Many people who work outside of the legal industry don’t know some of the hidden challenges that must be handled well for real estate transactions to succeed. If you are a first-time buyer, you don’t know what to expect because it is indeed your first time; but even if you are an experienced buyer, you can be sure that every transaction will have surprises and obstacles to overcome. This is because every property, transaction team and set of negotiated deal terms is different. This month I asked James Maye, an experienced attorney, to share some insights about real estate law.
Can you share something about your work that most people don’t know?
The purchase and sale process from the attorney perspective is very challenging. Not only do we have to assure that the buyer receives the property per the terms of the original offer by properly negotiating the contract of purchase and sale, but also assure delivery of title to the property without any post-closing liability for outstanding liens. In addition, to the best of our ability, we try to make sure that the property being delivered is in compliance with local code. When purchasing a home, buyers need to know that they are not purchasing a property that has outstanding permits that were not closed out with the building department. Further, they need to know that for any work that was done on their home, a permit was obtained prior to the commencement of the work and a certificate of occupancy was issued at the conclusion of the work. In some cases neither a permit nor a certificate of occupancy was issued. This is a challenge for the attorneys as they are trying to address issues with the house without having actually seen the property. They have to rely on the clients and the realtors to assist in resolving these issues.
Can you highlight any common mistakes that attorneys can make that might not be in the best interest of homebuyers and sellers?
One common mistake is not doing a preliminary title search when representing a seller. Some attorneys are surprised to later find that there are liens on the property that need to be paid off. They wait until they receive the title search results from the buyer’s attorney and then start dealing with the lien holders. Some of the liens will need to be negotiated; some will have to be paid in full. In either case, this can delay the closing.
Not confirming that the person claiming to own the property has valid title. I had a closing delayed 2 months as the seller’s attorney was not aware that in order to close, the estate for one of the deceased owners needed to be administered in order to convey clean title.
Are there any myths regarding home buying and selling that you are often debunking for your clients?
For the few buyers that I run into before they meet with a realtor or a lender, it is the belief that they need to put down a 20% deposit towards the purchase of a home. They don’t realize that they can put down as little as 3.5% or sometimes less if they package their loan with some of the various down payment assistance programs out there. Another myth is that they have to have stellar credit to qualify for a mortgage.
For sellers, it is the belief that even though they are listing their houses “as is,” they do not have to negotiate price or repairs after the inspection is completed. Regardless of how the house is listed, if there are substantial issues listed in the inspection report, the seller will have to either repair the items, provide a credit, or reduce the sales price. Otherwise, they risk losing the purchaser.
Another myth is that anyone can do real estate. I had a transaction where the buyer retained an attorney who had no idea what he was doing. I basically had to handle both the purchase and sales side of the transaction. Many times the lowest cost attorney on the block can do much harm to the client and the transaction.
How long have you practiced law? What areas do you cover and what is your educational background?
My areas of practice are real estate, bankruptcy, estate planning, estate administration and small business representation. I am a graduate of Mt. St. Mary’s College, Columbia University School of Law and NYU Stern School of Business.
Is there anything else you’d like to add?
After 25 years, I still enjoy the law. It is not what it used to be when I started. With the internet and various websites that allow for people to DIY, it is a much more competitive environment. That being said, there is no substitute for actually contacting a lawyer to get the correct answers to your questions or obtain properly drafted documents in a timely fashion. To compete with the internet, I try to provide my clients with the best services and make a point to have their calls/emails responded to promptly.
For more from James Maye, contact:
Email – email@example.com
Website – www.jmayelaw.com