Reprinted by permission of the Lower Bucks Chamber of Commerce, Outlook Magazine, January 2017.
Lawyers are expensive. Most bill for their services by the hour, and there is no question, that can really add up. It is understandable to wonder if it is really worth spending money on legal representation on the purchase or sale of your home? Unfortunately, the answer sometimes comes at the end of the transaction, when it’s too late, the damage is done, and your options are limited.
The purchase of a home is usually the most expensive transaction one makes in a lifetime. It has also become much more complicated with mortgage financing, title issues, homeowners’ associations, etc. Often, the buyer or seller assumes that the form contract is standard and has protections “built in.” They may also rely solely on the real estate agent and title agent to look out for their best interest.
A lawyer who is well versed in real estate and contract law is the best equipped to focus entirely on protecting your interests. A lawyer does not have the pressure to make sure the deal closes; is independent from the pressure of sales and commissions; is able to read the Agreement of Sale, listing agreement, mortgage commitment, title searches and commitment and other related documents with an understanding of your interest and goals.
Unlike other states, including New Jersey, real estate contracts and closings in Pennsylvania are primarily done without the assistance of a lawyer. The real estate agent locates the perfect home, and buyer signs the contract, which is typically pre-printed As a seller, you finally decide to sell your house and you’ve selected the most successful agent in your area. You sign the pre-printed listing agreement. Usually, there is little time to read any of these documents in advance and, in my experience; they are seldom read unless a problem develops post-closing. Over the years, I have seen a number of these issues come back to haunt parties to these transactions, when it is too late to do anything to resolve them.
Some of the potential pitfalls are:
• Buyer may discover that a release is included in the Agreement of Sale which bars pursuit of claims that may develop later or limits remedies.
• Buyer did not realize this limiting language was included in the signed document
• Seller failed to realize that, per the listing agreement, the agent’s right to a commission may extend longer than seller intended or understood.
• Seller may not be able to timely change agents if seller thinks the home is not getting the attention it requires.
• Seller may not realize that a commission is due if the home is condemned and seller receives compensation.
• Seller may not realize that the Seller’s Disclosure Statement, as signed one night at the kitchen table, was not detailed enough and is being used against seller years later in litigation with the buyer that “loved” their home.
Unlike some states, there is no an attorney review clause in the standard Pennsylvania Agreement of Sale. Once you have signed it, it is binding and enforceable against you.
Unlike most commercial real estate purchases, there is no broad due diligence period in a residential real estate purchase. There are provisions for inspections and some contingencies, but they are time limited and tightly worded. Unlike a commercial transaction, you can’t terminate a residential real estate contract because you aren’t comfortable with an easement or local zoning restriction.
There are ways for parties to a residential real estate sale to use the services of an experienced real estate attorney efficiently in such a manner as to minimize legal fees, while protecting themselves from potentially costly problems down the road . It is not necessary to hire a lawyer “soup to nuts”, instead, it is wise to narrow the services to those most critical to protecting your interests, such as:
• You should have a lawyer review all documents before you sign them. Important changes are usually allowed and you will know beforehand what you are signing.
• Your disclosure statement will be accurate and will not be used against you.
• Your title searches will be reviewed by someone who understands them and will point out a title defect or use restriction that may require that you walk away from the deal.
• At closing, your lawyer can be on call to handle any issues that develop at the closing table.
When you consider what is at stake, and the potential pitfalls associated with the purchase or sale of a home, there is no reason to take the chance that everything will work out and go smoothly, when you can retain a lawyer to be available when needed and as needed without incurring substantial fees.
