Real Estate Law

Individuals enter into real estate transactions in many different ways. According to the National Association of Realtors, in 2021, 87% of buyers purchased their homes through a real estate agent or broker. These professionals guide their clients through the process of completing submitting, reviewing, and signing contracts for the sale and purchase of the property.

The contract for a sale or purchase of a home is a legally binding document. In many cases, it is the biggest contract individuals will sign in their entire lives. Yet, in most states, every day, thousands of buyers and sellers sign real estate contracts without representation from an attorney.

Compared to the cost of a home, and the legal fees involved if there is a problem with the transaction, the investment in having an attorney protect your interests is minimal. Your lawyer, legally, cannot represent any other party in the real estate transaction, meaning they are 100% vested in protecting you.

Do You Need A Lawyer For A Residential Real Estate Transaction?

A qualified real estate attorney can support you at all stages of the transaction, from negotiating processes and terms, to addressing issues in the inspection, inspecting closing documents for unnecessary fees, avoiding legal liability, and more.

Attorneys can support buyers and sellers throughout the entire real estate transaction or with select procedures. Some examples of how attorneys help with a real estate purchase or sale include:

• Contract Creation & Review. For individuals entering into real estate transactions without representation, it is up to them to properly complete all sections of an executable contract. Real Estate attorneys are experts on the law and legal documents and can be invaluable in ensuring documents are correct. They also protect their clients from unwittingly giving up rights, and money, or incurring unnecessary liability.
• Title Searches. Attorneys may conduct searches on the property to ensure a “clean” title, meaning, ownership is clearly established and that there are no liens or claims on the property. The attorney’s firm may leverage multiple resources, including deeds, tax liens, land records, court judgments, and other records.
• Title Insurance Policies. There are two forms of title insurance. The first protects lenders from financial loss sustained from issues with a title to a property. The second is Owner’s Title Insurance which protects homebuyers. If there is a mortgage on the property, buyers are obligated to secure a policy for the lender. The owner’s policies are optional. Real estate lawyers can arrange for the purchase of both types of policies.
• Closing Procedures. Attorneys may prepare the Closing Disclosure Form (formerly known as the HUD packet), which serves as a statement of final loan terms and closing costs. They may also coordinate the transfer of funds, verify all documents are completed and guide their client through the sometimes complex process of signing documents.

The services provided by attorneys can vary from firm to firm and also by state. In most states, attorney representation in a real estate transaction is optional. Buyers and sellers may use an attorney for a specific function as opposed to the entire transaction.

This article is for general informational purposes only and is not legal advice. Contact us today to discuss your specific situation. 

Certain states consider a real estate transaction – the buying or selling of real property to be a legal transaction. In these states, the parties in the transaction must be represented by an attorney:

• Connecticut
• Delaware
• Georgia
• Massachusetts
• New York
• South Carolina
• West Virginia

Real estate attorneys bring a wealth of knowledge to real estate transitions, whether required by your state or not. Unlike real estate agents who may represent both buyers and sellers within the same transaction, a real estate attorney can only represent you and your interests in the translation.

This article is for general informational purposes only and is not legal advice. Contact us today to discuss your specific situation. 

Your real estate attorney will guide you through one of the biggest transactions of your life, the purchase and/or sale of your home. It is important to choose a lawyer that you trust, communicate well with, and is licensed in the state in which the transaction is taking place.

An option is to interview two to three attorneys to determine the best fit. To find attorneys, you can:

• Use your state’s Bar Association. Your state likely has an online directory of licensed real estate attorneys. You can find firms in your local area and also ensure that the attorney you choose has a clean practice record.
• Ask friends and family. Referrals are one of the most powerful ways of connecting with reputable professionals. You might feel more comfortable speaking with an attorney who comes with a success story from someone you know and trust.
• Read reviews. Many firms have Google Business pages with reviews from past clients. Check for customer feedback. If there are poor reviews, check the firm’s response. You can see our firm’s review by following this link .
• Use a review site. There are a variety of sites that compile reviews and practice overviews for attorneys in specific states or metropolitan areas. Make sure you are using an independent review platform and not a pay-for-play advertisement scheme.

