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Cheyenne R. Young
What happens after an offer to buy property is accepted?
What can I do to block a holdover home seller situation?
What types of mortgages are available?
What are contingencies?
What are some things a buyer should look out for when dealing with the purchase of a house?
If the inspection is not satisfactory, can the buyer cancel the agreement of sale?
What is involved in recording the title?
What is real property?
What types of laws restrict real property?
What are the risks in owning real property?
What is eminent domain?
What is an easement?
What is an option?
What provisions should be in a commercial real estate contract?
Is there a difference between a residential and a commercial lease?
What are some rights and responsiblities of the landlord and tenant?
How do I evict a tenant?
What happens after an offer to buy property is accepted?
The period between the time you pay your deposit check and the closing date is set is normally 30, 60, or 90 days. Your deposit check will be cashed so be sure you have sufficient funds in your account to cover it. It will be applied to the purchase price if the sale goes through. But if you cancel the deal for a reason not permitted in the contract, the seller may be entitled to keep your deposit.
Prior to closing, terms of the purchase contract are to be arranged. The contract likely includes a financing contingency and inspection contingency, and a provision that the buyer can and will confirm a title to the property free of defects.
The inspection provision allows the buyer to have the property professionally inspected. The financing provision gives the buyer time to secure mortgage approval.
Carefully review or have your attorney review the title report to ensure you have a clear title to the property. An estate planning attorney also can help you determine how best to hold title to the property.
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What can I do to block a holdover home seller situation?
The contract should have provisions for handling closing problems and delays. Many contracts do not cover the issue of short delays. If these delays are not addressed in the contract, the party who is ready, willing and able to close will have to bear any costs resulting from the delay of closing. But if the contract states that "time is of the essence" as to the closing date, then you have the right to sue for failure to close. It is critical that the contract contain a full range of remedies for failure to close including a specified daily charge to be paid by the seller for failure to close or vacate the property by the closing date.
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What types of mortgages are available?
There are many popular financing options for property purchases. Typical mortgages types are:
(1) Conventional: With a conventional mortgage, the bank or other lender obtains a lien or defeasible legal title to the property in return for the payment of the amount of money lent.
(2) FHA mortgage: An FHA mortgage is a conventional mortgage which is insured in whole or in part by the Federal Housing Authority.
(3) Purchase money mortgage: A purchase money mortgage is one that is given to secure the loan which is used to buy the property. A first (senior) mortgage on the property has priority over any second or subsequent (junior) mortgages on the property; the senior lender has a more secure interest in the event of a default since the senior obligations are paid first in the event of foreclosure and sale.
(4) Adjustable rate mortgages: An adjustable rate mortgage (often called an "ARM") offers a fixed initial interest rate and a fixed initial monthly payment. After the initial period is over, the rate and term of the mortgage can be modified at predetermined times under the agreement to reflect the current market mortgage rates.
There are other mortgage options, such as balloon mortgages, shared-equity mortgages, biweekly mortgages, reverse mortgages, and buy downs.
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What are contingencies?
Contingencies are escape hatches in a real estate contract. They let you walk away from the deal without penalty if certain conditions are not met. You might, for example, sign a contract to buy a property but make your obligation to close contingent on:
(1) Your being able to get a mortgage loan of at least 75% of the purchase price.
(2) Your having a contractor inspect the condition of the building and your being satisfied with the contractor’s report.
(3) Your determination that the building can be renovated to your satisfaction.
(4) Your being satisfied with a report you will order concerning environmental hazards.
A qualified real estate attorney can help you put appropriate contingencies in your contract.
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What are some things a buyer should look out for when dealing with the purchase of a house?
The buyer should consider:
(1) Exactly what property is included in the sale. Lighting fixtures, drapes or blinds, refrigerators, stoves, washing machines and dryers are often problem areas.
(2) The quality of the neighborhood.
(3) Whether any nearby development plans will affect the property.
(4) The inspection report.
(5) The amount of real estate taxes.
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If the inspection is not satisfactory, can the buyer cancel the agreement of sale?
Among the many contingency clauses a contract should include is an inspection contingency clause that permits the buyer to opt out of the deal.
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What is involved in recording the title?
When you purchase real property, you will receive the deed that transfers ownership or title of the property to you. The deed gives you formal title in exchange usually for a specified amount of money. The conveyance of real property is not complete until the deed is delivered to you or your authorized agent.
When you get the deed, you should file it with the recorder in the county where the property is located. This gives the public notice that you own the property.
Recording also tracks the chain of title. Anyone who wants to know who owns a piece of real property can check the records of the county recorder for the county where the property is located. Before you purchase real property, you can follow the chain of sales and transfers of the property - from the original grant of the land all the way to the current owner. When title insurance is purchased, the title insurer checks the change of title to determine whether any defects occurred in prior conveyances and transfers - defects may then be pointed out and excluded from coverage. It is critical to ensure that each time the property was transferred, the previous purchasers obtained clear title.
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What is real property?
