The following is a list of common problems that can easily be prevented when buying or selling real estate.
a. It is extremely important to keep the originals and backup any and all correspondence or documents that are generated during the course of any real estate deal. These can be worth their weight in gold in the event of any subsequent legal actions. The person that is most prepared for a legal contest and has the backup documentation will usually prevail. In legal proceedings there is a rule that the originals must be produced in court hearings, but there is a widely recognized exception when the originals are not available. If you cannot find your originals, then the next best thing is an electronic copy which can be printed out and used in place of the original.
San Francisco Bankruptcy Lawyer, Chapter 7 Bankruptcy, Chicago Bankruptcy Lawyer,
b. It is very important to contact a lawyer early on for guidance. Often this preventive maintenance will pay off in spades and only cost a fraction of what it could cost you if you avoid this step.
c. Don't use generic forms purchased at an office supply company unless they are tailored to suit your needs. Generic forms are usually produced as templates for wide use across the country. However, all states have their own laws, which are often changed without notice. Generic forms need to be tuned up to be useful in specific jurisdictions and updated by someone in the know. If you like to tinker with legal documents you should at least have a lawyer review your handiwork. Often clients look for legal advice only after the damage has been done. In those cases it winds up costing dearly to undue what could have been prevented in a few minutes of good proofreading.
d. Some forms are geared for buyer protection and some are geared for seller protection. Generic forms are usually preferential to either the buyer or the seller and are rarely dead center. If you are going to use the dreaded generic form, make sure you use the one that suits your purpose.
e. When purchasing real property make sure you have a way out if things don't go as planned. When you make an offer to purchase real property you should have an attorney or an experienced real estate agent to guide you. Often these experienced professionals will make sure that if your financing falls through, if you lose your job, or if the property does not pass muster, you will be able to cancel "for any reason" within a certain period known as a "feasibility" or "inspection" period. Make sure you have a sufficient feasibility period to do your due diligence. Many buyers have lost their earnest money because they were told they could cancel the contract if they could not obtain financing, and later found out that this contingency was nowhere to be found in the written papers.
f. Remember that in legal battles what counts is in the written agreements, and not the verbal exchanges. There is an ancient evidentiary rule called the "Parole Evidence Rule" which does not allow a person to vary or amend a complete written agreement by verbal testimony. Many people have found this out the hard way when the judge refused to hear their side of the story at trial. Make sure that the whole agreement is in writing, because most agreements have an "integration clause" which states that this is the entire agreement between the parties and it cannot be altered by any verbal representations.
g. The legal doctrine known as "Merger by Deed" means that verbal representations are merged into the deed upon closing. In other words, the buyer has to do his/her due diligence during the feasibility period and cannot rely on representations of the seller, because those representations do not survive closing unless there is a specific provision in the contract stating that certain representations and warranties survive closing. Of course this does not give sellers the wholesale opportunity to commit fraud, because any false representation that was relied upon and which causes the buyer damages can later be the subject of a fraud lawsuit. Fraud is committed when false representations are knowingly made and the buyer relies reasonably on those representations and is damaged thereby. Fraud damages are generally "trebled" or three times actual damages, so it behooves any seller not to make any false representations to a prospective buyer.
h. It is often to your advantage to pick the title company where closing will occur. Title companies will generally hold the earnest money pending closing and if a title company does a lot of business with one party or the other it may be more likely to favor that party in the event there is a dispute over the earnest money. Often title company employees become witnesses for one party or the other in court proceedings, so it is important to have some rapport. Also, many purchase agreements provide that a title company should pay the earnest money to the seller if the buyer defaults in any material terms. Many buyers are not even aware that they may be in default when they find out the seller has already been paid their earnest money as "liquidated damages."
If there is a dispute over the earnest money the disputing parties need to contact the title company as soon as possible and notify them that there is a legal dispute and that the title company should not release the earnest money to either party until a court orders it. If you are a buyer, you never want the seller to hold the earnest money. You should insist that it be held by a neutral third party, such as a title company. This is especially important when buying an unbuilt condominium unit, as you never know if you can trust the developer or if you will have to make a claim for your earnest money in bankruptcy court in the event the project is not successful.
i. Time is of the essence in real estate deals. Almost every purchase agreement will contain the words, "time is of the essence." Often people will need an extension to get their financing or to complete some other obligation that is a condition of closing. If you need an extension it must be in writing and it must be obtained before the deadline runs out, otherwise you are at the mercy of the other party, who may well see this as an opportunity to forfeit your earnest money as "liquidated damages."
j. Avoid arbitration clauses in purchase agreements. Arbitration clauses were ostensibly designed to lessen the time and expense of litigation but they have often been employed in a way that they deny the little guy a right to an impartial judge and can often cause more expense than a normal court action. Many times arbitrators are picked from a list of industry "insiders" who are not subject to being impeached or thrown off the bench for their erroneous decisions. The arbitration rules are vague and not uniformly applied because there is no body of arbitration law as there is in state or federal court. Also, arbitration rulings are private, so they are not subject to the normal scrutiny or the occasional ridicule they deserve when they fall way off the mark. If you do agree to arbitrate any disputes that may arise, you might at least insert a condition that the arbitrator must be a mutually-acceptable, retired judge, because retired judges make the best arbitrators, having had years of experience of applying the law and doing the right thing and being corrected when they don't. If you don't want to arbitrate at all, then just cross this provision out. Many people don't realize that pre-printed forms and agreements are not "holy." In fact, they are far from it. Any clause, including the all-too-frequent "arbitration clause" can be amended, corrected or deleted at will, as they should be.
k. Three-day right to cure. Many times a buyer or seller will unknowingly and innocently default in some provision of the sales agreement. In order to avoid an innocent mistake causing a disaster it is advisable to insert a three-day right to cure any default. This way honest mistakes will not be seen as an opportunity to take legal advantage. Some states provide this right to cure by law, but others do not. You can provide it yourself by inserting it in your purchase agreement.
l. Take time to read all the fine print. Make sure you have not acknowledged receipt of disclosures unless you have actually received them.
The foregoing is not an exhaustive list of preventative measures, (that would take an unlimited amount of space and time to complete), but hopefully it will be a starting point for people that are considering either buying or selling real estate. Many lawyers give free consultations as a public service, so if you can reach one by phone for a short conversation, you can often get some quick direction that will put you on the right track.
Is Bankruptcy Right For You? Talk to Bankruptcy Attorneys Free and Confidential. Licensed bankruptcy attorneys are available. Attorneys will call you to discuss your case for free. Find out if bankruptcy is right for your situation.
Rating of Borders Bankruptcy
Get Online Application at online Bankruptcy Lawyer.
0 comments:
Post a Comment