Buying a new home or selling your old one can be something to look forward to. But there is a practical, hectic and often stressful side of the experience. Closing on a home is a process, filled with, lawyers, banks, and paper, lots and lots of paper. Allow me to take you on a short tour of the home closing journey.
The first step in the home buying/selling journey is the retention of an attorney familiar with the process of purchasing a home in your particular locale. In my opinion, the best way to find a reliable attorney is to speak to people you know, friends, family, and co-workers, who have gone through the home buying/selling experience. Your real estate broker will also know attorneys they have dealt with in the past and can refer you to. Find an attorney who shows you they understand that they work for you and not vice versa.
The attorney representing the seller prepares the contract, he sends it to the buyer’s attorney who will review it and request changes based on his conversations with the buyer. Therefore, at the outset both attorneys need to know the expectations of their respective clients regarding the terms to be contained in the contract. This requires communication and a level of comfort with one another. My advice is, don’t be afraid to ask questions of your attorney about the contract. Whether you are the seller, or the buyer, odds are you have never read a real estate contract and if you have, unless you are a lawyer, you have no idea what it really all means. About a month ago, I represented a client selling the family home. She asked to see the contract I had prepared before I sent it to the buyer’s attorney. After sending it to her we had a three hour conversation about what the contract terms meant. It’s rare that a client actually wants such a detailed explanation, and most times it’s not necessary, but don’t be too shy to ask what the contract says, know your rights and obligations. Feel free to ask your lawyer to explain the most important parts of it, make sure any concerns you have about the transaction itself and the process are answered. Remember, the attorney you choose works for you; allow him/her to earn the fee.
Another important character in this home sale drama is the title company. The title company’s job is pretty simple, to ensure that the individual(s) selling the property actually is able to sell it to the buyer free of restrictions which might be adverse to the buyer. The title company generates a title report that the attorneys will review. The seller’s attorney has the task of clearing anything that might create a problem for the buyer (liens, mortgages etc.). While the seller’s attorney does this, the buyer is in the agonizing process of securing a mortgage loan. That’s a story in and of itself for another time. Once the buyer has secured a mortgage commitment (letter from his/her bank saying “you’re approved”) then the attorneys will, with the cooperation of the bank’s attorney, schedule a date for closing. As a buyer, please know that everything your mortgage bank does from the processing of your application to closing is paid for from your mortgage loan. For example, you may be borrowing $300,000 from your bank, but at the closing you will have less than that available for use toward the purchase price. Again, this is something to discuss with your attorney at your initial meeting with him or her.
On the day of closing, all parties, buyer, seller, bank attorney, and title company representative will be present, often at the Sellers attorney’s office. The buyer will have many documents to sign for his mortgage bank. Most closings last between two – four hours depending on the nature of the transaction. If all goes well, the seller hands the keys to the buyer, he receives bank or attorney Interest on Lawyer Account (IOLA) checks for the purchase price, the parties shake hands and are done.
In short, the process of selling or buying a home can be complicated. Having a reliable attorney to guide you through the process is a must.
TARIK DAVIS,
Tarik Davis, is a partner with the Law firm of
Davis Ndanusa Ikhlas & Saleem, LLP a multipurpose firm located in Brooklyn, NY