The Attorney’s Role In Real Estate Transactions

Oct. 20, 2010 - PRLog -- THE LAW OFFICE OF STEPHANIE KONARSKI
36 North Bedford Street, East Bridgewater, MA 02333
Phone: (508) 350-0120   Fax: (508) 350-0121
Email: stephanie@konarskilaw.com

THE ATTORNEY’S ROLE IN REAL ESTATE TRANSACTIONS

For most persons, the purchase and sale of real estate is one of the most significant and important financial transactions one will undertake.   It involves the execution and delivery of all necessary documents simultaneously with the payment of the purchase price and the settlement costs of the transaction.  While this may seem like a simple process, buying and selling a home is a complicated matter. It requires attention to numerous details, many of which require a thorough knowledge of local real estate laws.  Consequently, the importance of consulting with and enlisting the services of a knowledgeable real estate attorney cannot be overemphasized.   The following is a brief summary of several aspects of the purchase and sale process and how an attorney can assist in that process.  

Offer To Purchase

The first step in purchasing or selling residential real estate is the acceptance of an Offer to Purchase.  Most often, a real estate broker prepares the offer on a pre-printed standard form.  Although, attorneys are not typically involved in the offer stage, it is never a bad idea to consult an attorney to review the Offer.   An Offer to Purchase should contain all of the terms involved in the purchase, including the purchase price, how it is to be paid, a description of the property being purchased, and any conditions of the purchase.  

Many buyers and sellers are under the misconception that the offer to purchase is a mere formality and that a binding contract is formed only when the parties sign the Purchase and Sale Agreement.  Under Massachusetts law, an Offer to Purchase is a binding and enforceable contract against buyer and seller (even if the offer is subject to the signing of a more comprehensive Purchase and Sale Agreement).

Purchase and Sale Agreement
Once the Offer to Purchase has been accepted, a Purchase and Sale Agreement is negotiated and drafted. The Purchase and Sale Agreement is a detailed and complex document that must be tailored for each real estate transaction.  To be valid, it must be executed in writing by all parties involved.  
The Purchase and Sale Agreement is the final agreement between the parties and generally supersedes the Offer to Purchase and any prior agreements between the parties.   It is essential that all of the terms and conditions under which the property is being sold is clearly and specially set forth in the Agreement.  To avoid potential complications, it is advisable for both the buyer and seller to enlist the services of a real estate attorney to assist in the preparation and review of this document.   Any mistakes or unintended consequences can cost either the buyer or seller thousands of dollars, result in the loss of the house immediately or in the future, or result in years of litigation.  

Closing
Closing involves a series of complex phases: including examination of the title, completion and explanation of legal documents, and resolution of any possible title defects.  Real estate closing attorneys conduct each of these steps.    First, they examine the title records of the County Registry of Deeds and, in some case, the Registry of Probate where the property is located for prior conveyances, unpaid mortgages, liens, judgments, easements, and other encumbrances and clouds on title. They also verify that the seller has the authority to convey good title to the property and that there are no unpaid taxes, public assessments, and/or water and sewer charges which must be paid or pro-rated at the closing. .
Closing attorneys next combine all relevant information into one set of closing documents and schedule the passing of the papers.  The passing usually occurs either in the office of the closing attorney or at the Registry of Deeds.  All parties are assembled at a prearranged time, at which time final adjustments are agreed upon, and detailed explanations of the documents are explained to insure that the parties understand all the issues involved in the transaction.  The passing of papers provides an excellent opportunity for the buyer and seller to exchange information about the property, including delivering of keys, details of services such as trash pick-up, recreation, babysitters and other information most helpful to the Buyer.
Once the documents are properly executed and recorded and the title search is updated, the closing attorney makes arrangements for the transfer of funds between buyer, seller and lender.  
It is important to note that closings attorneys represent the lender and not the interests of the buyer or seller.  Both buyers and sellers should consider having their attorneys involved in the closing process.  The parties individual attorneys evaluate all legal documents affecting their client’s interest, make sure that clear title is transferred, review charges for consistency with estimates and provide counsel if any difficulties or questions arise.  
Why Hire a Real Estate Attorney
Buying or selling a home can be one of the most exciting experiences in one’s life. When complicated legal issues put a halt to your transaction, that excitement can quickly turn to disappointment and frustration.  
Both buyers and sellers should consider enlisting an attorney from the time he or she decides to buy or sell a home until the end of the closing.  Any manner of last minute disputes may arise which can jeopardize the sale or purchase of the property.  If a party is without an independent attorney, his or her interests could be at risk.  Thus, the assistance of an attorney can be invaluable during real estate transactions and closing proceedings.  Real estate attorneys have the knowledge and experience needed to address any legal issue that may arise during the transaction.  They can help ensure that the home comes with a clear title, explain one’s rights and obligations throughout the process, and ensure that all documents are in proper order to avoid future legal issues.  
One of the most important reasons to hire an attorney is the conflict of interest between parties.  The buyer’s and seller’s interest may be opposing.  The closing attorney represents only the lender’s interest and the brokers and agents can have their own professional and personal interest.  Both sides want to see the deal completed since that is ultimately the source of their income.  
Brokers, agents and lenders cannot provide legal counsel.  The respective lawyers for the buyer and seller will serve only their own clients’ best interest.  Their role is to make sure that the client is informed and protected throughout the transaction.  
Many buyers and sellers opt not to retain an attorney to save the several hundred dollars it costs to have one review the contract, deed and title, respond to inspection issues, and make sure the contract is performed according to its terms. However, the cost of an attorney is one that should not be eliminated in an effort to save money.  In the end, the lack of legal representation in the sale or purchase of a home could cost you much more than the money you saved.
When choosing an attorney it is important to select one who is customarily engaged in real estate practice and familiar with local real estate laws and practices.  Hiring an attorney to ensure a safe and favorable transaction can give peace of mind.

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