The purchase of a home may be the single most important financial transaction of your lifetime. As a result, the importance of protecting such an investment cannot be overstated. From the day you make your decision to buy a home until the time you become the legal owner, there are a number of decisions you must make which have legal consequences. As a result, the proper handling of such a transaction is extremely important. An attorney can advise you of potential legal problems and provide you with suggestions on ways to solve those problems before entering into a legally binding obligation.

Listing Agreement

The general theory of agency in real estate transactions is that a real estate broker with whom property is listed becomes the agent of the seller for the purpose of finding a ready, willing and able buyer. If the listing broker is a member of a multiple listing service, the placing of the property into the service creates a unilateral offer of subagency to all other member brokers and their agents. Thus, all brokers are generally agents of the seller.

Therefore, unless you hire the agent and agree to pay him to represent you, he will be representing the seller. However, the agent must still disclose to you all material facts concerning the property. As a purchaser, you should not tell the agent anything you do not want the seller to know, because it is the agent's duty to disclose to his principal (the seller) all that he knows. 

Contract of Sale

The real estate contract is the written agreement between the seller and purchaser as to the terms and conditions of the sale. The typical contract used in this state is a pre-printed form contract which has been prepared by an attorney. This contract is the single most important document involved in the process of buying a home. Not only does it specifically fix your liability, it dictates the steps to follow, most importantly with regard to financing, items included in the purchase, marketable and insurable title, defaults, adjustments, settlement costs, actual possession, risk of loss, infestation by insects and certain assurances as to plumbing, heating and electrical systems. All of the terms and conditions that are expected of the parties must be included in the contract.

Since you may not be comfortable with all of the terms of the contract or may have   questions concerning the legal interpretation of the provisions of the contract, you should not hesitate to consult with an attorney before signing.

You should always remember that the contract which you sign is a legal instrument enforceable by courts in the event of a breach by either party. You may wish to include additional conditions which must be met before you are obligated to buy; such as, the sale of your own home or approval of the proposed financing from a qualified lender. Once you and the seller have signed the contract, you will probably need to obtain the necessary financing. The real estate agent can be most helpful in assisting you in this area.

Title Examination

One of the primary roles of your attorney is to examine the public land records in the county in which the property lies to determine if the seller's title to the property is clear and marketable. Liens and encumbrances against the property or its present owners are liens to which the property will be subject regardless of who owns it. An examination of the public records by an attorney may reveal any of the following: partial ownership by individuals other than the seller; federal tax liens; judgments against the present or former owners; attachments; pending lawsuits; delinquent property taxes; special liens or assessments; outstanding loans; laborers' or materialmen's liens; options to sell the subject property; or lease agreements. Discovery of any one of the above items would be considered a defect in title which would have to be corrected or cleared of record prior to or at the time of closing. It is imperative that you realize that any such lien on the public records will remain a lien on your property unless it is properly removed.

Title Insurance

Most financial institutions require a title insurance policy insuring them against title defects which may not be apparent from the title examination. A title insurance policy insures the chain of title and "hidden risks" that generally are not discoverable from a review of the public records. Defects of this sort include marital status of the owner incorrectly given, mental in competency, forged deeds, fraud, confusion due to similar names, missing heirs, mistaken legal interpretation and the like. You also have the right to protect your equity with title insurance by purchasing an owner's title insurance policy.

Closing

The final settlement, or closing, is scheduled by your attorney at a time when you, the seller and the real estate agent can come together to execute the financing documents, the deed and settlement statements. At the closing, adjustments will be made to the sale price to apportion and pay-off debts associated with the property and make any other adjustments to the sale price called for in your contract. At the settlement, you should carefully review all of the documents which are presented to you for your signature. Any questions regarding the property should be clarified at this time.

You must bring proof of insurance on the property, for at least the amount of the mortgage, to the closing. You will also need to bring a certified check or bank check from a local bank to the closing to pay for your purchase, including closing costs. These are items which need to be coordinated with the closing attorney.

After the closing, the attorney is responsible for recording the warranty deed and any loan documents in the Office of the Chancery Clerk of the county in which the real estate lies and for taking the necessary steps to clear any title matters previously discovered, such as recording cancellations of existing mortgages or tendering payment to the appropriate tax collector.

Your Attorney's Role and Fee

The attorney's role is to advise and render legal opinions at all steps in the purchasing of a home. He works in cooperation with the agent and lender to effect a smooth transaction. Attorney's fees are dependent upon the role of the attorney in the particular real estate transaction. Generally the parties agree on a fixed fee or base the fee on the amount of attorney time  required or the size of the transaction. You and your attorney should discuss this at your first meeting.