some municipalites, a certificate from the building department may also be required. This certificate is often called a CO or CCO (Certificate of Occupany or Certificate of Continued Occupancy) or Certificate of Habitability. The seller will need to obtain all required certificates as well as ensure all open building permits have been closed prior to closing subject to the contract terms.
When can I CLOSE?
When all contingencies and conditions in the contract have been satisfied, the parties will meet to “close” the mortgage loan and “close” title to the property. Agreement on the date must be obtained from the Buyer, the Seller and the lender. Agreement on a date can be complicated by the need of the Buyer to coordinate that date with the date of the sale of their existing residence, or the need of the Seller to coordinate that date with the date of their purchase of another residence, or for many other reasons. Usually the Seller must vacate the property and leave it in a broom-clean condition for the closing. The Buyer should arrange for a final inspection of the property prior to the closing. A closing date is not firm until your Attorney confirms in writing that all parties have agreed to a set date.
What happens at the Closing?
The Seller’s Attorney must prepare the Deed and other documents necessary to convey good title and deliver them at the closing. The Seller will arrange for final readings on its utilities.
At the closing, taxes and other charges will be prorated, existing mortgages will be paid-off, realtor commissions will be paid, and lender charges, title search and insurance costs and all other closing costs will be paid. The Buyer must bring a bank check to the closing for any monies due from the Buyer.
After the closing, the Buyer’s Attorney will make all the disbursements provided for in the closing statement, record the deed and mortgage, obtain the title insurance policy and conduct other post-closing activities.
How do I select an attorney?
Buying or selling a home is a major transaction and for many people is the single largest financial transaction of their life. Make the experience as trouble-free as possible by selecting an Attorney with years of experience, competence, professionalism and pride in services delivered. Select the Attorneys at Petriello Law and join the many satisfied home Buyers/Sellers which have been represented in the past