Real Estate

Yes – It is highly advisable to have a lawyer review your title work, because a lawyer can review the title insurance commitment from the title company and negotiate with the company to ensure that the policy sufficiently protects your interests.

Title work first begins with a “Title Search” to determine who has title (or ownership) of the property. Typically a title company examines all of the deeds, public records and other documents that pertain to the particular property. The title company is trying to locate any potential defects in the chain of title that would raise a question as to who actually owns the property.

Defects might include: 1) a significant variation in the legal description of the land on a prior deed; 2) a deed that was improperly executed; or, 3) a deed that was executed by someone who lacked capacity to convey the property. The title search may also determine if any liens exist on the title and if the owners are subject to any judgments in the county where the real estate is located.

Once the title search is complete, a title insurer (usually a national insurance company and not necessarily the local title company you are familiar with) will issue the Title Insurance Policy. Title insurance is an insurance contract that protects the policyholder from losses caused by both on-record and off-record defects in existence on a specific date. There are two types of policies: 1) The Owner’s Title Insurance Policy, which protects the owner from losses due to title defects; and 2); The Lender’s Title Insurance Policy, which insures that the lender’s mortgage has a certain priority.

The title insurance policy insures the property subject to exceptions. These exceptions are concerns that the title company has regarding something on the chain of title, or off the record.

A lawyer can work with the Title Company to delete these exceptions in several ways. The lawyer can bring forth evidence to show that a defect has been cleared up, or can limit an exception, by showing the defect only effects a limited part of the property. Your attorney can also work with the surveyor to get a more accurate picture of encroachments on the property and use that information to negotiate coverage with the title company.

Your lawyer can also work with the title insurance company to obtain endorsements. Endorsements are agreements by the insurer to bear increased risk for certain events. For example, an endorsement may overturn an exception stated elsewhere in the policy or may modify a condition in the policy. Some typical endorsements deal with zoning, surveys, condominiums and subdivisions, or those that extend coverage to other parties, such as LLCs or other limited liability entities to whom you wish to transfer title.

If you are in the home buying process, and have questions about title work, please contact us at 314.862.2237

 

Yes –Any real estate contract that is referred to as “standard” was drafted by somebody and for somebody. In most cases, the contract was purchased online or at an office supply store, or it was supplied by a member of the Realtors® Association, whose legal counsel drafted if for its members’ use. All real estate contracts can be negotiated, including a contract provided to you by a real estate agent/broker. In fact, contracts for the purchase or sale of a residential property are often negotiated. Perhaps more importantly, the failure to fully negotiate such contracts could effectively waive your rights to later complain about or sue over the contract terms.

That said, only you or your lawyer can make changes to the contract. A real estate agent or broker is not permitted to do so in Missouri.

Missouri law only permits real estate agents and brokers to fill in the blank spaces for the parties, write on the blank lines at your direction, and fill in property location and other necessary terms. Doing more than this may constitute the unauthorized law practice in violation of Missouri law. Agents and brokers are therefore unable to cross out any of the contract language, and substitute it for something else. They are also unable to substitute contracts in the event the “standard” forms are not appropriate for the particular deal, unless such forms are pre-approved by their own legal counsel. But you, the client, can do that with the help of your attorney.

Many people buying or selling a home will therefore hire a lawyer to help them review their contract, negotiate its terms and make changes that are more favorable to their position. Real estate contracts can be complicated, and it is highly advisable to hire a lawyer who is experienced in this area of the law.

Our firm has helped numerous clients negotiate many so-called “standard contracts,” or “standard terms,” including but not limited to: the type of inspections allowed, who pays for them; dates for deadlines, and what happens in the event closing is delayed.

If you are either purchasing or selling property, or are an agent or broker assisting someone, and would like to discuss obtaining or making changes to a contract, please feel free to call our office at 314.862.2237.

Recently, we have seen a number of “Rent-to-Own Contracts” or “Lease Purchase Agreements” in our office.  In these contracts the owner of the property agrees to rent to the tenant for a certain amount of time, giving the tenant the option to purchase the property for a price that was agreed upon at the beginning of the lease.  Depending upon the contract, the tenant can either exercise their option to purchase the property during the lease term, or at its conclusion.

This type of contract provides the owner, who may have been unable to sell the property, rental income and a potential buyer.  Likewise the tenant has the opportunity to live in a place they see themselves living in long-term, without the immediate financial obligation to purchase.

In rent-to-own contracts, a portion of the rent is often called “Option Price Money.” If the tenant purchases the property, this money will be credited to the purchase price; if the tenant does not purchase the property, the owner keeps the money.

If you are considering entering a rent-to-own situation, an integrated rent-to-own contract is much preferred over piecing together separate rental and sale contracts.  This is because an integrated contract clearly spells out the rights and obligations of the parties and provides a smoother transition from the rental phase to the purchase phase.

Please feel free to call our office at (314) 862-2237 to discuss your situation.

When purchasing a home, many clients misunderstand or ignore a very critical deadline in their contract – The Loan Contingency Deadline.  If the purchase is conditioned upon the Buyer getting financing, the Loan Contingency Deadline is the date by which the buyer needs to have a firm commitment from their lender that they will receive financing.

When the buyer applies for a loan, the seller wants clarity on whether or not the buyer will actually be able to get a loan and how long this process will take.  The seller sets a deadline by which the buyer needs to have a loan commitment in place, after which the buyer is on the hook to purchase the property, whether or not they can actually obtain the loan.    Many Realtor^® forms we see in our office refer to this deadline as the “Loan Contingency Deadline.”

What confuses many buyers is that getting a document from a lender titled “Pre-Approval,” “Preliminary Commitment,” “Loan Commitment,” or other similar phrase does not mean that the buyer has a firm commitment from the lender.  The lender has not yet unconditionally agreed to fund the loan, and may ultimately decline to if the buyer fails to meet certain conditions.

Buyers can then find themselves in a difficult position if the loan contingency deadline has passed, and their lender has not agreed to fund the loan.

If you have a question about the loan contingency deadline in your contract, or are unsure about what you have received from your lender, please call our office at (314) 862-2237.