Real Estate Information Center
Real estate transactions are governed by various federal statutes, state statutes, and common laws that address a wide variety of legal issues related to acquiring, financing, developing, managing, constructing, leasing, and selling commercial and residential real property. Real estate lawyers at the Law Offices of Linares Associates PLLC review residential and commercial purchase and lease agreements, and handle real estate transactions. The following information about real estate law is general in nature, and is not intended to address your particular area real estate matter. For an initial consultation with a residential or commercial real estate lawyer, contact us, today.
Glossary of Real Estate Terms
Real estate law includes lots of jargon and legalese that can be intimidating or at least confusing, especially to first-time homebuyers. An attorney with experience in real estate law at Law Offices of Linares Associates PLLC, can help a buyer or seller understand the terms and concepts involved in real estate transactions. Read on to learn more about the terminology of this specialized area.
An appraisal is the estimate of value of real property made by a third party not involved in the transaction. Appraisals usually involve comparing the sales price to the value of similar properties in the area. Mortgage lenders typically require an appraisal before they will make a loan.
An assessment is a charge for improvements made by the local government that are beneficial to adjoining property. Sidewalks and road work are common examples of improvements which give rise to an assessment. Property owners who receive a benefit from the improvement are assessed a proportional share of the cost of the improvement.
A real estate broker is a licensed person or organization who negotiates real estate contracts, mortgages, leases and other agreements between the parties in a real estate transaction. Real estate agents (or realtors) are also licensed representatives who work for brokers.
A closing (sometimes called a settlement), is the last stage of a real estate transaction. At the closing, the buyer finalizes his or her mortgage and pays any closing costs for which he or she is responsible, while the seller finalizes and hands over the deed and the keys to the property.
Condominium (condo) owners own their individual residential unit and also have a right to use the common areas in the development, which are owned by the condominium association. The association maintains the property, pays taxes and insurance, and deals with improvements. A condo owner will probably have to pay association fees in addition to mortgage payments.
Contract for Deed
A contract for deed allows a seller to keep legal ownership of property while the buyer uses the property and makes monthly payments until the purchase amount is paid.
A deed is a document that transfers an interest in real property. A warranty deed is a deed in which the seller promises that the title to the land is good and complete. A quit claim deed transfers only the rights that the transferor has, with no promise that the transferor has full title or that there are no liens against the land.
When a homeowner defaults by failing to make payments on his or her mortgage, the bank or financial institution that holds the mortgage note may foreclose on the property. Foreclosure gives the legal ownership of a property to the bank to allow the bank to recoup its investment. Foreclosure proceedings vary by state but usually involve court appearances to ensure the foreclosure is warranted.
A mortgage loan is a loan secured by the real estate the loan is allowing the buyer to purchase. Mortgage terms may allow for fixed or adjustable interest rates or may include balloon payments. The functioning legal effect and foreclosure of mortgages vary greatly from state to state.
The Real Estate Settlement Procedures Act (RESPA) imposes obligations on mortgage lenders and other vendors involved in real estate transactions. Under RESPA, borrowers must receive disclosures detailing the costs associated with the transaction, copies of the lender’s servicing and escrow account practices, and a description of the relationships among the service providers to the transaction. Mortgage lenders must also give borrowers a fair estimate of the service charges for which he or she may be responsible.
A survey is a mapping of land boundaries, improvements and easements on real property. A lender will frequently require a survey of property, especially commercial or un-platted property, and will require the parties to address any irregularities that show up on the survey.
Title Insurance and Title Opinions
Title insurance protects against title defects not excluded by the policy. A title opinion is a lawyer’s written statement of the current condition of the title. Title insurance, a title opinion or both can help a buyer to feel comfortable with the validity of the title.
Speak to a Real Estate Lawyer
A real estate buyer or seller will encounter most, if not all, of the above topics when involved in a real estate transaction. Each of the above topics is complex, with details that vary greatly from state to state and transaction to transaction. An attorney from Law Offices of Linares Associates PLLC who has experience in real estate law can help a buyer or seller interpret and analyze the application of all of the laws related to the above topics to his or her transaction.
Buying a home can be stressful and time consuming. Obtaining a home inspection can take some of the worry out of the process. An independent home inspector will give a buyer a complete picture of the condition of the property he or she is considering buying. Most houses are not perfect, and the inspector’s detailed report gives the buyer an unbiased evaluation letting him or her know what needs work now and what will probably need work in the near future. Obtaining a home inspection and reviewing the results with an experienced real estate attorney at Law Offices of Linares Associates PLLC, can put a home buyer in an informed position to negotiate his or her purchase.
