There are many reasons to hire an attorney to help you when you are buying or selling a home. Two important tasks you should consider asking an attorney to help with in the purchase or sale of your residential real estate are: negotiating and drafting the initial offer to purchase, including any counter offers or amendments to the contract for sale; and reviewing the title insurance binder, which will identify any documents seller needs to pass a good title to buyer at closing. If you are planning to buy a home with someone who is not your spouse, you and your partner should absolutely work with attorneys to help you negotiate and draft a written Co-Tenancy Agreement, to protect both of you. The collaborative model is excellent for working out a Co-Tenancy Agreement.
In spite of how much fun residential real estate work is, attorneys don’t often get to do it. Many people decide to buy or sell a home without hiring an attorney. They rely on a realtor for the negotiations of the offer to purchase, and they use a title insurance company for the closing. Why would one need an attorney?
There are many good reasons to work with an attorney for a real estate transaction.
- Real estate is straight contract law, and negotiating the contract can be complicated. There may be successive counter-offers or amendments to a contract for sale before you finally have an agreement. An attorney who pays attention to details will help you get through the negotiation process and get the contract properly drafted. This is particularly helpful if you are doing a FSBO (for sale by owner) for your home.
- Once you have an accepted offer-to-purchase as to all issues, you have a binding contract. That contract will have required tasks for both the buyer and the seller, and there will be time requirements for those tasks. You have to meet the time requirements, or you may lose the deal. You may wish to have someone who pays attention to the details of the deal help you get to closing.
- Wisconsin has many statutes which set out requirements for sellers of real estate, to protect the buyers. An attorney will help you comply with those laws. This may be particularly true if you are selling a condominium.
- State law prohibits real estate agents from giving legal advice, and many realtors recommend that you hire legal counsel to represent you in real estate transactions.
- Sometimes a realty firm has a multiple representation relationship agreement with more than one client, which allows different agents in the firm to provide services to more than one party to a transaction. An attorney cannot ethically do that; the attorney can represent and offer advice to only one party in a real estate transaction.
- Whether you are the seller or the buyer, it is helpful to have your attorney review the requirements the title insurance company requires for seller to pass a “good title” to the buyer.
I love doing residential real estate. I enjoy “finding the words” my client wants for an offer or counter-offer. I pay attention to the details required to accomplish all the tasks required to get to closing, and I love the fact that everyone wants the deal to go through. We’re all “on the same page,” and we’re all working to make it happen. It is very satisfying work.
Co-Owning a Home
It is wonderful to fall in love and decide to buy a home with your sweetheart. Maybe you have “talked about it,” and you believe you “have agreements” with each other regarding how you will pay the expenses of that home. Maybe one of you contributes more to the down payment than the other, and you think you understand how that will be handled if you break up. However, you do not have a binding agreement unless it is in writing, and notarized! Protect both of you with a written agreement.
I call the agreement a Co-Tenancy Agreement, and it can deal with such issues as:
- How will you pay the ongoing expenses of the home?
- How will you make decisions about major repairs or improvements, and how will you pay for them?
- What will happen if one of you loses a job, or becomes ill, and can’t pay your agreed share of the expenses?
- What will happen if you decide you no longer want to live together, or own the home together? Will one of you have the right to buy the other’s interest in the home? If so, how will you arrive at the value of that interest? What will be the terms of one person’s purchase of the other’s interest?
- If you agree that the home should be sold, how will you do that? Will you select a realtor? How? How will you arrive at the sale price? What expenses will be paid at closing, and how will you divide the remaining proceeds?
It may feel challenging to have these conversations with a sweetheart when you are in love and buying a home together. However, it is much better to have the conversations, and work out the terms of your Co-Tenancy Agreement, before you purchase the home. It is much more cost effective to have these conversations, and have an agreement drafted before your purchase, than to have a dispute and have to hire two attorneys to “fight it out” later!
The collaborative model is an excellent process to work through the issues you need to address for a Co-Tenancy Agreement before your purchase. It is a process that will support both of you in discussing your goals and interests for your agreement, and it will help you resolve any differences between you. Even though the process requires that each of you hire a collaborative attorney, it is much less expensive than hiring two attorneys later to deal with a conflict between you! Further, if you have an agreement that spells out how you will deal with “coming apart” regarding your home, it is much less painful to know what will happen than to have to “fight” about it at that later time.