Real Estate

Why do I need a lawyer when I buy a house?

  • A lawyer can help you avoid some common problems with a home purchase or sale. For example, a seller may sign a brokerage agreement that does not deal with a number of legal problems. This happens quite often; realtors often use standard forms, expecting that they will cover all circumstances or will be easily customizable for unusual circumstances.In the absence of an agreement to the contrary, the seller may become liable to pay a brokerage commission even if a sale does not occur, or to pay more than one brokerage commission. If the agreement allows the seller the right to negotiate on his or her own behalf, for example, you may avoid this problem. A lawyer can explain the effect of multiple listings. He or she can negotiate the realtor’s rights if the seller withdraws the property from the market, or can’t deliver a good marketable title.

Why do I need a lawyer when I sell a house?

  • The seller should have the advice and guidance of an attorney with respect to a brokerage agreement. Even if the agreement is a standard form, its terms should be explained to the seller and revised, if necessary. An attorney should also determine if the agreement was properly signed. Even if a lawyer is not needed during the course of negotiations, both the buyer and seller should consult with a lawyer to answer important questions, such as the tax consequences of the transaction. To a seller, the tax consequences may be of critical importance. For example, the income tax consequences of a sale, particularly if the seller makes a large profit, may be considerable. An attorney can advise whether the seller can take advantage of tax provisions allowing for exclusion of capital gains in certain circumstances.

Do I need title insurance?

  • While it is not legally required, title insurance is highly recommended. It is a means of protecting yourself from financial loss in the event that problems develop regarding the rights to ownership of your property. There may be hidden title defects that even the most careful title search will not reveal. In addition to protection from financial loss, title insurance pays the cost of defending against any covered claim.

What does it mean to ascertain title to property?

  • Ownership of property is tracked by its chain of title at the Registry of Deeds. If there are any defects in the chain of title, a purchaser of property may not get clear title. Therefore, it is important for a purchaser to establish that the seller of a home has clear title to sell the property before entering into a contract to purchase the property.

What is a purchase and sale agreement?

  • A purchase agreement is a standard document between the buyer and seller that states the terms and conditions under which the property is sold. There are many issues that may need to be addressed in the purchase agreement; below are some common examples:
    • If the property has been altered or there has been an addition to the property, was it done lawfully?
    • If the buyer has plans to change the property, may what is planned for the property be done lawfully?
    • What happens if a buyer has an engineer or architect inspect the property and termites, asbestos, radon or lead-based paint is found?
    • What if the property is found to contain hazardous waste?
    • What are the legal consequences if the closing does not take place and what happens to the down payment? This question raises related questions: Will the down payment be held in escrow by a lawyer in accordance with appropriately worded escrow instructions? How is payment to be made? Is the closing appropriately conditioned upon the buyer obtaining financing?

What is a title?

  • A title is the evidence that you have outright ownership and possession of land. It is possible that someone other than the owner has a legal right to the property. If his or her right can be established, he or she can claim the property outright or make demands on the owner as to its use.

How much does title insurance cost?

  • The one-time premium is directly related to the value of your home. Typically, it is less expensive than your annual auto insurance. It is a one-time only expense, paid when you purchase your home, yet it continues to provide complete coverage for as long as you or your heirs own the property.

Should I shop around for the best title insurance deal?

  • Some states closely regulate rates. Others permit open competition, often resulting in significant differences between title insurers on rates and coverage. Depending where you live, it pays to investigate your options carefully in order to obtain the most complete coverage.

What happens during a closing?

  • The deed and other closing papers are prepared
  • The title passes from the seller to buyer, who pays the balance of the purchase price
  • A closing statement is prepared prior to the closing indicating the debits and credits to the buyer and seller
  • The deed and mortgage instrument are signed

When should I look into purchasing Title Insurance?

  • As soon as you and the seller sign the Purchase & Sales Agreement. Because there are a number of steps that must be taken to make certain that all information regarding title has been discovered, it is wise to get the ball rolling as soon as possible.

What is real property?

  • Real property is generally defined as land and the things permanently attached to the land, such as buildings.

What can make a title defective?

  • Any number of problems that remain undisclosed after even the most meticulous search of public records can make a title defective. These hidden “defects” are dangerous indeed because you may not learn of them for many months or years. They could force you to spend substantial sums on a legal defense, and still result in the loss of your property.

If the lender already requires title insurance, won’t that protect me?

  • Not necessarily. There are two types of Title Insurance-a Lender’s Policy and an Owner’s Policy. Your lender likely will require that you purchase a Lender’s Policy. This policy only insures that the financial institution has a valid, enforceable lien on the property. Most lenders require this type of insurance, and typically require the borrower to pay for it.An Owner’s Policy on the other hand is designed to protect you from title defects that existed prior to the issue date of your policy. Title troubles, such as improper estate proceedings or pending legal action, could put your equity at serious risk. If a valid claim is filed, in addition to financial loss up to the face amount of the policy, your owner’s title policy covers the full cost of any legal defense of your title.

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Note: This is not the MassHealth website. We are a private law firm.