Common Problems in Private Real Estate Transactions

How Your Lawyer Can Help in Real Estate Transactions

Why you need a lawyer during a private real estate transaction

Many issues can arise during a private real estate transaction. A lawyer can protect you.

We have previously written about issues that can arise in a for sale by owner real estate transaction. Now we want to tell you about some of the common issues that can arise during any private real estate transaction.

Realtors Use Standard Forms – They May Not Work for You

Since realtors are not attorneys, they often use standard contracts in private real estate transactions. This is likely the case for both the brokerage agreement and the home sale contract. Due to this, it is wise to have an attorney review any contracts prior to signing them.

Realtor Brokerage Form

Realtor brokerage form contracts can contain a variety of terms that may not be in your best interests.

You Have to Pay the Commission Even if the House Doesn’t Sell

If you are the seller, the brokerage agreement may state that you have to pay a brokerage fee regardless of whether the home is sold. For example, the agreement may state that if you receive a full price offer, you have to accept it. If you do not accept a full price offer, the contract may state, you will be responsible for paying the full brokerage fee. Due to such a clause, you could be forced to sell your home when a better offer may come along in the near future, or even if you change your mind and don’t want to sell.

The Agent Can Represent Both Buyer and Seller

The brokerage agreement may allow your real estate agent to represent both sides of the sale. Brokers are supposed to be loyal to either the seller or the buyer. But many brokerage agreements allow the broker to represent both sides. This allows the agent to receive both the buyer’s and seller’s percentage of the deal. This is a clear conflict of interest on the part of the agent. How is an agent supposed to negotiate the best deal for the seller if they are trying to also negotiate the best deal for the buyer? Your lawyer can review the agreement for any clauses which allow this kind of disloyalty.

Alterations to the House – Vague Contracts

Many form contracts do not address the time between when the buyer and seller sign the contract of sale and when the buyer takes possession. For example, if there is landscaping and the seller fails to care for it properly before the buyer takes possession, who is responsible for handling any dead or damaged plants?

Also, during this time the seller may cause damage to the house. This is especially common during the moving process. Things can be banged into walls causing damage to paint or walls. Sometimes houses are left vacant and third parties may cause damage. Who will be responsible under those circumstances?

There also may be confusion about what items are to be left in the home. This could include the refrigerator, draperies, or other items of importance that can cost substantial amounts. Contracts may be vague as to other details as well, costing either the buyer or seller money, time, or unnecessary stress during a very stressful time. A lawyer can make certain that the contract of sale is clear and help you avoid problems that arise due to lack of clarity.

Title Search

In Pennsylvania, a title search is a necessary part of a private real estate transaction if the buyer has a mortgage. Even if the buyer does not have a mortgage, a title search is critical. Making certain the title search is properly performed and understanding any problems is crucial. While a real estate agent may understand some aspects of a title search, they are unable to provide legal advice about the result and how any issues may impact the buyer. A lawyer can explain the results and advise the buyer on whether continuing with the sale is a good idea.

Mortgage Contract

Mortgage contracts are confusing. One of the reasons many people end up in foreclosure is because they do not understand how the loan will work over time. For example, will the rate change and how will that impact you? What happens if the mortgage is sold to a different bank? It is important to make sure that you understand all of the terms of the mortgage agreement.

The Closing

During the closing, both the buyer and seller will be provided with many documents to sign. Even if you do not feel pressured to sign every document quickly, you may not be certain what all of the small print means. In addition, you may be uncertain if some terms were altered from the point at which you agreed to the deal. A lawyer will take the time to review all documents and make sure that everything is correct and your rights are protected.

Your Lawyer Protects You

The key thing to remember is that a lawyer has only one job during a private real estate transaction, and that is to protect you, the client. While most real estate agents are ethical, they want to see the sale go through, are not lawyers, and are unable to advise you on the law. As a result, it is wise to have a lawyer with you during the process of buying or selling a house, so you can be certain that your rights are protected.

