Radosevich, Mozinski, Cashman & Olson, LLP, Real Estate Law, Probate, Personal Injury Attorney, Family Law, attorneys Manitowoc WI

DO YOU NEED AN ATTORNEY

TO BUY OR SELL A HOME?

Attorney Richard Mozinski

For additional information: link to Radosevich, Mozinski, Cashman & Olson LLP

We've all heard the advertisement: 'Purchasing a home is the largest financial investment you will ever make.' The ad will then promote retaining the services of a certain realtor, appraiser, home inspector, or financial planner. If you are purchasing a home, whether for the first or the tenth time, using these professionals makes good sense. But, what about an attorney's services–are they really necessary?

The typical purchase of a home or other real estate is handled by using a document known as an 'Offer to Purchase'. It is a blank, five-page form with single spaced fine print, requiring completion of both sides. The Wisconsin State Bar periodically updates its pre-printed version of the Offer to Purchase form, incorporating on-going changes in the law and recommended practices. If a realtor is involved in the purchase, the realtor will usually provide this form and complete it with your input and approval.

An Offer to Purchase addresses key terms of the real estate purchase such as price, included or excluded personal property, and deadlines for acceptance and closing. The Offer to Purchase also has a very important section involving contingencies. The analysis and completion of the contingency portion of the Offer to Purchase is where an attorney's services can be of considerable benefit.

Standard contingencies include:

(1) Whether your purchase is subject to sale of an existing home;

(2) What financing contingencies you need;

(3) Whether your obligation to purchase is subject to an appraisal or inspection; and

(4) Whether a survey is required.

Most buyers can successfully analyze the first and second contingencies with the help of a realtor and lender. A realtor will know the likely timing for the sale of a buyer's existing home. The lender will know what financing terms must be included in the Offer to Purchase. One tip, however, is to make certain your buyer's financing contingency requires that your loan approval must be in writing before your obligation to buy is final. If you can't get written financing approval within a certain number of days, the offer should give you, as buyer, the ability to cancel the sale. You cannot allow yourself to be caught in a situation where you are required to buy the home without being able to obtain a reasonable loan.

Contingencies (3) and (4) of the Offer to Purchase can be considerably trickier. Commonly your lender will require you to obtain an appraisal of the property's value as a condition of financing. This sometimes lures buyers into a false sense of security. The buyer might erroneously believe: 'if the appraiser has approved the purchase, then why waste money for a home inspector?.' Sadly, many buyers have learned the hard way that a favorable appraisal does not eliminate the chance of a leaking basement, bad foundation, poor electrical or plumbing, or a questionable roof. Although a good appraiser may notice property conditions that could be a problem, it is not the appraiser's principal task to look for defects. An appraiser determines a home's value. It is the job of a qualified home inspector to look for defects. As an attorney for property buyers, I will always point out the need for a property inspection as a condition of the sale. If the seller is proposing an 'As Is' sale, where the buyer waives any property defects, I will usually insist on it.

The question of whether to require a survey is also important, but sometimes overlooked. A common misconception is that if a home is located on a city lot and has been there for a number of years, a survey isn't necessary. This perception is only partially true.

Most home buyers are protected by a policy of title insurance, commonly required by the lender. Title insurance ensures you are buying real estate free from liens, mortgages, or other problems known as 'encumbrances.' What many buyers fail to realize, however, is that all title insurance policies issued to home buyers have a standard exclusion stating that no coverage is provided for title problems that could have been discovered by an accurate survey. Typical problems that a survey may uncover are boundary encroachments (hedges, trees, garages, fences, or driveways), and easements (utility placements). An attorney representing the buyer of a home, or even more importantly, a lot on which a home will be built, will ask the questions to determine whether a survey is necessary and who pays for it.

What about selling a home - is an attorney really necessary? There is an old saying that the seller 'only needs to worry if the check is good.' The saying is justified, but only to a point. Sellers of older homes need to be concerned about property conditions such as lead paint, asbestos, and other more common property defects. Generally, a buyer can file a lawsuit for up to three years after a sale due to an undisclosed defect. An attorney can advise the seller how to effectively disclose any potential problems, thereby reducing future liability. Proper drafting by an attorney can buy peace of mind, avoiding the risk of future problems with a disgruntled buyer.