The Home Inspection
The type of inspection that a buyer needs depends on many factors. Of course, every buyer should make his or her own basic inspection. A buyer should also obtain a professional whole-house inspection by a reputable person to uncover defects that may not be readily apparent. If the buyer is using an FHA or VA loan, a third, somewhat less thorough, inspection occurs at the time of the appraisal. The appraisal required by the lender is not as thorough and focuses on the value, not the condition, of the property. It does not substitute for an inspection. An inspector does not evaluate whether or not a buyer is getting good value for his or her money. Rather, the inspector checks the safety of the home, focusing on the structure, construction and mechanical systems to determine whether any repairs are necessary. Generally, an inspector checks the electrical system, plumbing and waste disposal systems, water heater, insulation, ventilation, heating and air conditioning systems, water source, water quality, potential for pests, foundation, doors, windows, ceilings, walls, floors and roof. If the home inspector discovers a serious problem, the inspector may suggest a more specific inspection. A buyer should also consider having the home inspected for the presence of a variety of health-related risks, such as radon gas, asbestos or lead, if not included in the basic inspection. Although a buyer need not attend the inspection, many buyers prefer to be present. Following the inspection, many home inspectors will answer questions about the report and any problem areas. The inspection also provides an opportunity to hear an objective opinion on the home’s quality.
The Home Inspector
A buyer should hire a home inspector who is qualified and experienced. In many states, home inspectors must be licensed. A buyer should obtain an inspection before signing a written offer. If that is not possible, a buyer may include an inspection clause in the offer when negotiating for a home, giving the buyer an opportunity to back out of the contract if the inspection discloses serious problems. An inspection clause can also specify that the seller must fix certain problems or make monetary concessions for any problems before the buyer will purchase the property. A real estate attorney at Law Offices of Linares Associates PLLC understands the interaction between the inspection and the purchase agreement, and can assist the home buyer in negotiating appropriate terms regarding the inspection.
Speak to a Real Estate Lawyer
A wise buyer realizes that an extensive home inspection is a necessity, not a luxury, and that the cost of the inspection is money well spent. Inspections are designed to disclose defects that could materially affect the property’s safety, livability or resale value. Contact an experienced real estate attorney at Law Offices of Linares Associates PLLC, to guide you through the inspection process and assist you in interpreting the inspection results and its implications.
What to Expect at Closing
A closing, or settlement, is the meeting during which ownership of the property is officially transferred from the seller to the buyer. The buyer and the seller, their attorneys, both real estate sales professionals, a representative of the lender and the closing agent typically attend the closing. The closing involves settling any open issues, balancing and verifying an often-complex closing statement and signing all documents necessary to complete the transaction. An attorney with experience in closing real estate transactions from Law Offices of Linares Associates PLLC, will advise you at closing to ensure that your rights are protected.
Closing costs are one of the least-understood aspects of the home purchase procedure. Although a good closer will take time to walk a buyer through the numbers, an experienced attorney from Law Offices of Linares Associates PLLC will provide additional insight and verify that the costs are being appropriately allocated between the buyer and the seller. Closing costs vary somewhat by community, but they generally are between two and five percent of the home’s purchase price and include:
- Attorneys fees
- Escrow fees
- Property taxes to cover the period to the closing date
- Interest from the closing date to one month before the first monthly payment
- Loan origination fees
- Recording fees
- Survey fees
- Mortgage insurance, if applicable
- Title insurance, both for the buyer and the lender
- Loan discount points
- The first escrow payment for future real estate taxes and insurance
- Homeowner’s insurance policy payment or receipt
- Appraisal fees
- Pest or other specific inspection fees
- Document preparation fees
What Happens at Closing?
At closing, the buyer typically presents his or her paid homeowner’s insurance policy or a binder and receipt showing a paid premium. The closing agent will then list the amounts the buyer owes the seller and the amounts the seller owes the buyer. The seller will provide any items the contract requires him or her to provide. Once the parties have verified that the numbers are correct, the parties sign the closing statement, the buyer signs the mortgage note and the mortgage, and the seller gives the buyer title to the property in the form of a signed deed. The buyer often pays the lender’s agent all closing costs, and the closer provides the buyer with a settlement statement listing all the monetary items. Immediately after closing, the closing agent should record the deed and mortgage.
Documents the Buyer Receives
The buyer typically receives:
- Settlement statement, itemizing the services provided and the fees charged
- Truth-in-lending statement
- Mortgage note
- Mortgage or deed of trust
- Sales contract
- Any required affidavits, if any
- Copy of the deed
- Keys to the home
Speak to a Real Estate Lawyer
A closing can move very quickly, with both parties discussing and sometimes disagreeing about the numbers, all of which ultimately represent your hard-earned money. An attorney who is knowledgeable in real estate law from Law Offices of Linares Associates PLLC, can help you protect your rights.