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Real Estate Transactions
Most residential real estate transactions begin when someone interested in selling their home signs a Listing Agreement with a local Real Estate Company. The Listing Agreement will obligate the Company to market the home for sale, will establish the commission that is to be paid when the home sells, and will provide that the Company is the exclusive agent for a stated period of time. Before presenting the Seller with a Listing Agreement, the real estate agent from the Company will have examined the home, checked on recent sales prices for comparable homes in the area, asked some questions about the “history” of the home, and offered an opinion about the likely range of sales prices.
At about the same time the Listing Agreement is signed, the Seller also will sign a Residential Disclosure Report. This report asks a number of questions about the condition of the home, the repair history of the home, and whether the seller has knowledge of problems with particular parts of the home. State law requires that this report be completed and signed by the Seller and furnished to the Buyer in a timely manner.
When a Buyer has been found who is willing to purchase the home on terms acceptable to the Seller, a Real Estate Purchase and Sales Contract is signed by both parties. Among other provisions, the Contract will state the purchase price, the amount of the deposit, the amount of the mortgage, the closing date, the items of personal property included as part of the sales price, and any rights of way, easements or other encumbrances on title that run with the land.
Most Contracts contain an inspection contingency, and a financing contingency. In general, these contingencies allow the Buyer to cancel the contract if either contingency is not satisfied, and the Buyer notifies the Seller of this within time periods specified in the Contract. On occasion there also is a contingency that allows the prospective Buyer to cancel the Contract if the Buyer is unable to sell his/her existing home by a specified date.
One would think that the legal issues associated with buying or selling a home are simple, leading one to ask “why do I even need a lawyer” or “why do I need a lawyer anywhere except at the closing.” Although most residential real estate transactions eventually do close, it is not unusual to see disputes arise along the way, sometimes at the last minute, and sometimes even after the closing.
Here are some examples of disputes that sometimes arise along the way: areas of the home requiring replacement or repair not readily apparent from a visual or even closer inspection; delays in obtaining financing; problems with the title to the property; driveway or other neighbor encroachment issues; an inability to sell an existing home in order to fund the purchase of a new home; delays in construction; a request to take possession prior to the closing; an inability or simple unwillingness to close on the date for closing set forth in the contract; water, drainage or sewage problems discovered for the first time after closing.
The resolution of all such disputes is governed by the language of the Contract, the content of the Residential Disclosure Report, Connecticut statutory and case law, and the terms of all of the other written documents generated between the date of the Contract and the date of the closing. For those reasons, from the beginning, advice by an attorney and careful review of all documents you sign is of the utmost importance!
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