An issue I see all too often in the residential real estate transaction: Involving Your Attorney AFTER Entering A Legally Binding Contract. In Massachusetts, a Buyer will usually submit an offer to purchase on some version of a standard form “Offer to Purchase” created by one of the local or regional Realtor associations like the Greater Boston Real Estate Board. In most cases, once the Seller accepts the offer, the material terms of the contract have been set and the parties are bound to the Offer and the conditions agreed upon.
Contained in the Offer to Purchase is: a description of the property; the purchase price; the deposit and the conditions under which the deposit becomes the property of either of the parties; the expiration date of the offer; the manner in which the offer may be accepted; the nature of the title to be conveyed; the items of personal property and fixtures that are either included in or excluded from the transaction; and the time and place for the delivery of the deed. These forms will also contain language similar to “NOTICE: This is a legal document that creates binding obligations. If not understood, consult an attorney.”
One of the conditions, contained in the Offer to Purchase is that the parties will execute a Purchase and Sale Agreement that is agreeable to both parties. This is the point where many Buyers and Sellers will first involve their attorneys. It is very important that the parties use an attorney in the negotiation of the Purchase and Sale Agreement. However, for numerous reasons, it is prudent to have an attorney review the Offer to Purchase before the material terms are set. In a future posting, I will discuss in detail why an attorney is needed in the negotiation of the Purchase and Sale Agreement.
For the Buyer, I like to include a valuation contingency, so that if the property does not appraise for the sale price, the Buyer has the opportunity to either renegotiate the sale price or back out of the deal and receive their entire deposit back which can be as high as five percent of the sale price. Additionally, I like to add some warranties and representations to the Offer to Purchase. For the Seller, it is important that they identify personal property that they may be leaving behind or fixtures, such as chandeliers, that they intend to take with them. If you want to take your Mother’s prized cherry tree with you when you sell, it better be in the offer.
There is no such creature as the “routine” residential real estate transaction. Each parcel of real estate is unique and each party to the transaction has individual needs and desires. For both parties, it is always a good idea to have a trained, experienced set of eyes review the terms and make sure the client’s interests are best represented and that the client fully understands the implications of the documents they are signing.
Even on weekends, there is enough time to have your attorney review the offer before it needs to be submitted or accepted. In my practice, I charge a flat fee for representing Buyers and Sellers and that fee includes the review and/or drafting of the Offer to Purchase and all other documents a Buyer or Seller would need to sign from broker disclosures to listing agreements. I can even help explain and compare different mortgage quotes for my Buyers. For most Buyers and Sellers, this is one of the biggest transactions in their lives. I strongly recommend any Buyer or Seller to talk to an attorney as early on in the process as possible.