What you should know before you buy or sell your home

Do I really need a lawyer? Can't the broker handle the transaction?

Whenever you buy or sell real estate, you should have legal counsel. A real estate broker may be helpful in putting the transaction together, but legally may not prepare certain legal documents necessary to the transaction, nor may the broker give legal advice as is often needed. There are potential legal pitfalls in the buying or selling of any real estate which can be avoided only by one with knowledge of the laws relating to real estate, taxes, insurance, contracts and other related subjects. Furthermore, any representations or agreement made by you to the other party regarding the house's condition, financing, etc. may be binding and enforceable. Your lawyer can protect you against such pitfalls.

Why do I need you as my own attorney when the bank will have one and I have to pay for him or her anyway?

Because the bank attorney represents only the bank, (specifically, how the closing impacts on the validity of the security interest being given to the bank,) its attorney will not get involved in most aspects of a closing which are strictly between buyer and seller. This includes the offer, the purchase and sale, and any other issues that may arise before the closing. Your own attorney will be concerned with all these matters and will work diligently to make sure your concerns are addressed. 

Why can't I take the hanging lamp in the front hall when we move?

In legal terms the lamp is considered a fixture. A fixture is a object which is attached to the property in such a way as to make their removal impossible without altering the property. Fixtures can also include (but are not limited to) built in closet organizers, crown molding, and certain types of window treatments. If you wish to take them, they must be deleted from the purchase and sale agreement's description of the premises to be sold, and any structural changes made must be remedied by replacing the lamp with another, or repairing any holes in the wall made by the removal of the fixture.

The mortgage broker mentioned to me that I may need PMI when I buy my house. What is it and why do I need it?

Private Mortgage Insurance (PMI) is a type of insurance that protects the lender against loss due to default by the borrower. It is generally required whenever the loan amount exceeds 80% of the fair market value of the property being purchased but may also be required in other instances as well. The requirement for this insurance is usually waived after the loan has been reduced to a specific level. The first year's premium may be required to be paid on the day of closing. In addition, it is not uncommon for the lender to require that you purchase additional insurance to protect against specific hazards.

What is title insurance?

Title insurance provides protection against financial loss which could result from title defects or claims against your property. While attorneys must certify to buyers that the title to the property is good (if such certification is made to the lender), the owner will not be able to collect on such a certification if the attorney is gone or if the problem is one for which the attorney would not be liable, such as a forged document in the chain of title, an improperly indexed lien, etc. In such an instance, the insurance policy would cover where the attorney would not.

There are two types of policies: 1. the owner policy, which provides protection to the homeowner and the homeowner's heirs, and 2. the mortgagee policy which offers protection to the mortgagee (lender) and its assigns. These two policies are separate and distinct. Most lenders require title insurance (which is usually paid for by the buyer), whereby the lender is protected and not the owner. If the owner wishes title insurance notify your attorney because a separate policy must be purchased. Purchasing owner's title insurance is recommended, inasmuch as it is a one-time premium that protects the borrower as long as he or she owns the property (with some exceptions such as refinancing). It should be noted that most title insurance companies will offer a discount when you buy a owner's policy and a mortgagee's policy at the same time. Therefore, if you are thinking about getting an owner's policy, it is best not to wait till after the closing to purchase it.

My mortgage application mentioned something about "points." What are they?

Points are fees charged to bank customers for the use of money. Although charged in many kinds of loan transactions, they are most commonly thought of in connection with residential lending. A point is calculated at one percent of the loan amount.