Real estate transactions have special rules, regulations, taxes, forms, and procedures that must be followed to properly pass title to property and protect the parties from future liability. Further, most sales of real estate involve financing, which brings additional paperwork and procedures that must be followed to satisfy banking regulations. There is much work and due diligence that goes into each and every real estate transaction. And thus exists many pitfalls, if you do not know what you are doing. Here we list the three most common pitfalls associated with real estate transactions.
- Not a valid contract.
Whether residential or commercial, real estate transactions should be in writing. The writing must be signed by the parties and include all of the essential information. At a minimum, the purchase and sale agreement should contain an adequate legal description, the purchase price, consideration (a deposit), a closing date and the signatures of the buyer and the seller. Other provisions to consider are inspection period, financing contingency, a period for obtaining proper zoning approvals, homeowner association riders, etc. Every purchase/sale is different and, as such, the contract should be sufficiently detailed to reflect the parties agreement and provide all the necessary protections for each side.
- The seller cannot convey clear title or does not have authority to sell the property.
Unfortunately, there are instances when the seller does not possess clear title the a property or has the authority to sell the property and pass title. For example, in the case of a corporate entity, it may be that the individual is not an authorized person to bind the company. Or, if an individual acting for another, there many not be a valid power of attorney in place. Or perhaps the title owner is deceased and the property was not properly probated. There is a plethora of reasons why a seller cannot properly convey title. Regardless of why, buyers must make sure that the seller has clear legal title and that the seller has the proper authority to transfer that title. For this reason, enlisting the help of experienced real estate attorneys will ensure that your purchase is valid and that title is clear.
- The property does not have the proper Land Use and/or Zoning Designation
Although not typically an issue in residential transaction, zoning issues are very common in commercial real estate transactions. When purchasing a property for a commercial use/business, the buyer has to make sure that the property has the proper land use and zoning designations for the commercial use that is planned for the property. For example, you may want to open a medical practice in a commercial area. The underlying land use and or zoning designation may permit commercial uses, but it may not necessarily permit a medical use. Or it may be permitted, but after special approval by the municipality or county which may take months to obtain. Or, you may be required to do a rezoning of the property. In that case, you should consider making the contract contingent on obtaining the required governmental approvals. For all of these reasons, it is not wise to take the seller or broker at their word. An experienced real estate attorney can help you ensure that the property has the proper designations for what you plan on using it for.
Having an experienced real estate attorney by your side, especially one who knows how about zoning and how to resolve most title problems quickly and efficiently, can be the best decision a seller or buyer will make as part of a real estate transaction.
Ser & Associates has the experience you need to enter confidently into any type of real estate transaction. So, if you are in the process of buying or selling a property, contact us today and get the help you need to close the deal.