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Real Estate Buying a home may be the biggest single investment of your lifetime. A life's savings may be invested in this one venture.
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Thus, it is extremely important that you, the prospective buyer, use the greatest caution in buying a home which will not only provide you with comfort, but will cause you as little trouble as possible, while living in it and when you decide to sell it. For your protection consult your family lawyer before you sign or buy. His or her training and experience will help you avoid trouble. TOPICS FOLLOWING:
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THE PURCHASE AND SALE AGREEMENT The paper first given to a prospective buyer by a real estate broker is the purchase and sale agreement. Few people realize that this paper is the most important step in making the purchase of a home, for the details of this agreement determine what you buy and how you buy it. Before signing, read the agreement carefully and discuss with your family lawyer such items as the following:
Your attorney may not be able to answer some of these questions until examining many public records, including court and governmental files. It is desirable that your purchase agreement be prepared by your own lawyer or reviewed by him or her before you sign. Only then will you know the agreement covers your requirements.
A real estate title is a right to partial or whole ownership to land and improvements upon the land. If you can prove your title against all the world, and if it is for whole ownership, it is a good title. If in addition the evidence or proof of ownership is contained in proper public records, it is a good record title. Ordinarily only a good record title is marketable. When purchasing a home, you should demand a "marketable" whole title. Your attorney, after proper investigation, can tell you whether the seller is able to convey such a title to you. No one can advise you without a proper investigation.
A warranty deed is a simple conveyance plus some warranties or guarantees. The usual guarantees or warranties by the maker are: good title, freedom from encumbrance other than as excepted, and possession to the buyer as against all others. These guarantees are not adequate protection since they are no better than the present and future financial responsibility of the maker. A warranty from a financially responsible seller is comforting and desirable. It is not a substitute for a title examination. Title defects have a way of lying dormant for years and perplexing a buyer long after he has paid for the land, and after the seller is dead. Necessity for Title Examination A title examination is a study of the abstract of title and sometimes of other title evidence. (An abstract of title is an outline of the public records relating to the ownership of a parcel of real estate.) When the abstract is completed, your attorney examines it carefully and then gives a written opinion stating who owns the lands, such defects in or charges against the ownership, as there may be, and the steps needed to make the record title good. This may seem to be a simple operation. It is not. It requires interpreting numerous deeds, mortgages, wills, court decrees and other instruments; considering the sequence of time of transactions and events affecting the title; and applying laws and court decisions to the various situations disclosed in the abstract. Because the examination of a title requires a thorough knowledge of so many phases of law, it cannot be done adequately by anyone except a lawyer. An examination of a single abstract may involve evaluating a variety of problems such as the validity of divorces, the effectiveness of foreclosures, the scope of restrictions, the presence of federal and state tax liens and the effect of old claims against the land. From examining an old United States patent down to passing on a deed of recent date, the process of examination is, at every step, the consideration of legal problems. Experience can speed up the work, but attorneys almost daily encounter new situations requiring new legal research. A title insurance policy is a contract between the insured and an insurance company. Unless you are so named in the policy, you are not the insured. The policy may protect only the person holding your mortgage. The contract may state that the company insures in you a "good and indefeasible" (not capable of being voided) title to the real estate described in the policy. Just as in any other insurance, the coverage is no greater than is stated in the policy. Any policy can have exceptions to the coverage, which may substantially affect title to the property. Such exceptions are not insured. The policy states the type and amount of indemnity due. The amount of the premium is determined by a schedule of rates based on the real estate purchase price. This price is the maximum amount for which you are insured. Buyers often have the title to a home placed in a joint ownership arrangement with special words inserted so that title passes automatically to the survivor when one of the joint owners dies. This arrangement is known as "joint tenancy." In Florida, when land is owned jointly by husband and wife, it is known as an "estate by entirety." Owning property in this manner may be a good idea for some, but, again, it may not be good for you. You should determine the income, gift and death tax consequences before having your home placed in joint ownership. Joint ownership frequently leads to lawsuits over a right of occupancy, the right to the rents if not occupied by all the joint owners and the duties of the various owners as to payment of mortgages, taxes and cost of repairs and upkeep. If the joint owners are parent and child, or brothers and sisters, the subsequent marriage of one of them may lead to conflicts and complications. Is the Building Under Construction? If the home you are buying is still under construction or has been completed recently, special care is required to make sure that all building costs have been paid by the sellers and that you are fully protected as to the provisions of the new Florida Mechanics' and Material Men's Lien Law. You should consult your lawyer for full information as to your right and responsibility under this law. This may be true also when repairs on a house have been made recently or building material recently delivered. Failure to protect against mechanic's liens can result in the property being subject to lien even though the full contract price was paid. Closing a real estate sale is a technical and complex operation. The careful drafting of papers to carry out the actual intent of the parties is part of the job. Meeting the requirements for a marketable title is another step. The proper signing and acknowledgment of papers is another. Delivery and recording the papers are usually the last steps. You, a careful buyer, should insist on your attorney being present at the closing, and checking each detail. He or she knows which points are significant in making your purchase trouble-free ownership to which you are entitled. This web page is based on Florida law and is issued to inform the public of some of the difficulties that should be avoided in buying a home. It is not intended to advise anyone on a specific legal problem, for different facts may change the application of the law. It is recommended that, before you take any action, you discuss any problems relating to the purchase and sale of property with your family lawyer.
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