Legal issues in purchasing a home |

Legal issues in purchasing a home

Rohn K. Robbins

There are a million things to think about when purchasing a new home. Sadly, retaining competent legal counsel may not be one of them.No doubt you’ve heard it said that, for most of us at least, buying a new home is the single largest investment we’ll ever make. And purchasing a new home is nothing if not a nest of potential legal issues and entanglements.Legal issues pertaining to purchasing a home may touch, among other things, such matters as contract, title, insurance, and financial concerns. In other words, home purchase is the milieu of attorneys and things legal. And in such domain, one is wise to be represented by a legal expert whose office it is to zealously protect your interests.Let’s start at the beginning. As Julie Andrews once said (or, rather sang), a very good place to start. In this setting, the beginning is usually when the potential buyer contacts a real estate agent and asks to look at available homes.Likely most of you know that real estate commissions are, generally, paid by the seller upon sale of the particular home. Usually there is a listing agent who is the person principally responsible for marketing the home. Often, there is a buyer’s agent who represents the purchaser. When a sale is ultimately consummated, the listing agent and the buyer’s agent split the real estate commission. Most commonly, the real estate commission is six percent of the sale price of the home and is divided equally between the listing agent and the buyer’s agent. This is not, however, always the case. Commissions may be higher or lower and the “split” may be other than 50/50. The particular arrangements are arrived at by negotiation and are formalized by contract.More and more frequently, there are neither seller’s agents nor buyer’s agents involved in real estate transactions. Instead, the agents may be termed “transactional,” representing neither one side nor the other but, instead, representing only “the deal.” While not necessarily a bad thing, this arrangement shifts the balance in real estate transactions. Whereas a seller’s agent is bound to represent and jealously guard a seller’s interests, and, as you might expect, a buyer’s agent is bound to do the same as regards the buyer, a transactional agent must remain neutral, representing neither the seller nor the buyer, avowing fealty only to the transaction itself. This, of course, can create both complications and conflicts if and when an impasse arises.Particularly where the deal is represented by transaction brokers, having an attorney on board early in the dealings is essential. Simply, someone familiar with the process must exclusively advocate the buyer’s interests. Where no brokers are involved, the involvement of counsel is equally essential. Who else will draft a binding and legally competent purchase and sale the agreement once the parties come to terms?Legal counsel may be important, too, in “coming to contract,” that is, in negotiating the deal, and in reaching agreement as to key terms even where standard Real Estate Commission approved forms are employed in memorialization of the transaction. Even when employing these standard forms, there is room for amendment, modification and wholesale revision of certain terms, provisions, clauses and for consideration of whatever contingencies may deserve special scrutiny or attention.Once the contract is formed, title review and inspection of the site and all relevant documents is absolutely essential. Often, there are ” bad things” lurking out there that can spell disaster if not discovered before certain black-and-white “cut off” dates which will irretrievably “harden” the deal. And these “bad things” are often traps for the unwary. Often, you have to have dealt with similar problems before to even recognize them for the obstacles they may represent or to fully comprehend their implications.Defects to title, outstanding liens, boundary disputes, squatters, water rights, inclusion or exclusion of certain items of personal property, special levies, impacts, future development plans, homeowner association restrictions, are some of the nearly endless list of matters that can “sour” what might otherwise be a sweetheart of a deal. As always, an once of prevention is better than a pound of cure and to discover these things before you are the proud owner of complications you hadn’t bargained for is the epitome of virtue. Who wouldn’t rather avoid a problem than confront one?Not only may competent legal counsel aid in securing a favorable deal and ferreting out what landmines may skulk in the shadows, but, hopefully, if and when such complications arise, counsel may propose an effective means and method of resolving them. Sometimes, the best advice, however, is to “bail out” of the deal entirely. We all have clients that have thanked us for suggesting a “man the lifeboats” strategy when the deficits outweighed the potential benefits of a particular deal.Lawyers can also help put the financing “piece” together and to see that the transaction proceeds smoothly to closing.In purchasing a new home another axiom applies; “penny wise and pound foolish.” Generally, employing competent legal counsel to assist you in the biggest purchase you’ll ever make is worth its weight in doubloons.Rohn K. Robbins is an attorney licensed before the Bars of Colorado and California who practices in the Vail Valley. He is a member of the Colorado State Bar Association Legal Ethics Committee and is a former adjunct professor of law. Mr. Robbins lectures for Continuing Legal Education for attorneys in the areas of real estate, business law and legal ethics. He may be heard on Wednesday nights at 7:00 p.m. on KZYR radio (97.7 FM) as host of “Community Focus”. Mr. Robbins may be reached at 970/926.4461 or at his e-mail address: robbins@colorado.netVail, Colorado

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