Real estate transactions take many forms and situations. The following examples are typical circumstances in which property is conveyed:

FINANCING YOUR NEW HOME

• You may wish to obtain a bank loan to buy a condominium unit to use as your residence. First, you shop for a mortgage loan and are pre-approved for a residential loan in an amount reflecting your income and debt ratios. You then negotiate a purchase agreement, with the seller, with or without the aid of a realtor. Having the preliminary approval of your lender is to your advantage when negotiating with your seller. You then take your purchase agreement to your lender, review the condominium documents and inspect the property for defects that may affect the purchase price. After you obtain your loan commitment for the condo property, your seller arranges the closing and your lender prepares a raft of the loan documents, the most important of which are the promissory note and the mortgage. Your closing costs will include conveyance taxes, recording fees, title insurance required by your lender, your loan costs, your seller's tax pro-rations and your escrow reserves for taxes and insurance.

PRIVATE MORTGAGES

• You may wish to have your parents lend you money to buy a rental property. You will need a purchase agreement with your seller. When you close, your seller gives you a deed. You pay your seller with the money borrowed from your parents. You then give your parents a promissory note in the amount you borrowed and mortgage to secure the repayment of their loan to you. You should also buy title insurance to handle any challenge to the title to the property. The deed and mortgage are recorded to make the transaction a matter of public record. After you take possession, you find a suitable tenant and negotiate a lease drawn in conformity with residential landlord-tenant laws and the security deposit law of your state. An inventory checklist showing the condition of the premises at the time of the rental should be completed by the tenant and signed by both parties.

GIFTING REAL ESTATE

• You may wish to give property to your daughter without having to pay federal gift tax. If the property is worth less than $10,000.00, you may transfer the entire property to your daughter by quit claim deed. If the property is worth more than $10,000.00, you will transfer part of the property in one year and the remainder of the property in subsequent years at the rate of $10,000.00 per year. If your spouse also owns the property, you may transfer partial interests equal to $20,000.00 per year. These transfers are also made by executing, delivering and recording a quit claim deed

LICENSES AND EASEMENTS

• You may wish to allow your neighbor to share your driveway. You will need a certified survey and an agreement defining the rights and duties of each party. These documents will be recorded to make the transaction a matter of public record.

RIGHT OF FIRST REFUSAL

• You may wish to rent commercial space to a tenant who wants to purchase if you decide to sell. You will need a written lease agreement that contain additional terms which describe in detail the conditions under which the tenant may exercise your right of first refusal.

WATERFRONT PROPERTY INSPECTIONS

• You may wish to purchase waterfront property on which to build a cottage. Your purchase agreement will contain contingencies such as financing, suitability for building, satisfaction with the land boundaries survey and topographical and underwater surveys, and soil inspection and title matters such as assessments, restrictive covenants, easements, water rights, mineral rights, and municipal zoning and occupancy ordinances. Your financing and your construction contract are separate matters which involve another kind of due diligence in investigation for the purposes you intend to use the property.

SELLING THROUGH A REALTY AGENT

• You may wish to sell your house through a realty agent. Even though much of the paperwork is available through the realtor, it is risky to proceed without legal representation throughout the entire transaction. Your interests must be protected in the listing agreement, the disclosure statement and the purchase agreement, all of which require full understanding of their terms. Examples of troublesome areas are:

1. The listing agreement may bind you too long to one realtor. It may obligate you to pay a brokerage commission even if you sell to persons already interested in your house or you decide to withdraw your house from the market. Or it may restrict multiple listings.

2. The disclosure statement may be a source of serious dispute if it can be characterized as misleading or incomplete.

3. The purchase agreement may allow the purchaser to keep the contract active when there is no likelihood that financing can be obtained. Or it may allow the purchaser to cancel with no consequences in circumstances that should require forfeiture of the earnest money deposit.

PURCHASING PROBLEMS

• You may wish to purchase a residence where the seller has employed a realtor. Despite the temptation to proceed without legal representation, it is a decision you will regret when a problem arises. In addition to a legal interpretation of the meaning of the basic terms of a purchase agreement, the purchaser needs advice regarding the earnest money deposit and contingencies such as surveying, inspection and title matters. I arrange for the issuance of appropriate title insurance policies and I work with the lender, the sellers and the title company to assure a smooth closing transaction. Difficult and complex issues often arise during contract negotiations and before closing. Resolution of rights and obligations of the parties should never be delayed until after the sale. The seller and the purchaser both benefit from the full disclosure and complete understanding of the condition of the property and such matters as the moving date. After closing, I arrange for the recording of documents and review the title policy and attend to any post-closing problems.

RENTING AN APARTMENT

• You may wish to rent an apartment that comes with appliances and several items of furniture. Even with a short-term occupancy, it is best to have the agreement of the landlord and the tenant reduced to writing. This avoids disputes as to who may occupy the premises and who may be entitled to return of the security deposit. I recommend the use of inventory checklists even when law does not require them. I also emphasize strict adherence to security deposit laws. Housing courts are more than fair to tenants but they are never happy to see unnecessary issues presented in landlord-tenant cases.

SIGNING DOCUMENTS

• In these transactions, as with all matters of legal consequence, documents should never be signed without the advice of counsel. The time, effort and money that you spend in making a transaction turn out the way you intend also works to prevent future problems that may make you regret the entire transaction.

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