Hiring an Attorney and a Real Estate Broker
When is it too late to ask for help from an attorney?
A Final Word on Selling a Home
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This section outlines some of the important legal issues which you may face when buying a home. These issues are different from personal or business issues, such as whether to buy a home, and how much money you should pay for a new home. You should consider these legal issues when you are making decisions about buying a home.
One of the first decisions you should make, after you decide to buy a home, is whether to hire an attorney. It is advisable to hire an attorney before you make an offer to buy a home. An attorney will explain to you the important terms which should be included in a purchase agreement, and he will negotiate with the seller or the seller's broker/salesperson to include terms which are important to you in the final purchase agreement. The broker/salesperson also understands these terms, and you may be able to find a broker/salesperson to help you. In the typical transaction, however, the broker/salesperson is paid by and is bound to represent the seller. This means that the broker/salesperson intends to negotiate the most favorable terms for the seller.
The purchase offer is a complex bundle of terms covering the price, the description of the property, the additional goods included in the sale, the type of deed which you will receive from the seller, title insurance, splitting of responsibilities for taxes, insurance and some utilities, the date when you may move in, rent which you may receive from the seller after you purchase your home if the seller has not moved out, contingent conditions which may allow you or the seller to cancel the agreement (such as your failure to obtain a mortgage loan, the "unmarketability" of title to the property, and opinion of a professional inspector regarding the physical condition of the house), and information about your rights if the agreement is not honored by you or the seller.
All offers and agreements to buy and sell a home must be in writing. An attorney will provide a model purchase offer to you and explain why each of its terms are important. You may add terms to the model and modify terms to meet your special needs. An attorney will draft language which best describes your needs and preferences, prepare a document which may be signed by the seller, and present your offer to the seller or the seller's broker/salesperson.
An attorney will also explain any rights and obligations which you may be assuming when purchasing a home. These special rights and obligations are contained in deed restrictions, easements, and declarations recorded in the real estate records of most properties. Some forms of property, such as condominiums and cooperative housing, feature common ownership of land and other property which require special governing bodies (condominium and cooperative housing associations).
An attorney may also help you understand the different forms of financing available to you. An attorney may explain which costs are tax deductible, whether a homestead property tax credit is available, which type of loan is least expensive for the length of time you will occupy the home, and whether alternative forms of financing (land contracts and seller financing) have advantages. An attorney may also draft a land contract or a note and mortgage to allow the seller to finance the sale. An attorney may answer questions regarding assuming the current mortgage loan, wrap around financing and lines of credit.
Your attorney will review the details of the sale before the final transfer of the property (the closing). Your attorney will review the title insurance commitment for defects in the title. Your attorney may also review the land survey to determine whether the structures on the property (or those which you may add)will be within the boundaries of your property. Your attorney will review the settlement statement to insure that the costs of the sale comply with the written purchase agreement, and that arrangements are made to pay any prior mortgage debts and liens. If improvements to the property were not completed prior to the closing, your attorney may draft an escrow agreement to reserve funds to make any necessary repairs. Your attorney will review the deed and bill of sale offered by the seller to make sure that you receive proper legal title to the home and any furnishings included in the purchase agreement.
Some time after the closing, you should contact your attorney to make sure that your deed was properly recorded, and that the title insurance policy was issued properly. Your attorney may help you organize your valuable documents concerning your home, and explain which documents should be preserved while you own your home.
Attorneys are found in telephone listings, in classified advertisements in newspapers, through the State Bar of Michigan or through local bar associations. Ask your friends, coworkers, and acquaintances for the names of professionals who can help you.
Interview several attorneys. Ask for their rates. Ask what services they will perform specifically, and ask to see their service agreements. Ask for a cap or maximum on the fees and charges for all services. Ask whether their services can be terminated at any time without further fees, or on what conditions you can cancel their services if you are not happy. Ask how fast the attorney will respond to your inquiries, and whether the attorney will be available to help you during the period when you expect to need help. Ask whether you will be assisted by the attorney, or whether an associate will be assigned to help you.
When is it too late to ask for help from an attorney ?
An attorney can still help you after you make an offer for a home and the seller accepts it. An attorney will explain your rights and help you to correct errors in the agreement. An attorney will help you with all of the necessary details of the closing.
Many people buy a home without the assistance of an attorney. They do so, however, without the advice and experience of these professionals. For you to make truly informed decisions regarding the purchase of your home, you should seek the advice of an attorney.
This section outlines some of the important legal issues which you may face when selling your home. These issues are different from personal or business issues, such as whether to sell your home, and how much money you should accept for your home. You should consider these legal issues when you are making decisions about your home.
