Real estate law

Among the many things that real estate lawyers do, representing buyers and sellers in residential and commercial real estate transactions and closings are important parts of their jobs. Residential real estate buyers are often in the process of making the largest financial transactions that they may ever make in their lives. Sellers likewise are engaging in major financial transactions and might need legal guidance through all of the steps of the process to ensure that the closings go smoothly and the transactions are completed without problems. The stakes are even higher in corporate real estate transactions, necessitating a careful legal review for both the buyers and the sellers at all stages of the process.

Due diligence prior to closing

Whether a real estate transaction involves residential or commercial real estate, proper due diligence before closing on the property is vital. Residential buyers need to make certain that they research the properties’ records to make certain that there are no clouds on the titles. They should also have thorough inspections completed to identify all issues that exist on the properties. Making certain that the homes are located in areas that are relatively crime-free is likewise important. Real estate lawyers may help their clients with conducting the research and the analysis of the area in an effort to protect their clients’ financial and legal interests.

Sellers have duties to disclose defects to their properties as outlined under the laws of the state. Real estate lawyers can assist their clients with making the required disclosures correctly so that they are not later exposed to liability. They may also assist with negotiating with the buyers in order to help protect the sellers’ financial interests.

Due diligence for commercial real estate is highly complex. In addition to researching the title and property records, calculations should be made about the details of the property to make certain that it will be as profitable as what it might appear from the property’s portfolio. The type and depth of real estate due diligence for commercial real estate transactions may depend on the reason for the purchase. Commercial transactions are usually done for one of three reasons, including investment purposes, business operations and real estate development. It is important to conduct a thorough analysis of the property’s fundamentals as well as the seller, compliance and financing obligations so that uncertainties are mitigated and reduced. Prospective buyers must examine a myriad of things including zoning regulations, liens, encroachments and other related issues. They must also determine whether or not they will inherit the prior owners’ legal liabilities from any regulatory violations. If they will depend largely on financing to purchase the properties, they will also need to analyze their ongoing ability to meet their payment obligations. By getting the help of an experienced real estate attorney, a prospective buyer of commercial real estate might feel more confident in a transaction when the lawyer conducts the appropriate analyses. Many investors in commercial real estate hire real estate attorneys prior to signing purchase contracts in order to prevent potential problems. Alternatively, buyers may want to outline in the contracts for sale that the buyer will complete certain actions of due diligence as well as how long it will take. Doing so might encourage the sellers to deliver the required documents more expediently. If certain adverse factors are discovered for the anticipated financial returns, the buyers might then have stronger positions in the negotiations so that they obtain fair and accurate property valuations.

Duties of real estate lawyers for closing

Real estate lawyers have five main closing duties during real estate transactions. These include title examinations, title insurance, coordination of communication, document review and title transfers and disbursements.

Title examinations are done to make certain that a clear title exists for the property. Once the attorney receives a real estate purchase agreement, he or she will then research the property’s title history to check for such things as use, encroachments, easements, marketability and clear for transfer. Any existing mortgages that will need to be satisfied will be identified. All mortgages, judgments and liens against the properties will need to be satisfied prior to or at closing.

The closing attorney will also help to choose a title insurance company in order to protect the buyer and lender in case a title problem is discovered in the future. After completing the title examination, the attorney will draft an opinion and submit it to a title company so that the company can issue a title binder. All lenders are required to have title insurance when real estate is purchased or refinanced. Buyers may opt to purchase it as well, especially if they are buying properties outright or with little financing.

The closing attorney also coordinates all of the communication between the numerous parties involved in the real estate closing, including lenders, buyers, sellers, real estate brokers, merchants, surveyors or judgment creditors. They will also coordinate the communication with the title company, homeowner’s insurance companies, the seller’s mortgage lender, adjoining property owners and many others that might have an interest in the transaction. These lines of communication are important so that the transactions are timely closed.

When closing arrives, the attorney will be there to review all of the documents that are associated with the closing of the transaction and the mortgage. He or she will be available to answer any questions about such things as deeds, deeds of trust, settlement statements, notes and the loan documentation.

Finally, the closing attorney has the responsibility for closing the transaction and disbursing all of the funds that are involved. He or she will execute all of the necessary instruments and check the local registry a final time to update the title and record the deed or deed of trust.

Real estate transactions are highly complex. As huge financial transactions, it is important for buyers and sellers to make certain that they are handled correctly. Mistakes that are made during a real estate transaction and closing may be very costly and difficult to correct in the future. To learn more about how we might be able to help, call us today to schedule a consultation.