Whether you’re buying a new home or purchasing commercial real estate, your mind is probably focused on getting the price you want, and making sure that nobody else puts in a winning offer before you. Perhaps your attention has mainly been on the architectural details, such as whether there’s scope for renovation and whether the space is up to your aesthetic standards. While these are all important matters, they are only secondary to the most important consideration of all: who will represent you in your property transaction?
In Florida, a real estate attorney plays a pivotal role in the purchase and sale of property. Though they work largely behind the scenes – and certainly never appear as central characters in the countless real estate reality TV shows out there – they could be the difference between a smooth-sailing property transaction and one that goes horribly wrong. Understanding the role that real estate attorneys play in property transactions is key to grasping why you should never be purchasing property without one by your side.
What Are The Stages Of A Property Transaction?
To appreciate the vital role that real estate attorneys play, it’s important to understand the various stages of a property transaction. While every property transaction is different, and each transaction will face its own unique hurdles, all follow the same basic steps:
- Listing: The sale of a property begins with an evaluation and listing of the property. At this stage, any potential legal issues – such as title defects – should be resolved by the seller.
- Offer and acceptance: Once the property has been viewed, prospective purchasers will put in their offers. There may be some negotiation of the purchase price at this stage. The seller will accept one of the offers and a preliminary contract of sale will be signed. A deposit will need to be paid into a special account called an ‘escrow account’.
- Disclosures and inspections: Once the seller has accepted an offer, they will need to disclose any issues with the property – such as repair work that has been done in the past or still needs to be done, environmental hazards, structural issues, and so on. The purchaser will also have an opportunity to inspect the property and will hire a home inspector to perform an electrical, drywall, and pest/termite inspection.
- Negotiations: The purchaser may request that the buyer reduce the purchase price, offer a warranty, or conduct repairs following the inspection of the property. If the seller and purchaser can’t reach an agreement, the purchaser may choose to cancel the transaction and claim the return of their deposit.
- Financing: Once the final purchase price has been agreed, the purchaser will need to obtain financing (a mortgage). In most cases, purchasers will have obtained pre-approved financing up to a certain amount from their lenders – usually a bank – and will then wait for this financing to be confirmed by the lender, who will send an appraiser to assess the value of the property. The property is the lender’s underlying collateral, so it is vital that the lender has an accurate assessment of the property’s value.
- Title transfer and pre-closing: Once it is clear the sale is going ahead, a real estate attorney or title company will begin work to transfer title over the property into the purchaser’s name. The purchaser may arrange title insurance. All documentation relating to the sale will need to be finalized: this includes the final contract of sale, title deed, title insurance, lender’s documentation, warranties, and so on.
- Closing: Closing is the final stage of the transaction, and takes place either at the real estate attorney’s office or title company’s office. The parties to the transaction sign all the documents, the purchaser (or lender) releases the funds (or presents the check), and the title agent registers the new title deed with the county recorder. As the final step, the seller hands the purchaser the keys to the property, and the transaction is complete.
At each stage of the transaction, there is potential for complications to arise. Thankfully, an experienced real estate attorney will be intimately familiar with navigating the challenges that property transactions present, and will ensure your best interests are represented every step of the way.
What Is The Role Of A Real Estate Attorney At Each Stage?
Although Florida law doesn’t require sellers or purchasers to hire real estate attorneys, it is nevertheless strongly advised that you hire one if you’re planning to buy or sell property. A property transaction isn’t just any old sale: there are usually thousands of dollars on the line, and in the case of many purchasers, a large portion of their life savings are invested as a deposit. If the transaction goes wrong, your family home could be in jeopardy, and you could end up with a significant legal bill should litigation be required to enforce your rights.
Real estate attorneys play different roles depending on whether they are representing the seller or buyer – let’s take a look at each in more detail below.
Representing the Seller
When representing you as the seller, real estate attorneys have a crucial role to play in ensuring that the property has no title defects before it is listed. If there are title defects or administrative issues such as expired permits or incorrect zoning, these must be rectified. Your attorney will also scrutinize offers received from potential buyers and renegotiate any terms that are not in your interests. They’ll help you to conduct due diligence on the purchaser and/or lender, and will draft a comprehensive sale agreement that leaves you properly protected if the purchaser attempts to renege on the transaction. They will help you assess whether you need to make any disclosures and negotiate and draft any warranties that the purchaser has reasonably requested. Most importantly, your real estate attorney will set up an escrow account to receive the deposit from the purchaser and ensure that it is securely held until closing.
Either the seller or the purchaser’s attorney can act as the closing agent. The closing agent’s role is to oversee the exchange and execution of all the documents related to the transaction, to release the funds to the seller upon execution of the final transaction documents, and to hold the title deed until the transaction is finalized and it can be recorded with the county on the day of closing. The closing agent will need to ensure that the purchaser has already been listed on the title deed prior to closing so that everything can proceed smoothly on the actual closing day.
Representing the Buyer
The importance of hiring a real estate attorney as the purchaser cannot be understated. Your attorney will be responsible for many aspects of the property transaction, but one takes priority above all others: conducting a thorough title search.
Usually, attorneys conduct title searches. These searches are essentially your guarantee that the seller is the lawful owner of the property and is entitled to pass ownership of the property to another person. Title searches can also be used to check whether there are any claims, municipal liens, or undisclosed mortgages over the property. This gives you as the purchaser peace of mind that there will be no challenges to your ownership of the property down the line. Your real estate attorney will also arrange title insurance for the transaction, protecting you from any potential future ownership disputes. Some purchasers choose to hire a title company to assist with conducting due diligence on the property and act as a closing agent for the transaction. Title companies do not represent either the buyer or the seller and can’t offer legal advice unless they are owned and operated by a licensed attorney, but they can assist with conducting title searches and taking care of many of the administrative aspects of purchasing a property.
Your attorney will also assist with the inspection of the property, negotiate warranties on your behalf, and negotiate with your lenders. They’ll meticulously review the contract of sale and mortgage documents to ensure that they are clear and legally binding and that your best interests are protected. Finally, they may also serve as the closing agent for the transaction if the seller hasn’t appointed one.
Coral Springs’ Most Trusted Real Estate Attorney Is Ready To Assist You
Property transactions are lengthy and highly complex, and thousands, if not millions, of dollars are on the line. Knowing that your best interests are being represented at all times and that all documentation is being expertly prepared and reviewed will give you invaluable peace of mind as you wait for your transaction to be finalized. The real estate attorney at Gary I. Handin, P.A., has decades of experience in real estate law and has successfully closed thousands of real estate transactions.
Contact us at 954-796-9600 today to find out more about our legal services or arrange a consultation.