The Importance of Using a Lawyer in Real Estate Transactions, part 1
For many people, buying a house is the most expensive purchase of their lives. From the brokerage contract to closing, buying and selling a house involves many issues of law that most people are not familiar with. Real estate attorneys have the experience and knowledge to ensure that this important transaction goes as smoothly as possible.
The Transaction
The first step in a real estate transaction is the brokerage contract. The seller will sign this agreement with a real estate agent. The agent then locates a prospective buyer, and the two parties negotiate, usually through the agent.
When the buyer and seller reach an informal agreement, they then formalize it with a written contract, known as the purchase agreement. The purchase agreement is usually contingent on the buyer obtaining financing from a lending institution.
A title search is then performed to ensure that the seller has the right to sell the property and that no one else has an undisclosed claim on the property. Finally, at closing, the property is transferred to the buyer and the purchase money paid to the seller.
Brokerage Contract
Because of the complexity of a real estate transaction, there are many steps at which legal issues may occur. The brokerage contract, which is the first stage of a real estate transaction, may not cover all legal issues. Real estate agents often use form contracts that do not sufficiently address the situations that may arise, especially if there are any unusual circumstances in the transaction. For example, sellers may be alarmed to learn that often, they must pay the real estate agent the brokerage fee even if the agent does not sell the house, or if the owner sells it without the agent’s assistance. Additionally, it is useful to have a lawyer explain the terms of the brokerage contract to the seller, even if it is a standard contract.
Purchase Agreement
The purchase agreement is the most important document in a real estate transaction. Most purchase agreements in Florida contain a provision stating that the parties have the right to consult an attorney prior to signing. The attorney can explain the provisions of the agreement and make changes for the benefit of the buyer or the seller.
An attorney can also ensure that a client is aware of other issues that may arise and draft provisions addressing those issues. For example, an attorney may address what to do if defects such as termites, asbestos, or hazardous waste are discovered; what to do if closing does not take place; or whether the down payment should be held in escrow. An attorney can ensure that the purchase agreement specifies that the sale is contingent upon the buyer obtaining financing.
The buying or selling of a house is a very important transaction and if it goes wrong, it can be financially and emotionally devastating. An experienced real estate attorney can advise you throughout the process, making sure that the transaction goes as smoothly as possible and that you understand the impact that each aspect of the process can have. If you are considering buying or selling a house, please contact the Boca Raton Law Offices of Larry E. Bray for an initial consultation.
