Reasons to retain Counsel when dealing with Real Estate Transactions
For many first-time investors, real estate transactions seem exceptionally complex and even overwhelming. The dedication of time, financial obligations, and general sense of uncertainty can make the entire process feel like a difficult undertaking. It is no wonder that buyer’s remorse – when the buyer decides that they are no longer interested in moving forward – is one of the top reasons for real estate sales going bad.
Other reasons why real estate transactions fall through
Whether you are selling or buying a home, the last thing you want is to invest your time only for the deal to fall through. This implies that something has gone wrong on either one or both sides, and the likelihood of completing the deal has dropped to nearly zero. Other reasons why a sale might go bad include:
- Low appraisal – If the property does not appraise at the sale price, both parties should be willing to re-open negotiations.
- Financing problems – If the buyer is not able to finance the purchase, despite their initial claim of ability, the deal will not proceed.
- Home inspection – There are cases of something bad turning up at a property inspection, like radon, mold, or another serious concern, which can threaten the transaction.
- Contingencies – If the transaction is tied to the sale of the buyer’s other property, the process could drag on for longer than expected.
- Verbal agreements that cannot be enforced – If you intend to buy a residential property you have been leasing for some time, talk to your landlord about your intent, and agree on an exclusive option to buy the property by shaking hands, the landlord has the freedom and right to sell to another person.
These are just a few of the many reasons why some real estate transactions are not successful. So, as a buyer or seller, it is best that you prepare yourself for any outcome.
The role of a real estate lawyer in property transactions
The importance of hiring a real estate attorney is perhaps best illustrated in the last reason why property deals fall through. One of the most basic tenets of real estate law demands that a contract involving the purchase of property is only enforceable if it is embodies in one (or more) written documents signed by the entity against whom enforcement is sought. Those writings must indicate all the essential items of the sale or purchase.
If a real estate attorney had been involved, they would have helped the tenant acquire the essential elements required to make the verbal agreement enforceable, such as the purchase price and terms of payment for the property.
You need a deal maker!
A real estate lawyer has the training and business acumen to challenge deals and get you the sale or real property at the most favorable rates. The lawyer is supposed to anticipate the possible pitfalls of a particular deal, advice the client on the merits and downsides of that deal, and find ways to make the deals happen in a manner that benefits the client; but the ultimate purchase or sale decision remains with the client at all times.
When it comes to negotiating real estate transactions and documenting the deals, lawyers become relevant in addressing two major concerns:
- First, that the real property deal agreed to between the entities is properly set forth in the final documents of the transaction
- Second, that the documents of the final deal do not include language that carries unknown risks on the client.
At this point, property buyers and sellers rely on their lawyers to navigate through the negotiations while focusing on the favorable solutions to the numerous issues that are likely to come up. It is the responsibility of the lawyer to provide for specific contingencies when drafting the document as a way to offer proactive counsel. While it is not always possible to evade every single negative outcome, using a real estate attorney in your deal can reduce your risk and protect you against numerous contingencies, including those that you did not anticipate prior to retaining counsel.
The better the clients communicate their goals to a lawyer, the better the documents drafted will reflect their desires. These documents will also be creating the laws that will govern the real estate transaction, except for components prohibited by public policy and the concept of good faith and fair dealings.