“Do Hereby Warrant and Covenant…”
Contracts: The Toughest Part of Real Estate
Buyer’s agreements, seller’s agreements, exclusive listing agent, full disclosure, first second deed of trust, title search, and title insurance: The terms probably look familiar if you ever have bought or sold a home, but can you define them? Do you know what to do with them once you define them? Would you know a good one from a bad one from a fake one from something that looked like one but wasn’t really one at all?
Especially since the housing bubble burst, foreclosures went into high gear, and only the very well qualified buyer could secure a mortgage, everything about sale and purchase of real estate has grown considerably more delicate and complicated. And veteran home buyers readily will testify, the whole process seemed pretty mysterious even when it allegedly was easy. Of course, you trust your realtor, and of course, you have a healthy skepticism about your mortgage broker—do these assets look “toxic” to you?
Now, more than ever, even with the very best realtor in the world, you should secure an attorney’s advice and assistance as you seal the deal on purchase of a new home.
In the current market, title searches have become more important than ever, because “bank owned” properties may have liens against them not only for uncollected debts but also for unpaid taxes and other assessments. Until those liens are cleared, you cannot claim “clear” title to the property; and you certainly do not want to assume the previous owner’s debts. Title search protects you against weird blindsides, too: the previous owner’s ex-wife may still own half the interest in the house and you will have issues to resolve with her. You need an attorney.
In the current market, the fine print in the mortgage documents matters more than ever. Although we would wish to believe the sub-prime slimy creatures have gone back under their rocks, wishing and knowing remain worlds apart. And not every one can read and make sense of all that fine print. Not everybody can explain what reverts to who upon the first party’s default. You need an attorney.
Although the “new,” tougher market probably protects you against all kinds of fraud and malfeasance, you not only should but really must spend some time with an attorney, going over and making certain you understand every single provision of every document before you sign it. The time and money you invest in expert legal counsel may save your entire investment in your new home.
