As home values continue to rise in this sellers’ market, it’s no secret that buyers need to act quickly if they want a chance to purchase their desired home. If you’re considering purchasing a home now or sometime in the future, it’s important to remember to play it smart. It’s easy to get hung up on the perfect neighborhood, the updated kitchen, or the large backyard, but listen to input from the professionals around you. These experts include your agent and your financial advisor or accountant, but should you consider consulting an attorney as well?
Attorney roles and duties in real estate transactions may include:
- Draft or review contracts
- Negotiate terms
- Check legal descriptions
- Review land surveys
- Work with the title company on the title history associated with the property
- Review final amounts to close
Not every state uses attorneys in real estate closings, but it’s customary in the State of Illinois for both buyers and sellers to have an attorney represent them in this important transaction.
You’ve found your dream home. Your offer has been accepted, and the contract is signed. It feels like party time! Unfortunately, that contract is not set in stone yet. There is a period of time called the “attorney review period” where the attorneys will continue to negotiate the contract terms on which the agreement is based. Sometimes the modifications to the contract are minor, yet other times, they are quite extensive. Both attorneys try to get the most and protect their respective party’s interests.
There are many issues the buyers’ and seller’s attorneys will discuss. The perfect example of one is repair issues that come up during the professional inspection. The buyers’ attorney will negotiate with the sellers’ attorney to make certain repairs or provide a repair credit.
The attorneys will also work with the title company. The title company’s role is to review the chain of title on the property. The attorneys will review the title with the title company to ensure that the person or people you believe you are purchasing the land from are the people who actually own the property. They also make sure no one else has a claim on the property. Essentially, they verify that the sellers have the right to sell the property to the buyers.
Once all material is collected to get the buyer’s loan approved, the attorneys can schedule the closing. (Note: do not be alarmed if your closing date gets pushed back a day or two. This is common when dealing with so many variables that must be completed before scheduling the official closing date).
Within a day or so of the scheduled closing, the title company will prepare a closing statement. This will show a list of all of the fees and expenses on both the sellers’ and buyers’ sides. Don’t be surprised if this is a higher number than you anticipated! There are always going to be extra closing fees you did not consider. The general rule of thumb is that the sellers will pay about 10 percent of the sale price in closing costs. In Illinois, that includes factoring in the taxes from the year before. The buyers, on average, pay about 3 percent of the sale price in closing fees.
At the closing, be prepared to sign many, many documents. It can be overwhelming, but that house doesn’t become yours until they’re complete. The buyers must attend the closing with their attorney if they are financing the purchase. If the buyers are paying cash, then they can sign a Durable Power of Attorney and have their attorney sign for them. It is common for the sellers’ attorney to have met with the sellers before the closing and had them sign most of the documents already. Then, the seller’s attorney brings the signed documents to the closing.
Once both parties sign all the documents, the title company will submit the documents to the bank. The bank funds the loan, and the transaction is complete. Now the sellers will give the buyers the keys and the garage door openers, and the buyers are free to move into their new house!
If you’d like a more detailed description of this process, check out Cindy Campbell’s new book, “Legal Things Parents Should Know”. If you’re thinking about purchasing or selling your first (or second or third) home and have legal questions, do not hesitate to reach out. Please call or email us at 866-566-9494 or Assistant@jlonglaw.com.