This article is for general informational purposes only and is not legal advice. Contact us today to discuss your specific situation. 

The American Bar Association guides individuals seeking an attorney to be mindful of their attorney’s specialization or practice area(s). Most states do not require attorneys to be certified in a certain practice area.

However, eighteen states require lawyers to certify as specialists in specific legal practices. These states are Alabama, Arizona, California, Connecticut, Florida, Georgia, Idaho, Indiana, Louisiana, Maine, Minnesota, New Jersey, New Mexico, North Carolina, Pennsylvania, South Carolina, Tennessee, and Texas.

Initial consultation

Many attorneys will offer a free consultation to discuss your needs and see if clients are a good fit. Before booking an appointment, confirm whether or not there is a fee for this initial conversation. Be prepared to clearly and succinctly describe your legal needs/concerns.

Understand that this initial consultation is an exploratory conversation, and the attorney may not be willing or able to provide legal guidance until you officially become a client. There is information the attorney cannot gather from you or share with you unless you are officially in an attorney-client engagement.

Look for an attorney or firm that is responsive, explains things in terms you understand, and is vetted by the state. It is important that you trust your attorney. Remember, they are going to represent you in a top-dollar transaction. Take the time to choose wisely.

This article is for general informational purposes only and is not legal advice. Contact us today to discuss your specific situation. 

Every year over 200,000 home sellers decide to sell their homes without the use of a real estate agent. These transactions are known as for-sale-by-owner or FSBO home sales.

Owners selling their homes without a real estate listing agent may sell their homes to buyers who are represented by a buyer’s real estate agent. In some cases, neither party has any representation, and they are negotiating contracts, inspections, and closing requirements completely on their own.

Title Companies and Title Agents

According to the website https://www.forsalebyowner.com/, in most states, a title company is sufficient to manage all facets of the closing, including title searches, documents, and funding. The Title Agent will conduct a title search, offer title insurance, manage escrow, put together the settlement documents, and supervise the signing.

While the Title Agent will ensure all parts of the transaction are completed properly and legally, they are a neutral party. They have no obligation to communicate any liabilities or advantages among parties. The transaction is secure, yet neither party have a professional protecting their interests.

Attorneys

In states where a lawyer is required in real estate closings, both parties must secure attorney representation in order for the sale to be completed. According to forsalebyowner.com, “many customers hire a Real Estate Attorney to protect their interests throughout the real estate transaction. A lawyer can act as an escrow agent for down payments, evaluate any complicated offers from potential buyers, and handle closings.”

Data collected by the National Association of Realtors, NAR, indicate that FSBOs accounted for 7% of home sales in 2020. While that is a small segment of the 5.6 Million homes sold, it still represents hundreds of millions of dollars in real estate transactions. The median price for a home sold by the owner in 2020, was $260,000.

NAR also found that 57% of all buyers of for-sale-by-owner homes, knew the sellers prior to entering into a real estate transaction. That means that 43%, roughly 170,000 for-sale-by-owner transactions were completed by strangers. Strangers who have to navigate a complex process of negotiation, documents, and deadlines to successfully exchange hundreds of thousands of dollars for a home.

This article is for general informational purposes only and is not legal advice. Contact us today to discuss your specific situation. 

If you are contemplating either selling your home without representation or buying a home with the guidance of even a real estate agent, be sure to understand your competencies and limitations.

Sellers

Sellers in for-sale-by-owner transactions must follow all legal guidelines and good business sense to:

• Properly value their home or property
• Understand their local real estate market
• Properly promote and set up marketing for the property
• Negotiate documents with proper terms and deadlines
• Arrange for proper management of escrow funds
• Project manage all inspections
• Secure or enable the buyers to secure a title company
• Manage all details related to their move and relocation.

