ATTORNEY OF THE BUYER
THE ATTORNEY’S ROLE
The role of attorney is to ensure that the buyer is getting what they want, for the price they want, in the purchase of a home. The attorney focuses on the purchase price for the buyer, and state of the personal property in the sale, as well as several clauses: the mortgage contingency clause, the inspection clause, and the clause that governs penalties for default. The lawyer will make sure that the seller has provided the required disclosures (regarding the property's condition, including radon hazards, the status of lead paint, etc.) and warranties, and that the various pro-rations (taxes, utility bills, rents, association dues, etc.) are reasonable for the buyer
STEP #1 – SEARCHING FOR YOUR PERFECT HOME
A buyer searches for the right home to buy. Once the buyer finds that home, the selling broker assits the buyer to prepare and execute a contract which is sent to the property owner, usually accompanied by an earnest money check. At this point, the signed contract is known as an “offer”.
STEP #2 – MAKING THE OFFER
The offer is the first legal step towards purchasing a home. It is a legal statement of the buyer’s intentions. For this reason, no offer should be submitted without careful consideration of the attorney’s role in the transaction. Nearly all standard real estate contracts contain attorney approval or attorney modification clauses to protect the participants. No offer should be submitted unless the contract at least contains an attorney approval or modification provision.
STEP #3 – THE SELLER’S RESPONSE TO THE OFFER
The selling broker will usually point out that the contract has an attorney modification clause and changes can be made later. In most cases, the buyer's attorney can iron out many problems in a contract during the contractual period provided for attorney review. However, careful review and modification before the offer is submitted can ease the buyer’s transaction. Here’s why:
The buyer’s attorney will review the contract to determine that the contract does not take advantage of the buyer. If something in the contract looks irregular, the attorney will include a modification clause. Modification clauses ensure that the buyer is buying exactly what they want and that their interests are upheld. They are submitted as part of the offer. This is important because the courts of Illinois indicate that a “modification letter”, which is different from a modification clause actually constitutes a counter offer and therefore, a party could back out of a contract when presented with such a letter. For example, if "Buyer One" offers $140,000 to Seller who accepts. The contract is then sent to Buyer One’s attorney who reviews it, makes various minor changes, and replies with a modification letter to Seller. Then, "Buyer Two" makes an offer for $165,000 on the same property. The Seller then receives the modification letter from the attorney for "Buyer One". However, the Seller's Lawyer tells the Seller that they may cancel the original contract with "Buyer One" and enter into a contract with "Buyer Two", since they are current Illinois law. This is legal! But to avoid this problem, allow your attorney to look at the contract before it is signed and handle all modifications at the time the offer is made. In this way, the modification clauses would have been in the original offer, and the Seller would have been legally bound into the agreed price of $140,000, saving the buyer from wasting their time and money by starting their search for a new home over!
STEP #4 – NEGOTIATING THE CONTRACT ON INSPECTION AND REPAIRS
Usually, a contract contains an inspection provision providing the buyer with the right to obtain a professional inspector to check the property for defects. Inspection clause provisions may vary from contract to contract. Some allow the buyer to request repairs be made to the property for any defects found; some require allow that defects exist so long as they not exceed a certain dollar amount; and some allow the buyer to cancel the deal because the condition of the property is found to be unsatisfactory. It is up to the buyer’s attorney to assist the buyer in negotiating with the seller’s attorney regarding repairs.
The inspection and attorney review period will usually last for a limited period of time. The terms of the contract will set this time. Once the periods expire, no additional modifications may be made. This is why it is important that once a buyer receives a copy of the signed offer or accepted contract, they get it to their attorney as soon as possible.
STEP #5 – MANAGING THE MORTGAGE CONTINGENCY
After the inspection and modification periods pass, the buyer’s attorney will assist the buyer with the mortgage contingency. Most contracts contain a “mortgage contingency” clause: a provision that allows the buyer to lawfully cancel a transaction if the buyer cannot obtain a loan that satisfies the terms of the mortgage (as detailed in the contract). The attorney will make sure that the lender’s loan agreement complies, within reasonable limits, with the contract terms and that the proper notices as to whether or not the loan is approved are forwarded to the Seller.
STEP #6 – FINAL REVIEW BEFORE CLOSING
The final tasks of a buyer’s attorney before the closing include making sure that any final problems arising during the final inspection are dealt with by the buyer and to work with the buyer, lender, and title company to make sure all documents and items necessary to close are brought to the closing. The buyer coordinates to make sure all the materials are ready and all parties are working together.
STEP #7 – THE CLOSING
At the closing, the Mortgage Lender will deliver a “package” of documents to the title company. This package is comprised of many documents, including the note and mortgage and documents disclosures and agreements. It is the buyer’s attorney's job to review and walk the buyer through these documents, pointing out important terms and protecting the buyer’s rights against the bank.
The Seller will also come to the closing with a package of documents, including, the deed to the property. The buyer’s attorney will scrutinize these documents to make sure that the buyer is purchasing and the seller is submitting the correct property, that all taxes and liens are paid, and that title is cleared and insured by the title company. This involves a review of the documents and a survey provided by the Seller. This is to avoid disastrous mistakes such as a third party ending up owning legal title to the home just purchased by the buyer. Once the closing is complete, the transaction is concluded. Keys are exchanged, and the buyer now has their home!
CONCLUSION
To many buyers, the purchase of a home or property is a lifetime milestone. The services of a real estate attorney greatly reduce the likelihood of problems by serving as an experienced guide through this complex process and provide peace of mind that their interests are being addressed.
