Nearly everyone who has sold or bought at least one commercial real estate property without an attorney, know to hire an attorney, the next time. However many people may undergo several residential real estate transactions and never speak with an attorney. The reasons for this touch on these factors: (1) the nature of how persons perceive buying a home versus buying investment property; (2) the typical buyer of a home versus investment property; and, (3) confirmation bias. The truth is, some of the most “unfair” rulings involve real property. Whether it is a family farm passed down through the generations, ‘taken’ by the ‘evil’ non-blood-spouse through the early death of the blood-related member (before or after children), or an ‘innocent’ mistake by a real estate broker allowing the son of a trustee sign on a purchase agreement costing the buyer hundreds of thousands of dollars, avoidable mistakes happen all the time.
In fact it is estimated, by a survey of lawyers, that 99% of real estate transactions contain ‘serious errors’ that would certainly result in serious monetary damage (below $15,000) if discovered or if not corrected, and a significant majority of those errors are considered ‘fatal errors’ that could result in the transaction being reversed or monetary damage greater than $14,999.99. Obviously the time when a lawyer is involved, the lawyer will notice the errors and correct them, and person who hire lawyers might do so when they already suspect something might not be right, but the prevalence of error is unlikely to change significantly.
Personal property is virtually everything that isn’t nailed down to land. Real property is land and virtually everything nailed to it. In Michigan, the majority of law governing real property and personal property is common law. Common law, is essentially a combination of public policy and precedent set by judicial rulings. Common law are the pieces that hold statutes together and is the lens through-which most statutes, particularly property (real or personal) statutes, are viewed. Without getting overly technical, estates in land are possessory interests. They may be presently possessory, or they could also become possessory in the future. There are also interests that don’t give ownership (leases), and there are ownership interests that are nonpossessory interests (easements, profits, etc.).
Transfer of Real Property
Likely the largest investment/purchase any person will ever make will be owning real property. It is a huge responsibly and it is an investment that must be taken seriously. It doesn’t matter whether you are investing thousands of dollars or millions of dollars in a house that you hope will become your “home”, care and careful planning needs to be scrutinized for your legal protection.
In residential transactions, buyers and sellers oftentimes only employ real estate agents at 3-6% to help them buy or sell their home. While it shouldn’t be argued that real estate agents don’t provide a valuable service, their licensed permits them to present documents. Non-lawyer real estate professionals are not permitted to provide anyone with legal advice, thus, they are unable to provide you with legal protection if something goes wrong in your transaction. It is important to take note that a real estate agent simply acts to get the transaction completed; they are not there to consider the legal aspects and consequences involved in the transaction.
Attorneys have heard from some real estate persons over and over “buyer wants to buy, seller wants to sell, what’s the problem?” That is obviously a worst case scenario, and not all brokers and agents are so cavalier with their client’s assets. But it shows that these particular persons have one goal in mind, 3% at their clients expense.
How can a real estate attorney help you?
First, attorneys owe a duty to the client, their only concern is their client. If that means advising their client to back out, they will, if that means delaying they will. Also if that means making sure the purchase agreement is followed to the letter, or the settlement statement is allocated accurately, the closing lawyer advocates on behalf of their client.
In Michigan, you will need an attorney to carefully examine and review all the contracts involved. Not all real estate contracts are the same and they are all highly advanced documents that can appear quite simple. But they are controlled by common law, zoning laws, ordinances, home owners associations and they control: when closing takes place (and what happens if it doesn’t), what is a permitted or not permitted use of the property, who pays for what and when, what happens if there is something wrong with the property. And even worse through no fault of the seller or real estate person, a lurking creditor waiting in line pursuant to a lien might claim a share.
Real estate agents cannot do legal research on the property to issue spot. Occasionally real estate agents will employ lawyers, and advertise that they have lawyers looking over all the contracts. However, since this lawyer is employed by the real estate company, they owe a duty to their client (the real estate company) and not you! Never rely on the advice of a lawyer working for someone other than you.
A lawyer should represent the buyer and a lawyer should represent the seller in every transaction. Contact a lawyer in your area or the law offices of Zamzow Fabian for experience and security.