The real estate market is booming these days – so we thought it’d be a great time to catch up with Mary E. Tokarz, Of Counsel at McCabe and Mack LLP. She gave us the scoop on what buyers and sellers should know about real estate law; here’s more from our conversation:
A. I’d say the most critical question would be: “What percentage of your business is residential real estate?” You want to be confident that your attorney has the expertise and experience in this area, and practices real estate law regularly.
A. A mortgage pre-approval is key to making an offer. In the alternative, a cash offer requires documentation from the bank to show proof of available funds.
Your attorney will generally become involved once the offer has been accepted and inspections are in process. Your realtor should provide your attorney with the full MLS listing and Memorandum of Agreement or Purchase Offer. These documents will provide the basis for the contract.
A. Once you have a fully executed contract, the Seller and Purchaser are obligated to the transaction. In this active market, Sellers have an opportunity to select buyers of their choosing, based upon a variety of factors. Usually, a Seller wants to go with a particular buyer for financial reasons, particularly if there is a cash offer on the table. Other times, a Seller will choose their Purchaser for reasons that are emotional in nature. Either way, it is important to get to the contract stage as soon as practical after inspections have been completed so that both parties can move forward toward closing with confidence.
A. Ideally, each party should be represented by an attorney. If everyone involved gets along well, you may be able to work with one attorney. Either way, you should go through all of the steps of a real estate transaction, including a formal contract and ordering a title report. You don’t want to buy your relative’s problems!
A. There are certain steps at which you can terminate the transaction and expect a return of your down payment. For example, if you are rejected for a mortgage within the mortgage contingency period, you can walk away from the transaction. This can happen if you are unable to qualify for the loan financially, or if the property does not appraise high enough to support the loan. Other basis for termination on the part of the Purchaser would include title issues or the death or permanent disability of the Purchaser. If you have a specific concern going into the transaction, speak with your attorney as contract clauses may be added to address particular contingencies.
A. Every state has their own practices. Some states have simplified the process to the point that a title company will coordinate the closing of title and realtors draft contracts. Here, attorneys draft contracts and everyone at the table tends to have their own attorney – the buyer, the seller, and the lender. This results in fewer post-closing complications.
A. As part of the process, a Buyer’s attorney will order a title report, which will include a municipal report. Although most contracts provide that the property is being sold in “AS IS” condition, the standard contract provides that the Seller is responsible for curing any municipal violations on the property. In other words, if the Seller has made any improvements to the property that would require a Certificate of Occupancy or a Certificate of Compliance from the municipal building department, the certificates must be in place by the time of closing.
For instance, if the municipality notes a Certificate of Occupancy for a 3 bedroom home, but you know the house now has 4 bedrooms, the seller will then have to apply for a Certificate of Occupancy. This may require an application for a permit and inspection of the improvement and can threaten the transaction.
A. Sellers should expect a quick offer in today’s market and must be ready to leave the property within 45 to 60 days. They should have an exit strategy in place once the house is on the market because in most cases, they will be required to close within the expiration dates of their Purchaser’s mortgage. If they are unable to close pursuant to the contract, they can lose the transaction and will be responsible for any fees incurred by the Purchaser in the process.
Buyers should be prepared to go in with their best offer and make sure that they are financially able to support their offer. It’s also key to take the time to sit down with your attorney to review the contract so you know what your rights and duties are to the transaction overall. Finally, be diligent in pursuing a mortgage once you have the contract in place.
There is pretty much a formula to it all with a fairly linear time track; most transactions follow the same process. Once in a while, an issue will pop up, but with real estate law, we can typically tell people what to expect which is really nice.
If you’re buying or selling a home, reach out to Mary E. Tokarz, Of Counsel with McCabe and Mack LLP, to be sure your real estate transaction goes as smoothly as possible. Visit https://mccm.com/mary-e-tokarz/ to learn more.