The Lawyer's Role In Home Purchases
The Lawyer's Role

John and Betty have reached retirement age and no longer want the responsibility of being homeowners. They want to sell the house they have owned for 30 years, but they are not sure what steps they need to take.

Mark and Lanita want to get out of their cramped apartment and have a nice backyard for little Mark to play in. They think they have enough for a down payment, but they're not sure of how to go about buying a home.

Although we tend to think of the bottom line first--how much we'll pay or receive--there are many decisions in home purchases besides price. Is a real estate broker necessary for either party? What is covered by a sales contract? What documents are needed to transfer ownership to the buyer? What is "good title" and will the seller be able to deliver it? When does the seller have to move out? 

At each step of the process, your lawyer can help assure your peace of mind -- and probably save you money too.

Should You Use a Broker?

The first decision most sellers make is whether to hire a real estate broker.  Experienced, reputable brokers can offer advice on a reasonable sales price and offer marketing assistance. They can also have your property included in listing services shared by other brokers.

You'll be asked to sign a contract (called a listing agreement) to be represented by a broker. As always with contracts, it's a good idea to have your lawyer advise you before you sign. The broker's fee may be negotiable, as well as the length of listing agreement. Other points on which you might not want to accept the terms in the broker's preprinted agreement are whether the broker is entitled to a commission if the seller finds the buyer, when the commission must be paid, how advertising and other costs are to be allocated, and whether the seller may employ more than one real estate broker to assist in the sale.

Buyers usually don't have to pay for an agent to represent them, since buying agents split the fee with the selling agent.  

Owners who are familiar with local real estate values and have some understanding of how to market their home may decide to try and sell it on their own. Even so, they'll may need the services of other professionals, such as an appraiser to set their home's price and their attorney, to advise them throughout the process.

The Contract

Let's say Mark and Lanita decide that they want to make an offer on John and Betty's house. With the help of their attorney or agent, they'll typically make a formal, written offer. Generally, the offer will include the proposed sale price, the date after which the offer is no longer valid, a financing contingency clause (a provision that makes the sale dependent on the buyer obtaining acceptable financing), a list of personal property included in the sale (such as light fixtures, curtains, etc.), the documents required at closing, and when the buyer will take possession of the home.

An offer may contain several other contingency clauses. The buyers may request an inspection contingency to have the home professionally inspected for bugs, compliance with building codes, and safety prior to finalization of the contract. If they had to sell a home before they could buy this one, the offer could include a home sale and closing contingency. This kind of clause would assure that the proceeds from the sale of their present home would be available to pay for the new home.  Finally, if their lawyer has not already reviewed the offer, the offer may contain an attorney-approval rider  allowing their attorney to propose changes to the contract before it is finalized.

Once an offer for the home is received, the seller's attorney should review it to be sure that the terms are acceptable to the seller. If the offer is satisfactory, the seller will accept its terms and it will become the sales contract. The offer is accompanied by earnest money that the seller may claim if the buyers renege after they have signed the contract.

Some states require disclosure of any major defects in the home of which the seller is aware, such as flooding basements or structural flaws. The seller may communicate such information to potential buyers on a standardized form provided by the broker. Even where volunteering information is not required, buyers usually have specific questions regarding the condition of the property. A seller who fails to disclose problems may run the risk of a lawsuit.

Preparing to Close

Often the seller's attorney prepares the documents required by the contract.  These include a deed, bill of sale and a closing statement that details how the proceeds of the sale will be  distributed. Before closing, the seller may order a survey of the property and a letter from the mortgage holder indicating the amount necessary to pay off the seller's loan on the property.

It is typically the seller's responsibility to ask a title insurance company to conduct a search of the public records to assure that the title to the property is "good," not clouded by encumbrances that might affect its sale. The company will look for liens against the property for unpaid debts, taxes and special assessments that might be owed, and easements on the property. The title company will issue a report called a title commitment, which shows any exceptions, such as public or private easements which may affect title by giving utility companies the right to go onto the property to service telephone, gas or electrical lines, as well as right of access by neighbors.

The attorneys for each party will review this title commitment, carefully examining the exceptions raised by the title company.  In Florida, Attorneys often act as the Title Agent and issue the Title Policies.

The Closing

The closing is a time when all the parties meet to complete the transaction. At this time, the buyer will pay the balance of the purchase price. The seller will give the buyer the closing documents specified by the contract. Unpaid taxes will also be settled.

Shortly after the closing the title company or closing attorney, will issue an insurance policy which protects the buyer from losses suffered because of an undiscovered defect in the title, such as liens against the property.


Receiving the proceeds from the sale is exciting, and often enables the seller to purchase another home or make an investment. With proper planning and appropriate legal advice, though, a home sale and purchase should be a painless and, hopefully, a mutually profitable experience.

A home purchase is one of the few truly "Win-Win" situations.  John and Betty came to the closing with keys to a home they wanted to Sell and left with a check representing their proceeds.  Mark and Lanita came to the closing with a check and left with the keys to their new home; oh and a nice backyard for little Mark to play in.

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All Contents Copyright 1999
Douglas L. Hilkert, P.A.
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