Contact Our Real Estate Lawyers for Assistance

If you are thinking about buying or selling, please call the law offices of Hoffmeyer and Semmelman today. Our experienced real estate lawyers in York are here to help. We also have law offices in Shrewsbury and Mt. Wolf.


Real Estate for Sale By Owner Risks

Traps to Look Out for with Regard to For Sale By Owner Transactions

For sale by owner real estate transactions

It is important to have counsel in for sale by owner real estate transactions.

Typically, for any FOR SALE BY OWNER SALE/PURCHASE, there are no realtors involved in the transaction.   Consequently, the seller has determined a selling price based upon several possible sources or factors which may or may not equate to the true value of the property.

On the other hand, when the buyer is considering the purchase of a property For Sale by Owner without the benefit of a realtor, the buyer may not be aware of the true value of the property or that the seller is, potentially, asking considerably more than the true market value of the property.

Those issues become very important if the buyer is paying cash (and paying too much for the property) or must obtain a mortgage and subsequently determines that the bank appraisal is significantly less than the asking price by the seller.

Why You Need Legal Representation in For Sale By Owner

Under either of these circumstances it is very important for the buyer and the seller to have separate legal counsel to advise them of the pros, cons, and various significant issues involved in such a transaction.

Agreement of Sale

There is absolutely nothing wrong in either a seller selling on their own or a buyer purchasing on their own as long as they have adequate legal representation and advice.  One or the other attorney must prepare the Agreement of Sale which will then be reviewed and critiqued by the other attorney.

Legal Considerations

It will be the responsibility of the seller’s attorney to indicate all of the matters that the seller must consider before they advertise the property for sale and all of the issues that must be considered when they find a buyer to purchase their property.

Settlement Obligations

On the other hand, the buyer’s attorney will typically be handling the real estate settlement, must advise the buyer, and on occasion the seller, of the costs of that sale, and the expenses which they must understand will be their obligation at the time of the settlement.

Title Issues

Further, the buyer’s attorney has the responsibility of making certain that the title to the property is properly searched by a title searcher who is not obligated to discover a good title but who is obligated to discover the true nature of the title to the property.

The buyer’s attorney should have no hesitation to inform the buyer when title is not good and explain that it will take some significant period of time to correct that title – assuming the seller is willing to correct the title.  If the seller is not willing to correct the title, the buyer’s attorney has the obligation to tell the buyer to look elsewhere for a property.

On the other hand, the seller’s attorney has the responsibility, after the title search has revealed certain defects, to professionally advise the seller that the property cannot be sold without curing those defects.  The seller’s attorney will act on behalf of the seller to cure the defects in the title to the property.

Each Need Own Attorney

Finally, no attorney should represent both the buyer and the seller in such a transaction.  The buyer and the seller should each have their own legal counsel, i.e., no attorney can serve two masters.

Seller’s Point of View

From the seller’s point of view, when he or she agrees to sell the property, the seller enters into one of the largest financial transactions in which the seller will ever be involved.  The same holds true with regard to the buyer.   The buyer is obligating to purchase a property for a significant sum of money and will be entering into a transaction for which, if the buyer gets a mortgage, will incur significant financial liability.  If the buyer does not get a mortgage, hard-earned money to buy the property will be shelled out.  If that property has a defective title, and the buyer doesn’t protect the purchase with professional legal advice, the buyer may be put in the position of having to pay to cure the title (a cost that should have been the seller’s responsibility) when the buyer sells the property.

We Are Experienced in For Sale By Owner Transactions

Hoffmeyer & Semmelman has a statewide reputation in the real estate field as being thoroughly knowledgeable in representing clients in the sale and purchase of real estate and in discovering and curing defective real estate titles.  Please contact our real estate lawyers whenever you are involved in any real estate transaction. We have law offices in York, Shrewsbury, and Mt. Wolf to better serve you.


Written  By:   William F. Hoffmeyer, Esquire

Copyright by Hoffmeyer & Semmelman LLC, November 2017

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