Hiring an Attorney and a Real Estate Broker
One of the first decisions you should make, after you decide to offer your home for sale, is whether to hire an attorney. It is advisable to hire an attorney before you decide whether to hire a real estate broker. A broker is trained to help you to market, show and sell your home. You and the broker must sign a complex written agreement stating the broker's fees and duties before the broker may assist you. This agreement is sometimes called a listing agreement. It includes terms such as whether your home may be sold only by one broker, or whether others may assist you and share in the fee you will pay. This agreement also states when it expires, and when you must pay the broker's fee.
You are free to negotiate the terms of the listing agreement. You may feel that you do not know which terms are important to include or negotiate in this agreement, and that you would like the assistance of an experienced professional to assist you to define the duties of the broker and yourself. Even if you plan to accept an agreement offer to you by a broker, you may not fully understand how your relationship with the broker will work.. The role of an attorney is to explain the relationship with a broker to you, and to assist you to understand the issues covered in a listing agreement so that you may make a fully informed decision to hire a broker. The attorney may also attempt to bargain with the broker at your direction.
All offers and agreements to buy and sell a home must be in writing. You may write an offer to sell your home to someone, but usually it is the buyer who gives you a written offer to buy your home. You may reject, accept or make a counter-offer in response to a buyer's offer. The offer usually becomes a legally binding agreement if you sign it to indicate that you accept it.
The purchase offer is a complex bundle of terms covering the price, the description of the property, the additional goods included in the he sale, the type of deed which you will give the buyer, title insurance, splitting of responsibilities for taxes, insurance and some utilities, the date when you must move out, rent which you must pay to the buyer if you live in the home after you sell it, contingent conditions which may allow you or the buyer to cancel the agreement (such as the buyer's failure to obtain a mortgage loan, the "unmarketability" or your title to the property, and the opinion of a professional inspector regarding the physical condition of the house), and information about your rights if the agreement is not honored by you or the buyer.
A broker is trained to assist you in setting an asking price for hour home. A broker, however, has limited training regarding the importance of these other terms. The broker may not be qualified to explain your rights and responsibilities in as much detail as you wish. The broker may not be the best person to assist you to modify the words of the offer if you wish to make a counter-offer. The broker may not be able to assist you in preparing other legal documents, such as deeds and land contract. The broker cannot assist you if a legal defect is found in your ownership of the property. An attorney is best suited for this role. An attorney can explain the implications of various clauses in the purchase offer, and suggest alternatives which meet your needs and concerns. An attorney can review the title to your property, analyze whether there are any other claims to your property, and represent you if you must ask a court to confirm your title to the property. An attorney can prepare your deed, escrow agreements, and land contract.
Brokers and attorneys are found in telephone listings, in classified advertisements in newspapers, through the State of Michigan licensing agencies (the Michigan Department of Licensing and Regulation for brokers, and the State Bar of Michigan Lawyer Referral Service for attorneys) or through local bar associations. As your friends, coworkers, and acquaintances for the names of professionals who can help you.
Interview several attorneys and broker/salespersons. Ask for their rates. Ask what services they will perform specifically, and ask to see their service agreements. Ask for a cap or maximum on the fees and charges for all services. Ask whether their services can be terminated at any time without further fees, or on what conditions you can cancel their services if you are not happy. Ask how fast the professional will respond to your inquiries, and whether they will be available to help you during the period when you expect to need help. Ask whether you will be assisted by the broker and attorney, or whether an associate will be assigned to help you.
When is it too late to ask for help from an attorney?
Once a buyer makes an offer for a home and you accept it , it is too late to hire a broker. An attorney can still help you by explaining your rights, by helping your correct errors in the agreement, by reviewing your title to the property and correcting errors, and by reviewing the settlement statement to make sure that you are receiving all of the money to which you are entitled. The attorney may attend the "closing" of the sale (the occasion at which ownership is transferred to the buyer) to explain the transfer of title and help make the transfer.
A Final word on Selling a Home
Many people sell their home without the assistance of a broker or an attorney. They do so, however, without the advice and experience of these professionals. For you to make truly informed decisions regarding the sale of your home, you should seek the advice of one or both of these professionals. The broker's role is to help you find a ready, willing and able buyer for your home. The attorney's role is to assist you to prepare a listing agreement (if you choose to hire a broker), the prepare a purchase agreement , and to help you through the process of transferring your property to the buyer. Both of these professionals are obligated to assist you to the best of their abilities to make sure that you receive an acceptable price and acceptable terms for the sale of your home.
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This pamphlet may be purchased individually or in bulk from the State Bar of Michigan, Membership Services Department, 306 Townsend Street, Lansing, Michigan 48933-2083. You may call 1-800-948-1442 ext. 6326 to obtain price information.
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Last Updated 1-5-97
Send your comments, questions and suggestions to Phil Harter at 161 E Michigan Avenue, Battle Creek, Michigan 49014 or e mail to pharter@calhouncountymi.gov