Understanding The Legalities Of The Real Estate Closing Process
Closing a real estate deal is a critical legal process in nearly every system. Property rights are important, and the way people transfer them has major legal implications. Consequently, a lot of people and financial institutions will insist on working with a real estate closing law firm to protect their rights. Before you hire counsel and jump into the process, though, you should understand the legalities.
Zealous Representation for One Party
It may seem tempting to have a real estate closing agent serve both sides to save money. However, if you or the other side has hired a real estate closing firm, that practice can't legally handle work for both of you. The real estate closing law firm must provide zealous representation for only one party.
If you're a buyer and a seller has counsel but you don't, for example, their attorney can't represent your interests. For that reason, you should hire a lawyer to represent your side of the deal.
Outlining the Closing Process in the Contract
The real estate closing agent for each side will draft a contract and hammer out the differences between the two sides' positions. A closing contract usually outlines who pays what and when, if the money will sit in escrow when the seller will turn over keys, and who will hold the title. In other words, it covers the basic process of taking a house from one person's possession and putting it into another's.
You will also want to include the property rights in the title. People do sell properties and retain mineral, gas, and even water rights. Be clear and exhaustive about what the buyer will and won't get for their money.
The seller has a major duty in closing law to disclose all of a property's potential negative issues. Disclosures include problems with the structure, ground, and even the history of the site. An extreme disclosure example is a seller must note if a house was the site of a notorious crime, such as a murder, that might affect the value of the property. A more mundane disclosure would be that a developer built the house on land reclaimed from a garbage dump.
As a matter of prudence, a real estate closing firm will tell a buyer to look into common problems. Lawyers will want to do title searches to ensure there isn't a lien on the house. Similarly, the buyer should have a professional inspect the building. Any concerns should be noted in the contract so both sides are dealing fairly.