Buying or selling a home is the most significant financial transaction most people will undertake in their lifetime. Hundreds of thousands of dollars are exchanged for a property. This property—the centerpiece of the transaction—and the legal documents surrounding it must be thoroughly understood by both the buyer and the seller.

The legal documents agreed upon are binding contracts, meaning these documents can be used in court if one or both parties develop disputes after the home sale.

In this article, we will explore the reasons why it is necessary to have an attorney during the process of buying or selling a home. In essence, both buyers and sellers should know the following: an attorney is there to protect both parties. Some factors to consider are:

• Local attorneys know local laws.
• Property damage during closing.
• Attorneys will ensure protections in the contract.

Local Real Estate Code

Does the property comply with the code? Cities and municipalities often have their own rules and regulations about what is allowed on a property. Additionally, homeowners’ associations have detailed regulations. It’s critical to understand these laws, rules, and regulations!

Imagine this: All homes in a neighborhood must have light brown roofs; however, the property being sold has a dark brown roof. Coincidentally, a few weeks after moving in, the new owners receive a notice that they must change the roof color. That means, essentially, the new owner must replace it!

A new roof is not cheap. In fact, it often costs thousands of dollars. That’s not something a new homeowner wants to purchase right after spending a fortune on the property! This raises the question: Who is responsible for replacing the roof? Technically, the current owner is responsible for the home; however, the previous owner violated the regulation by installing a roof of the wrong color. But the previous owner may not even have known about the regulation. This is where an attorney comes in.

Situations like this happen more often than you might think. The answer to liability must be found in the contract. This is a great example of why home buyers and sellers need an attorney. Stipulations will be included in the contract for situations like this. An attorney knows exactly what terms to include in contracts. After all, these are the ones that will be used to protect both the buyer and the seller in case of litigation by either party.

Property Damage and Liability

With the previous example, we saw how violating local regulations can harm the buyer, the seller, or both. In this section, we will examine the possibility of property damage during the closing process.

Congratulations! The buyer and seller have agreed to transfer the property. The property has already been inspected and looks great. Negotiations have been agreed upon and are being finalized. There’s just one problem: one of the rooms caught fire and caused minor damage. Who is responsible?

According to HG.org:

The buyer can halt the sale and suspend the process in many circumstances, but they must conduct a final inspection to ensure no additional damage has occurred. During this stage of negotiation, they may contact the seller to repair or replace certain items that were damaged after the initial evaluation but before the closing of the sale. However, if the property is damaged before closing and the buyer is unaware, the situation can become complicated.

The last sentence is what you should focus on. It benefits neither the buyer nor the seller to encounter complicated situations. A third party, an attorney, is the best option when things don’t go as planned; however, these types of situations are best resolved if an attorney was consulted about the contract before it was signed and before any damage occurred.

Additional Contractual Considerations

Is the seller the actual owner of the property? A title search must be conducted to confirm that the seller is the true owner of the home. A real estate attorney will verify this for both parties.

Most property buyers and sellers are laypeople in real estate law; therefore, they are unaware of what risks to avoid with the content of a contract. Let’s take financing issues as an example.

There are times when everything seems to be going smoothly; however, a problem can arise at the worst moment. A buyer may sign a purchase agreement without having their mortgage approved. However, a good attorney would recommend that the buyer obtain approval before signing the contract. Suppose the house costs $400,000.

The buyer in this example might think they qualify for the loan. After all, they might have a good job and a strong credit history. Plus, a coworker with a similar salary might have bought a house for $500,000. What the buyer doesn’t know is that their coworker’s spouse also works, which allowed them to qualify for the $500,000 mortgage. Their spouse currently doesn’t work, and the buyer’s household income doesn’t qualify them for the mortgage.

What happens next? They already signed the paperwork to buy the property and even put down a deposit. They thought everything would be fine. Is the buyer obligated to purchase the home? If not, can they recover their deposit?

The seller can always demand full payment or, at the very least, keep the deposit. They may also choose to walk away and return the deposit. If the seller demands full payment or refuses to return the deposit, it’s time for the buyer to hire an attorney.

There wouldn’t be as much controversy if the buyer and seller had consulted an attorney before signing the contract. The attorney would have included stipulations covering aspects like the mortgage contingency clause.

Final Thoughts

Hiring a real estate attorney costs money; however, the benefits of having one far outweigh the cost.

Attorneys ensure the protection of both parties (buyer and seller) in the contract they enter. Therefore, hiring an attorney should be considered an investment, not an expense.