Purchasing a home for the first time can feel like one of the most daunting decisions of your life. Let’s take a look at some of the legal details.
Just because language is included in a pre-printed “standard” contract provided by a realtor or attorney, it doesn’t mean that those terms are set in stone. Some states have standardized form contracts approved by the state’s legal professional and real estate authorities for use in real estate transactions. These forms are intended to provide a convenient starting point, but are not the only form of contract usable for the purchase and sale of real estate.
Making changes to the language of these contracts does not automatically render them invalid. Many attorneys will modify the terms or elect to use their own form entirely. If there is an important term or concept for you as a buyer or seller that conflicts with the terms of the contract you have been provided, you may choose to modify the contract to suit your needs, or refuse to proceed with the conflicting provision included.
It also can be good to know that a title search does not identify all potential issues with a property. Title searches typically identify easements, notices of commencement, liens, judgments, ordinances, declarations of covenants, conditions and restrictions, and other items that have been placed in the public records of the county in which the property is located.
The requirements section on a title commitment is intended to list items that must be cleared prior to closing, so that a title can be issued deleting certain of the standard exceptions and without including any exceptions for the issues discovered by the title search. But there are matters that can adversely affect the property which are not identifiable by the title search. Title companies perform a municipal lien search to verify if the utility balances are current on the property, as some municipalities have the ability to place liens on the property for past-due utilities. These searches also typically include a code violations and permit search.
Open and/or expired permits and code violations can be costly to a property owner to clear, and can affect an owner’s ability to make future improvements on the property until these matters have been resolved.
A property survey shows the layout of the property including its boundaries, location of improvements and potential encroachments.
The purchase price is not the only financial item that is negotiable. Buyers and sellers may often get bogged down on the price, but there are other closing costs involved that, depending on who is paying, can make a significant impact on the overall expenditure.
Depending on local custom, the buyer or seller may be paying for the title search, title insurance premium, municipal lien search, recording costs and transfer taxes. Regardless of the custom, these items boil down to a dollar figure that affects the bottom line of each party and can be modified based on mutual agreement of the parties.
The timing of prorations such as property taxes, maintenance dues (if the property is subject to an association), and rent (if the property has a tenant) also have an impact. It’s essential to review the allocation of costs in a contract in order to understand what amounts you will be responsible for, and will increase or decrease your cash-to-close/net proceeds.
Given the wide array of issues that may arise throughout the transaction, it is highly recommended to work with experienced professionals and advisors, who may prove invaluable to your peace of mind and your pocketbook.
DISCLAIMER: This article is made available for educational purposes only as well as to give you general information and a general understanding of the law, not to provide specific legal advice. By using this blog site, you understand that there is no attorney-client relationship between you and the author of this article. The Blog/Web Site should not be used as a substitute for competent legal advice from a licensed professional attorney in your state.
*All content provided in this blog is supplied by Tomer L. Alcalay, Esq., and is for informational purposes only. Barclaycard makes no representations as to the accuracy or completeness of any information or found by following any link within this blog.
Tomer L. Alcalay, Esq., is an attorney licensed in Florida and New York. He is one of the founders of Norsoph, Alcalay & Orner LLP (NAO Law), a law firm based in Fort Lauderdale, Broward County, Florida. As head of NAO Law’s Corporate, Real Estate and Wills, Trusts & Estates groups, he oversees the firm’s transactional practice. Tomer regularly represents corporate clients in the formation and operation of businesses including corporations, limited liability companies, limited liability partnerships and all other forms of legal entities. He has assisted buyers, sellers and investors in the structuring, negotiation and closing of complex business transactions, e.g. mergers & acquisitions, stock purchases, asset sales, etc. He is experienced in the drafting and negotiation of purchase and sale contracts, leases, operating agreements and other corporate documents and agreements.
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