Real Estate Buyer Checklist
The following is a list of common problems that can be easily prevented when buying or selling real estate.
A. It is extremely important to keep originals and backup copies of all correspondence or documents that are generated during the course of any real estate business. These can be worth their weight in gold in the event of subsequent legal action. Generally, the person who is most prepared for a legal contest and has the supporting documentation will prevail. In court proceedings there is a rule that originals must be produced at court hearings, but there is a widely recognized exception when originals are not available. If you can’t find the originals, the best thing to do is an electronic copy that can be printed and used instead of the original.
b. It is very important to contact a lawyer early on for guidance. Often this preventative maintenance will be well worth it and only cost a fraction of what it might cost you if you avoid this step.
against Do not use generic forms purchased from an office supply company unless they are tailored to your needs. Generic forms are generally produced as templates for wide use throughout the country. However, all states have their own laws, which often change without notice. Generic forms need to be tailored to be useful in specific jurisdictions and updated by someone in the know. If you like to play with legal documents, you should at least have a lawyer review your work. Often clients seek legal advice only after the damage has occurred. In these cases it is very expensive to overdo what could have been avoided in a few minutes of good correction.
d. Some forms are geared toward buyer protection and others are geared toward seller protection. Generic forms are usually buyer or seller preferential and are rarely deadlocked. If you’re going to use the dreaded generic form, make sure you use the one that suits your purpose.
my. When buying real estate, make sure you have a way out if things don’t go as planned. When you make an offer to buy real estate, you should have an experienced real estate agent or attorney to guide you. Often these experienced professionals will ensure that if your financing falls through, you lose your job, or the property fails the test, you will be able to cancel “for any reason” within a certain period known as “viability.” or “inspection” period. Make sure you have a sufficient feasibility period to do your due diligence. Many buyers have lost their security deposit because they were told they could cancel the contract if they couldn’t get financing, only to find out later that this contingency was nowhere to be found in the written documents.
F. Remember that in legal battles it is the written agreements that count, not the verbal exchanges. There is an old evidentiary rule called the “Parole Evidence Rule” that does not allow a person to vary or amend an entire written agreement by verbal testimony. Many people have found this out the hard way when the judge refused to hear their side of events at trial. Make sure the entire agreement is in writing, because most agreements have a “merger clause” stating that this is the entire agreement between the parties and cannot be altered by any oral representation.
gram. The legal doctrine known as “Merger by Deed” means that the oral representations are merged into the deed at the time of closing. In other words, the buyer has to do due diligence during the feasibility period and cannot rely on the seller’s representations, because those representations do not survive closing unless there is a specific provision in the contract that certain representations and guarantees survive. closure. Of course, this doesn’t give wholesalers the opportunity to commit fraud, because any false statements relied on that cause damage to the buyer can be the subject of a fraud lawsuit later. Fraud is committed when false representations are knowingly made and the buyer reasonably relies on those representations and is therefore harmed. Fraud damages are typically “triple” or triple the actual damages, so it is incumbent on any seller not to make false statements to a prospective buyer.
H. Often, it is to your advantage to choose the title company where the closing will occur. Title companies will generally hold escrow pending closing and if a title company does a lot of business with one party or another, it is more likely to favor that party in the event of an escrow dispute. . Title company employees often become witnesses for one party or another in court proceedings, so it is important to have a report. In addition, many purchase agreements stipulate that a title company must pay the seller the earnest money if the buyer fails to comply with the material terms. Many buyers are not even aware that they may be in default when they discover that the seller has already been paid their deposit as “liquidated damages.”
If there is a dispute over the security deposit, the disputing parties should contact the title company as soon as possible and notify them that a legal dispute exists and that the title company is not to release the security deposit to either party. parties until ordered by a court. . If you are a buyer, you never want the seller to keep the security deposit. You should insist that it be in the hands of a neutral third party, such as a title company. This is especially important when purchasing an unbuilt condominium unit, since you never know if you can trust the developer or if you will have to file a claim for your deposit in bankruptcy court if the project is unsuccessful.
Yo. Time is of the essence in real estate transactions. Almost all purchase agreements will contain the words “time is of the essence.” Often people will need an extension to get their financing or to complete some other obligation that is a condition of closing. If you need an extension, it must be in writing and must be obtained before the term expires, otherwise you are at the mercy of the other party, who may well see this as an opportunity to lose your deposit as “liquidated damages.” “
d. Avoid arbitration clauses in purchase agreements. Arbitration clauses are ostensibly designed to reduce the time and expense of litigation, but have often been used in ways that deny the child the right to an impartial judge and can often cause more expense than a normal court action. . Often times, arbitrators are chosen from a list of industry “insiders” who are not subject to being charged or kicked out of the bank for their erroneous decisions. The arbitration rules are vague and not uniformly applied because there is no body of arbitration law like there is in state or federal courts. Furthermore, arbitration rulings are private, so they are not subject to the normal scrutiny or occasional ridicule they deserve when they get off track. If you agree to arbitrate any dispute that may arise, you could at least include a condition that the arbitrator must be a mutually agreeable retired judge, because retired judges make the best arbitrators, as they have years of law enforcement experience. and doing the right thing and being corrected when they don’t. If you do not wish to arbitrate at all, simply strike out this provision. Many people don’t realize that preprinted forms and agreements are not “sacred.” In fact, they are far from it. Any clause, including the all-too-frequent “arbitration clause”, can be modified, amended or deleted at will, as appropriate.
k. Right of cure of three days. Many times, a buyer or seller unknowingly and innocently violates some provision of the sales agreement. To prevent an innocent mistake from causing disaster, it is advisable to insert a three-day right to cure any breach. In this way, honest mistakes will not be seen as an opportunity to gain legal advantage. Some states provide this right to cure by law, but others do not. You can provide it yourself by inserting it into your purchase agreement.
I. Take the time to read all the fine print. Make sure you have not acknowledged receipt of the disclosures unless you actually received them.
The above is not an exhaustive list of preventative measures (which would take an unlimited amount of space and time to complete), but will hopefully be a starting point for people considering buying or selling real estate. Many lawyers provide free consultations as a public service, so if you can reach one on the phone for a short chat, you can often get quick direction that will get you on the right track.
