Buying real estate is a big decision and is typically the largest transaction most buyers and sellers will make. The sale and purchase involves complex areas of law that do not apply anywhere else. You are not usually required to hire an attorney to represent your interests in the transaction; most deals can be closed without one. However, it is a good idea to use the services of a real estate law firm in a property transaction, even though it may increase the cost. Here are just a few of the situations where it is particularly important to seek the services of a real estate law firm.
Short Sale
A short sale is the sale of real estate for less than the amount owed on the mortgage. In other words, the seller comes up “short” on the money to pay off the loan. It is always a good idea for financially distressed homeowners who are considering a short sale to seek the services of a real estate law firm.
Qualifications
Typically, there are four qualifications for short sale: The market value must have dropped, the mortgage must be in or close to default, the vendor must be suffering a financial hardship, and the seller must not have other assets that could be used to pay the full balance of the loan. If the seller has any assets that could be used to pay off the loan in full, the lender may ask the vendor to liquidate them and make a contribution to the payoff. Some states protect vendors against this, and some things are not considered assets. A real estate law firm will fully evaluate the vendor’s situation, determine if the vendor qualifies and give legal advice as to how to best protect any assets the seller may have.
Lender Approval of the Sale
Additionally, it is critical for an attorney to secure the lender’s approval for a short sale and to negotiate the most protection for the vendor. Without the approval of the bank, or without ensuring the vendor is adequately protected from the mortgagee in the future, the bank may be able to obtain a deficiency judgment. If a deficiency judgment is obtained, the bank can still pursue the seller in some ways for the amount the bank was shorted. The bank may be able to garnish the dealer’s wages, or pull money from the vendor’s bank account. Unfortunately, this means that the seller not only loses his property, but also his protection from the bank in the future.
Successions
Often, more than one person has inherited rights to real property. When inherited property is bought or sold, many questions arise. The first question for both sellers and buyers is usually, “Who can sell the property?” Many times, the answer to this question requires a thorough title search. Both parties may have additional questions. What if some heirs don’t want to sell it? Can the property be partitioned and sold? Can the non-compliant heirs be forced to “buy out” the heirs that wish to sell? A real estate law firm can assist any party in ensuring that the transaction has met all legal requirements and that their rights are protected.
Commercial Entities
Sometimes, one or more of the parties to the transaction is a partnership, corporation, limited liability company, or another type of business entity. There are certain formalities and filings that must be completed for any purchase involving an immovable, but there are additional requirements when business entities are involved. Business entities must file specific documents to protect their interests. Additionally, the entity’s charters and by-laws must be adhered to. The attorneys will understand the structures of the various business entities and will be able to protect you and ensure that the charters and by-laws are honored.