Buyers

Buyers in FSBO transactions must:

• Understand the real estate market in their target area
• Negotiate fair price, terms, and deadlines
• Sign a contract that is accepted by their mortgage and insurance companies
• Ensure funds provided for escrow are secure
• Coordinate all inspections and appraisals in accordance to contract timelines
• Secure proper insurance coverages as required by their lender
• Secure title insurance as needed
• Ensure all documentation needed by their lender is reviewed in time for closing
• Accept or pick a title company
• Manage all details related to their move and relocation

A real estate attorney can support many of these critical parts of the process to ensure that your interests are protected and that you have a successful closing. Discovering that you signed away important inspection rights or agreed to pay thousands more than the property is worth can turn a stressful transaction into a nightmare.

This article is for general informational purposes only and is not legal advice. Contact us today to discuss your specific situation. 

If you are selling or buying a home as part of a for-sale-by-owner transaction, being represented by a qualified and experienced real estate attorney can bring a lot of peace of mind to the transaction.

The website, ConsumerAffairs.com states: “Even if your state doesn’t have an attorney requirement, it’s often a good idea to hire one to protect yourself. Purchasing a home is one of the most important transactions of your life. A lawyer can look out for your best interests and answer any questions you have about the documents you’ll sign.”

Services

Services may vary from state to state, or even by the firm. However, most real estate attorneys will support:

• Contract Creation & Review
• Title Searches
• Title Insurance Policies
• Closing Procedures

To learn more about how an attorney can protect your money, your liability, and your peace of mind, refer to our article, Do You Need A Lawyer For A Residential Real Estate Transaction? This article delves deeper into specific services provided by real estate attorneys and how to find a qualified lawyer to represent you.

This article is for general informational purposes only and is not legal advice. Contact us today to discuss your specific situation. 

In the world of residential real estate, most transactions involving the sale and purchase of a house happen between an individual (or family) that wants to sell a home and an individual (or family) that wants to buy a home.

In general, most transactions happen between willing parties, but not all. Every year there are thousands of homes sold under some form of financial duress.

Short Sale Vs Foreclosure Vs REO Properties

There are three types of transactions that are outside of the normal person-to-person exchange of property. The common denominator in these transactions is usually some sort of financial distress or loss. The owner of the property did not or could not meet the financial obligation of their mortgage, necessitating a solution.

Short Sale

The quickest definition of a short sale is the sale of a home for less than is owed to the mortgage company. This typically happens when the homeowner has gotten behind on payments and must sell the property to avoid foreclosure.

The lender or mortgage loan servicer must agree to accept less than what is owed, and the amount waived may be subject to future legal action and/or taxation.

Foreclosure

A foreclosure is a complex, typically multi-year process with multiple steps. Many people think of foreclosures as homes being auctioned because the owner could not pay. However, a foreclosure process starts long before a property goes to auction.

The process with a Pre-foreclosure stage is in which the homeowner is in default of their loan obligation and is at risk of foreclosure. An actual foreclosure takes place when demands for payment are not met, and the lender repossesses the property and attempts to sell it, typically at an auction. The homeowner may or may not remain in the home during this process.

Real Estate Owned – REO Properties

A home becomes an REO property when the home went through the foreclosure process and did not sell at auction. The property has been officially repossessed, meaning ownership has reverted from the homeowner to the lender or lender representative. These properties are also called “bank-owned” and can be a drain of resources to the bank or lending institution, which typically aims to sell the property as soon as possible.

Complex Real Estate Transactions

Short Sales, Foreclosures, and REO Property sales are complex transitions that can have life-changing financial and legal consequences. It is important that homeowners or buyers entering into any of these transactions understand the process and risks involved.

This article is for general informational purposes only and is not legal advice. Contact us today to discuss your specific situation. 

Purchasing a home is often the biggest financial investment in an individual’s lifetime. A house becomes a home, a place of sanctuary, rest, and peace.

When a person purchases a home with a mortgage loan, the lender goes through an extensive loan application and underwriting process to ensure the potential homeowner is able to repay the loan.

As long as there is a mortgage on the property, the loan is secured by the home, meaning the lender can take ownership of the home if the homeowner defaults on their loan obligation.

