In this real estate market, it may be tempting to save all the costs possible, but buyers, sellers, lessors, or renters should ask “How early should I involve an attorney in my real estate transaction?” before signing on the dotted line. Whether buying or renting a residential home, investing in property for rental income, or leasing a commercial property for a business, having an attorney who knows the party’s goals can be imperative in making the transaction successful.
WHEN SHOULD I CONTACT AN ATTORNEY?
The easiest answer to the question of how early to involve an attorney in a real estate transaction is, as soon as possible. There may be a gap between when a party decides to purchase, sell or lease a property and the actual transaction, when the attorney is not needed, but having an attorney prepared with the party’s goals in mind means that when a contract is presented to the attorney to review, they have been a part of the transaction since the beginning and can act in a timely manner. The latest time to contact an attorney is when the parties begin to negotiate the sale or lease. Anytime after negotiations begin, the party without an attorney is at a disadvantage.
WHY DO I NEED AN ATTORNEY FOR A REAL ESTATE TRANSACTION?
- First, an attorney can make sure a buyer or lessor is not becoming involved in a property with legal issues pending. If there is litigation involving a property, the plaintiff must file a lis pendens with the county, which is a declaration that the property is involved in litigation. Knowing whether there is an issue with a property prior to becoming involved can prevent headaches in the future.
- Second, if purchasing a property, an attorney can make sure there are no Liens, Judgments, or Title Defects. A previous seller may have sold the property in question subject to a lien. Examples of types of liens can be a judgment lien from a court or a mechanic’s lien from a contractor. The property may be sold with one of these liens without proper notice to the buyer. There can also be issues with the chain of title, or the chain of ownership of the property. For example, a deed may not be properly filed naming the correct owner of the property or a trust may own the property, but the trustee may not have filed a property update to the deed indicating the death of a previous trustee authorizing the new trustee to manage the property. These are key issues that needs to be looked into by an attorney, or at the very least the realtor providing the property report.
- Third, significant structural problems with real estate must be disclosed to a buyer by the seller under California law. Buyers should use a qualified home inspector and make sure that all mandatory California real estate disclosures are correctly completed. This can be as important as a crack in the foundation to an added room without a proper permit. If the transaction was completed without licensed real estate professionals and problems arise, an attorney will be needed to negotiate between the parties to find a way to settle the issues if the parties still wish to go through with the sale.
- Fourth, a seller or buyer may refuse to go through with the sale at the last minute. The other party may then be left with no property to move into after selling their previous property or terminating a lease or may not have the payment for their new location after planning for the subject property to be sold. In such cases, the buyer or seller may be able to force the other party to complete the transaction once an offer has been accepted.
- Lastly, attorneys are key in reviewing all contracts for terms that the buyer or seller wants or which have been including by the opposing party that may be the other’s detriment. For example, in a lease, the lessor should have to give at least 24 hours’ notice before entering the property unless there is an emergency. However, the lease may grant the lessor the ability to enter the premises at any time for any reason the lessor believes is appropriate, at their discretion. Or, the property being purchased may have a large dead tree that will cost thousands of dollars to remove. The attorney can make sure that language is included in the agreement that the seller must remove the tree or pay a portion of the costs to remove the tree prior to the sale.
ATTORNEYS ARE PART OF YOUR TEAM:
In conclusion, the sooner parties involve an attorney in their real estate transaction team, the earlier they are aware of potential issues and can help make the transaction a smooth process. Parties can avoid hazards and make sure they achieve the goals they want to meet with an attorney on the team from the beginning. Calling an attorney two days before closing of a sale or the start date of a lease to make sure there is nothing concerning may just cause issues because by then the deal is made and trying to change the terms of the deal may not be acceptable to the other parties. It may be too late to make material changes or learn of issues that could affect whether the deal should go through.
To get assistance with your real estate transaction, please contact our offices.