Questions and Answers for Home Buyers

Attorney Richards provides some Frequently Asked Questions and Answers about some of the legal issues that buyers of real estate may encounter in real estate transactions, especially in Massachusetts. These FAQs are not intended as legal advice: The law changes frequently as new cases are decided and statues are enacted. Consult Attorney Richards regarding any question you may have that is specific to your situation.


Questions and Answers for Massachusetts Home Buyers

1. What legal problems may arise in the purchase of my home?

The purchase of real estate can be quite complicated legally and fraught with pitfalls. Moreover, a significant period of time will often elapse between the signing of the contract to buy your home and the actual closing of the purchase. During this time, the market or the seller's circumstances may change, and the seller may wish to back out of the sale. If you or your lender uncovers title problems, you will wish to ensure that the seller is able to correct them prior to the closing, and not use them as an excuse to cancel the transaction. Regardless, if the purchase and purchase documents were drafted or executed poorly, the seller may be able to avoid concluding the purchase.

2. How may I best avoid legal problems in the purchase of my home?

It is advisable to involve the services of an attorney early on in your purchase in order to ensure that the purchase contracts are drafted in such a manner that is enforceable, and that the deed will be in the correct form of ownership at closing.

3. What services does an attorney provide to a buyer?

As with any legal matter, an attorney is obligated under the attorney code of ethics to represent the client ethically and zealously in order to bring the purchase to a conclusion and always to act in the client's best interests in concluding the purchase. Although it is usually the responsibility of the seller to provide first drafts of purchase documents, you as buyer may sometimes wish to engage an attorney to prepare the initial Offer to Purchase. Your attorney will provide or review and document drafts, negotiate them to a conclusion, and ensure that all documents are executed. The buyer's attorney will assist in shepherding the purchase to a conclusion and represent the buyer at the closing.

4. What legal steps should I take to purchase my home?

As buyer, it is your goal to lock in a firm price and to agree upon the terms and conditions for the purchase of your future home to occur at a fixed time and location. The seller agrees to take his property in return for a series of contracts and a substantial deposit paid by the buyer. First comes the Offer to Purchase signed by both sides and accompanied by a small deposit (typically, $500 - $1,000), and secondly the Purchase & Sale Agreement ("P&S") accompanied by a substantial deposit (5-10% of the purchase price inclusive of the initial deposit). These deposits must be held in escrow pending closure of the transaction, usually by the seller's attorney or, if there is a real estate broker involved, sometimes by the broker

5. What legal documents are required to buy my home?

Firstly, the Offer to Purchase, and secondly, the Purchase and Sale Agreement are customarily used in Massachusetts to buy your home. Both are legally binding documents. The seller may also offer a "Seller's Disclosure Statement" at the time of showing the property. In Massachusetts, though a seller's disclosure is not legally required, the seller may provide one voluntarily, and the buyer should obtain one whenever feasible, as it will give you a better idea of the flaws in the property, and also provide a starting point for your home inspector.

6. What difference is there between an Offer to Purchase and a Purchase and Sale Agreement?

The Offer to Purchase specifies fewer details of the obligation to buy and sell. Since it comes early, it will probably contain more contingencies such as that of a home inspection and mortgage commitment. It is important to remember, however, that the Offer to Purchase can be just as binding a document as the P&S. Usually the Purchase & Purchase Agreement is signed once the contingencies in the Offer to Purchase are eliminated. The buyer should use any problems uncovered by the home inspection as a basis to lower the purchase price prior to signing the P&S. A signed P&S replaces the Offer to Purchase as the binding document to enforce the purchase. With the signed P&S in hand, and a deposit in escrow, both parties can begin to prepare for the closing.

7. What services may I expect of my attorney leading up to the closing?

If you involve a professional lender, the lender will provide an attorney to search the title to your property, and ensure that you (and the lender) receive a clean title in accordance with federal, state, and municipal law. Although you will pay the lender's attorney's fee, bear in mind that the lender's attorney acts solely in the interests of the lender, not the buyer.

These interests will sometimes align, but not always. The lender's attorney will not assist you to correct physical problems with your future home that do not affect the legal title. For example, you may need your own legal assistance to enforce any repairs or remediation that are called for in the P&S such as problems with flooding, radon gas, or repairs to major appliances, or other damage that may occur to the property prior to the closing. The lender's attorney will also not advise you as to how best to take legal title. Your attorney should also review the HUD settlement statement with the lender's attorney prior to the closing on your behalf.

8. What services may I expect of my attorney at the closing?

Your attorney can accompany you at closing to walk you through all documents, ensure that you receive proper title, and are correctly charged and paid. There may also be last minute negotiations over specific commitments that the seller made in the P&S, or perhaps outside the main transaction. There may also be timing issues that your attorney can assist with. For example, you may be selling your current home at the same time, and using the sale proceeds for the purchase. If it proves inconvenient for you to attend the closing, your lawyer can attend for you, and execute purchase documents on your behalf. If you wish to attend, your attorney can review all documents and interpret them for you prior to your executing them.

9. What will it cost to hire an attorney to represent me in the purchase of my home?

An attorney's services are personal and specific to each transaction. Part of what your attorney might need to know before offering an estimate is the property location, its history, whether there are any known title encumbrances, how the seller currently holds title, a sense of who the seller is, when the closing is likely to take place and where, and other intangibles. Once you provide an an understanding of some of these factors, your attorney may be willing to provide an estimate of the maximum that fees are likely to reach, subject, of course to any contingencies of which the attorney is unaware at the time of the discussion.

10. What else I should be aware of?

The road to buying your home offers an interesting journey. Each buyer should bear in mind that the completely smooth transaction is a rarity: There almost always occur twists and turns along the way where it is useful to be able to access the guidance and advice of a qualified real estate attorney.

Please contact our offices today to schedule a consultation.  During this time, an experienced attorney can assess your case and explain your options in order to help navigate a successful outcome.