Short Sale

The quickest definition of a short sale is the sale of a home for less than is owed to the mortgage company. This typically happens when the homeowner is behind on payments and is not able to comply with payment arrangements or qualify for a loan modification.

While a short sale may avoid foreclosure, it means that the homeowner has to vacate their home. This type of home sale must be approved by the mortgage lender or servicer. However, just because the lender states they will be satisfied with a less than full payment of the loan, does not necessarily mean the homeowner is without financial obligation.

This article is for general informational purposes only and is not legal advice. Contact us today to discuss your specific situation. 

If a homeowner loses the ability to meet the financial obligations of their mortgage loan, a short sale is an alternative to foreclosure. Still a complex process with financial and legal consequences, a short sale can be advantageous to multiple parties in the transaction.

Short Sale Homeowners / Seller

The greatest advantage is the avoidance of foreclosure, which can have a greater financial, legal, and credit impact. It can be a much simpler and more dignified process, allowing the homeowner to move on to affordable housing faster and with fewer complications.

Short Sale Buyer

Not all buyers are willing to purchase a short sale home. It can take months to close on the property, and deals can fall through. Some buyers prefer to make an offer on a short sale aiming to secure a quality home below market prices. Real estate investors are attracted to short sales for this reason.

Homeowner’s mortgage lender or servicer

A foreclosure is a complex and lengthy process that is also quite costly for lenders. Since foreclosed properties are sold anyway, many leaders will be open to a short sale as it minimizes the work they must do and, ideally, minimizes their lost revenue and expenses.

All other parties

There are professionals that specialize in managing short sale transactions. Listing agents, buyer’s agents, appraisers, inspectors, mortgage brokers, title companies, and insurance companies all earn payment for services rendered.

In years following the “Great Recession, short sales became common, rising to 11% of home sales in 2009 (reported by CNN Money) as opposed to less than 1% in 2021, according to the National Association of Realtors.

This article is for general informational purposes only and is not legal advice. Contact us today to discuss your specific situation. 

Most short sale homes are listed for sale just like any other home on the market. That said, the sales process is much more complex. The Freddie Mac website advises homeowners exploring short sales to work with a qualified real estate professional.

Process

Once a homeowner decided to sell their home, and the lender is willing to allow a short sale, the property is listed, ideally, by a qualified professional with short sale experience. The short sale status must be disclosed to potential buyers.

Offers made on the property must be presented to the lender and accepted by the seller. The real estate agents and real estate attorneys must submit a carefully prepared short sale package. If the lender approves the offer, the escrow closes as usual with no proceeds going to the seller. This process can take several months as mortgage companies tend to need several weeks to evaluate offers and make a decision on whether or not to accept.

This article is for general informational purposes only and is not legal advice. Contact us today to discuss your specific situation. 

The Consumer Financial Protection Bureau, a U.S. government agency, warns consumers that there are states in which homeowners are responsible for the difference between the value of your property and the amount you still owed on the mortgage loan. This amount, which could be tens of thousands of dollars, is called a deficiency.

Without a proper waiver of deficiency, the lender may have a right to demand the balance and may sue the homeowner to collect in full, plus penalties and legal expenses. It is important to request and receive properly signed documents that waive all future obligations on the loan.

This article is for general informational purposes only and is not legal advice. Contact us today to discuss your specific situation. 

There are three main consequences of a short sale. Each can have long-term financial and legal consequences and must be considered carefully before entering into a short sale as a solution to missed mortgage payments.

Failure to Secure a Deficiency Waiver

As mentioned above, the completion of a short sale does not guarantee that the lender will give up on being paid in full. It is important to request a full waiver of deficiency in order to be fully exempted from repayment. However, the lender is not obligated to grant the waiver.

This means that homeowners who have given up their homes and have moved may still be under obligation to pay back potentially tens of thousands of dollars.

Income Taxes

The amount forgiven by the lender may be considered taxable income by state and federal governments. The homeowner may be liable for paying income taxes on the waived deficiency amount.

Credit Report

A short sale will show up on a credit report, under the mortgage history as a special status that labels it as “settled,” “not paid in full,” or “account legally paid in full for less than the full balance.”