Land and objects permanently attached to it are considered real property. Permanent attachments also are known as improvements, including homes, garages, and other buildings. Gas, oil, minerals and other substances below the land also are considered permanently attached. Non-permanent items such as mobile homes and tool sheds are not considered real property.
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What types of laws restrict real property?
An array of federal, state, county and local laws restricts what you can do with real property that you own. Various governmental agencies are responsible for enforcing these laws. Violation of real property laws can result in fines, penalties, injunctions and even criminal prosecution. Among the most common restrictions are:
(1) zoning – limitations on the use of the property for residential, industrial, agricultural, or commercial purposes and restrictions the types of improvements to the real property.
(2) environmental hazards — restrictions on the types of materials that can be stored on the real property and regulations regarding who is responsible for their removal.
(3) public easement and right of way —these are used to allow access to other property, to provide for roads and sidewalks, and to enable electric/gas/telephone/sewer lines to be installed.
(4) deed restrictions or covenants — these are documented in the public record and limit future uses of a property. Limitations can include the density of a building, dictate the type of structure that can be built or prevent buildings from being used for specific purposes.
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What are the risks in owning real property?
There are many risks inherent in owning real property. Some of the more common include:
(1) liability for violation of zoning ordinances.
(2) liability for environmental hazard clean-up.
(3) liability to others who are injured on the property.
(4) liability to others who are injured by the property (such as an uphill landowner is responsible when his land slides onto a downhill landowner's property).
(5) liability to third parties pursuant to contract (such as responsibility to make mortgage payments to the lender).
(6) liability to a purchaser when the property is sold (and there is a problem in transferring title, interest or possession).
(7) If you fail to maintain your property or knowingly create a condition on your property that causes injury to someone's property or person without taking steps to eliminate the hazard or provide a proper warning; you could be determined to be negligent and thus responsible for the harms and injuries that result of your negligence. To reduce your exposure to risk from owning real property, you have an affirmative obligation to maintain your property so as not to cause harm or injury to others.
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What is eminent domain?
Federal state and local governments have the right of "eminent domain,” which means they can condemn and force the sale of private property for public purposes. When private property is taken by the government, the owner is entitled to just compensation for the property.
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What is an easement?
An easement allows another person the right to use your land for a specific purpose. The most usual easements are those granted to public utility or telephone companies to run lines on or under your private property and to neighboring houses to use a common driveway to give access to their home.
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What is an option?
It is a right a seller grants a buyer to buy real estate within a certain period of time. If someone is interested in buying an office building but wants more time before committing to the purchase, the prospective buyer could offer to pay the owner an option fee to reserve the property. In return, the owner might be willing to grant you the right to buy the building within a certain period at a specified price. The owner would not be able to sell to anyone else in meantime.
You could agree that all or part of the option fee would apply toward the purchase if you decided to actually purchase the property. If you did not exercise your option, you would forfeit your option fee.
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What provisions should be in a commercial real estate contract?
Since every real estate deal is different, you will need to get advice from lawyer on how best to protect your interests. Your contract likely should address the following:
(1) An exact description of the property you are buying, including the land surrounding the building.
(2) The purchase price and whether it is all due at closing or in installments.
(3) A list of any equipment or personal property that is included in your purchase.
(4) Any contingencies that must be met before you are obligated to complete the purchase, for example, you can make the deal contingent on your ability to get a mortgage loan.
(5) How property taxes and utility bill will be pro-rated (allocated) between you and the seller.
(6) The type of title evidence or title insurance the seller must provide.
(7) The date for closing and delivery of possession.
(8) What legal recourse a party has if the other party defaults.
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Is there a difference between a residential and a commercial lease?
When a person leases rental property from a landlord for use as a residence, the arrangement is called a residential lease. When a business leases rental property, the arrangement is called a commercial lease.
While there are many similarities between residential and commercial leases, state and local law often regulates the relationship between a tenant and a landlord under a residential lease. These laws are designed to provide basic requirements for the condition of rental property, and to protect tenants from unscrupulous landlords. Since commercial leases are viewed as being contracts between knowledgeable business people, less governmental protection is needed.
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What are some rights and responsiblities of the landlord and tenant?
Tenants have a responsibility to:
Pay the rent on time.
Keep the apartment and the surrounding area clean and in good condition.
Keep noise to a level that will not disturb you neighbors.
Notify landlord immediately of major damage and repair any that is attributable to the tenant
Give the landlord permission to enter the apartment at reasonable times and with advance notice to inspect it or to make any necessary repairs.
Give landlord advance notice when moving out.
Be sure that the apartment is in the same condition as when the tenant moved in and return the key to the landlord promptly.
Landlords are obligated to provide:
A clean apartment when the tenant moves in.
Clean hallways, stairs, yards, entryways and other common areas.
Well-lit hallways and entryways.
Properly working plumbing and heating.
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How do I evict a tenant?
Eviction can be based on non-payment of rent, lease expiration or nuisance. To ensure your rights as a property owner are protected, you should contact a qualified attorney before initiating eviction.
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