This information will remain on the consumer’s credit report for approximately seven years and will cause a drop in the homeowner’s credit score. According to Experian.com, a short sale is considered settling a debt and will likely have a large negative impact.

The impact on the credit score will depend on other factors such as the individual’s initial credit score, subsequent payment history, and whether your lender reports a deficiency balance. If your lender does not release the “forgiven” balance, knowing as waiving the deficiency, then that unpaid balance can have a great impact on your credit history and score, similar to a foreclosure.

Summary for Short Sales

There are many legal and financial consequences of a short sale that can stay with a homeowner for years after the sale of the property. Before entering into a short sale as a solution to a difficult situation, it is important that homeowners understand the timelines, obligations, and liability of this type of transaction.

This article is for general informational purposes only and is not legal advice. Contact us today to discuss your specific situation. 

Homeownership is a big part of the American dream. A safe place to shelter after a long day of work, a place to rest, entertain, and maybe even raise a family. In 2021, 6.12M homes were sold, according to the National Association of Realtors. Millions of individuals and families moved in, decorated, and began building memories.

Unfortunately, home ownership doesn’t always work out as expected. Every year, over 150,000 homeowners become unable to pay their mortgages to the point of falling into foreclosure.

According to the government website USA.com, “Foreclosure occurs when a homeowner is no longer able to make mortgage payments as required. This allows the lender to seize the property, removing the homeowner and selling the home, as stipulated in the mortgage contract.”

This article is for general informational purposes only and is not legal advice. Contact us today to discuss your specific situation. 

There are two primary types of foreclosure in the United States. The type of foreclosure filed will depend on the terms of your mortgage contract and the relevant laws of your state. Most foreclosures will be either a Judicial Foreclosure or Non-Judicial Foreclosure.

Judicial Foreclosures

Judicial Foreclosures are allowed in all states and required in others. It means that foreclosure processing will be under the supervision of the court. The lender files suit for payment with the judicial system, and the borrower will receive a note in the mail demanding payment. The borrower must repay all monies owned within 30 days to avoid foreclosure. If the owed funds are not paid in full, the mortgaged property is then sold through an auction to the highest bidder, carried out by a local court or sheriff’s office.

Non-Judicial foreclosure

Non-Judicial foreclosure, also known as Power of Sale foreclosure or statutory foreclosure, is allowed by many states if the mortgage includes a power of sale clause in the mortgage contract. The lender can move forward with sending notices and selling the property in a public auction without court supervision or the involvement of the local sheriff’s office. These types of foreclosures tend to finalize faster.

This article is for general informational purposes only and is not legal advice. Contact us today to discuss your specific situation. 

There are many steps homeowners can take and resources they can tap into to prevent a foreclosure situation. Not only does foreclosure mean the loss of the home and relocation, but it also has significantly damaging impacts on credit histories and scores, which can make it difficult to secure housing in the future.

The U.S. Department of Housing and Urban Development has pages and pages of online advice and resources for homeowners at risk of foreclosure.  A few of their suggestions include:

Communicate with the lender

As soon as there is any concern about missing or making an incomplete mortgage payment, homeowners are encouraged to contact their lender and request assistance. Many lenders have short-term programs to help homeowners avoid defaulting on their loans. Open all correspondence and answer all calls from lenders, as avoidance will likely make the situation worse.

Loan Modification

A foreclosure is a long, tedious, and costly process that most lenders want to avoid. While it may feel awkward to discuss financial distress with your mortgage lender, they are often best positioned (and best motivated) to assist homeowners. The lender may temporarily reduce interest rates, allow skipped payments that are added to the end of the loan or change other terms of the loan to make payments easier for a short-term period.

Find the funds

Homeowners at risk of foreclosure are advised to take a realistic inventory of cash flow and assets. What funds can be accessed to ensure the mortgage returns to a current state and stays current? Is there anything that can be quickly sold? Can the household be tightened for a few months? Are there retirement savings that can be safely accessed to save the home?

Consult an attorney

A foreclosure is a complex legal proceeding that is challenging to navigate without support. Homeowners with legal representation of your can make timely decisions that allow the best possible outcome for their unique situation.

The HUB website also reminds consumers to beware of scammers and be skeptical of individuals or organizations who claim they can make a foreclosure go away. To get proper guidance on how to prevent or navigate a foreclosure, speak with a qualified attorney or find a HUD-Approved Housing Counseling Agency

This article is for general informational purposes only and is not legal advice. Contact us today to discuss your specific situation. 

The Consumer Financial Protection Bureau mentions another option for avoiding foreclosure. In a deed-in-lieu of foreclosure the homeowner and mortgage lender mutually agree to exchange the deed to the home to the lender, who then drops foreclosure proceedings. By voluntarily turning over ownership of the home to the lender, the homeowner avoids the stress, cost, and greater credit damage of the foreclosure process.

The lender may also participate in a “cash for keys” program in which the lender will pay the homeowner’s relocation costs. This allows the lender to quickly take possession of the property and prep it for liquidation. In addition, consumers are advised to secure a complete waiver of deficiency to ensure they have been released from liability of any gap between the total loan and the amount of money the lender receives in the sale of the home

This article is for general informational purposes only and is not legal advice. Contact us today to discuss your specific situation. 

Foreclosures are highly regulated and controlled procedures. The basic steps are the same nationally, however, details and timelines may vary from state to state.

For example, some states may allow the homeowner a Right of Redemption. Typically reserved for non-judicial foreclosures, the borrower is given a certain amount of time to repay all monies and fees owed to stop the foreclosure and reclaim their property.

Another difference involves deficiency judgments. If the foreclosed property is sold for less than the amount owed by the borrower (homeowner), the lender may pursue payment for the difference. This is permitted in some states and forbidden in others. A qualified attorney in your state can guide you through the rule applicable in your state.

General Steps in a Foreclosure

Late Payment. The path to foreclosure can begin with the very first missed payment, although lenders have varying rules on when a payment is considered late.

Default. Additional missed mortgage payments will place the loan in default. Some lenders will consider the borrower in default after 15 days of no payment, while others have longer thresholds. The next steps vary based on whether there is a judicial or non-judicial foreclosure. Typically, non-judicial foreclosures are faster.

Foreclosure lawsuit or notice of default. For a judicial foreclosure, the lender will file a foreclosure lawsuit. If the homeowner responds, the case could go to trial, or the judge reviewing the case could file a motion of summary judgment. If the borrower does not respond, the judge may issue a default judgment in favor of the lender.

In cases of non-judicial foreclosure, the lender will automatically issue a notice of default (NOD) via certified mail. The notice is recorded with the county registrar and details how much is owed, including past due amounts, late fees, and related foreclosure costs. Borrowers typically have 90 days to repay the owed amount or negotiate a repayment agreement with the lender.

Pre-foreclosure. Where allowed, the lender will resolve a foreclosure by selling the property. Between the notice of default (NOD) and the sale of the home, the homeowner can still stop the foreclosure by paying the funds owed to the lender.

Notice of sale.If the borrower/homeowner is not able to pay the monies owed or negotiate a repayment plan, the lender will move forward with selling the property. The lender will publish a notice of sale as a sign on the property and possibly in local newspapers. The home is auctioned, and based on buyer demand, the property may sell for more or less than owned on the loan.

If the property sells for less than owed, the defaulting homeowner may be responsible for the difference under a deficiency judgment. In the event the home sells for more than the balance of the loan and all fees, the homeowner will be paid the difference.

Leave residence. After the property is sold by auction, the borrower has a limited amount of time to vacate the property. The timeline varies by state.

It is important to remember that foreclosures are preventable. Early communication with the lender can often result in assistance that allows homeowners to catch up on payments and keep their homes. If you are facing financial challenges that may interfere with your ability to pay our mortgage and you would like to understand your rights and options, contact a qualified attorney in your local area.

This article is for general informational purposes only and is not legal advice. Contact us today to discuss your specific situation.