What Does the Closing Attorney Do?

What Does the Closing Attorney Do?

By Gary Bowers, Attorney Whether buying a house or refinancing your existing mortgage, you the purchaser/borrower may ask what is the role of the closing attorney? There are five primary functions handled by the closing attorney during a real estate transaction: Title examination: The purchaser and lender will both want a clear title for the property. Upon receipt of a real estate purchase agreement or a request from a bank or mortgage broker, the closing attorney will begin to check the title to the property being sold. The title examination is for the purchaser and the lender to evaluate title to the real estate. The purchaser will need to know whether there are certain restrictions to use, easements, encroachments or whether the title is marketable and clear for the seller to transfer to purchaser. The closing attorney will identify any existing mortgages against the real estate that will need to be satisfied at closing in order to transfer good title. The lender will want to have an overview of what liens, judgments and mortgages, if any, exist that must be addressed prior to or at closing so it can secure a 1st lien position on the real estate. Also, the title examination provides the lender’s underwriters with opportunity to raise concern with the status of the title. Title insurance: Title insurance protects the purchaser and the lender in the event a future problem is found with the title. Once the title examination is completed, the closing attorney prepares an opinion on the title that is offered to a title company for the issuance of a title binder, which is...
3 Situations Where Your HOA Board Needs Legal Advice

3 Situations Where Your HOA Board Needs Legal Advice

By Ryan McNeill, Attorney at Law If you serve on the Board of your Homeowner’s Association, you may quickly find out how much you need to learn! In addition to the Covenant’s and Bylaws that govern your HOA, there are other local, state and federal laws and regulations that can come into play. As long as all homeowners abide by the rules and pay their dues on time, being on the Board can be relatively simple. Unfortunately, many homeowners don’t read (or perhaps understand) these thick documents and others ignore them. Evenly and fairly enforcing the Covenants and Bylaws for the benefit of the Association members (the homeowners) as a whole becomes the responsibility of the Board. Many issues that come up have very specific guidelines the Board must follow. For example, the Smith’s lawn is overgrown and tangled with weeds. The Covenants state that lawns must be kept in neatly trimmed and free of weeds. The Board’s response (generally handled by a property management company) is to send a letter to the homeowner giving them a set period of time to rectify the situation. If the homeowner fails to fix the problem, the Board is able to take the next step of holding a hearing. If the situation remains unresolved, the Board may then permitted to hire a third-party to mow and treat the lawn and charge the homeowner. [The actual steps to resolve the issue will depend on the governing documents and applicable laws in your area.] But what happens when the situation is not as clear cut? Here are some common examples where you might want...
Advice When Purchasing a Home

Advice When Purchasing a Home

By E. Drew Nelson, Attorney Whether buying a home for the first time or buying a second home or investment property, there are several steps each and every home buyer should consider when looking to purchase a piece of real estate. Have a written offer to purchase signed by all owners and spouses. Also have an attorney look over this document before submitting to the seller. Have a home inspection and survey done. Home inspections are most often where you hear horror stories from real estate closings. I recently had a client who debated getting a home inspection on a property that looked very good on the surface. Upon having an inspection they discovered extensive termite damage and rot that would require approximately $30,000 to repair the floor and support joists. If he had not caught this prior to the end of the due diligence period, he would have been stuck repairing this out of pocket. Additionally, I have had clients who declined to get a survey done. They realized years later a building on their property encroached upon the property of another and had extensive expenses battling over this encroachment in court. Get financing approved well in advance of closing. Preapproval for a loan will make the process smoother from the start, and some sellers may even require you to be preapproved before they accept an offer. Make sure the property appraises for enough to match the value of your offer. Do not move in or do any work on the property before closing. Make it clear if there are any contingencies to close or closing costs the...
The Real Estate Closing Process

The Real Estate Closing Process

By Ryan McNeill, Attorney If you are a first time homebuyer or are buying a home for the first time in a long time, the real estate closing process can be very intimidating. Since a home is usually the biggest expenditure a person will make during his/her lifetime, the decisions you make in this process are extremely important. As a purchaser you will want to form a team of experienced professionals to educate you and to help you move through the process. A good start will be to find a realtor to help you search for property, a mortgage loan officer to find out your financing options prior to making an offer, and a real estate attorney. The starting point in buying real estate is the Offer to Purchase and Contract, which is the document that you will send to the seller to indicate your terms of purchase. I recommend to my clients that they review this document with their realtor and attorney, because once it becomes accepted by the seller it controls all of the important terms of the purchase. Keep in mind that in North Carolina a contract for the purchase or sale of real estate must be in writing in order to be valid, so a gentleman’s agreement over a handshake will not be enforceable in court. One of the most important parts of the real estate contract is setting up an appropriate time for inspection of the property by home and pest inspectors and so that you have time for a personal inspection. The contract needs to provide enough time for that inspection and an...
What is a Reverse Mortgage?

What is a Reverse Mortgage?

By Ryan McNeill, Attorney Although most buyers understand how a traditional fixed or variable rate loan works, there is a lot of misinformation out there for borrowers interested in a reverse mortgage. What is a reverse mortgage? A reverse mortgage is a home loan available for borrowers 62 years old or older that allows for a conversion of equity in the home into cash. A reverse mortgage is different from a standard equity line of credit in that it is available regardless of income and there are no monthly payments. The most important difference between a traditional loan and a reverse mortgage are the terms of repayment: no payment is required to the bank until you die, you leave your home for more than 12 consecutive months, or you sell your home. Is a reverse mortgage right for me? The main drawback of a reverse mortgage is that the fees and closing costs associated with a reverse mortgage are generally much higher than that of a traditional loan. Although these costs can be added to the principal balance of the loan, this will make the loan much more expensive over a long period of time than a traditional mortgage. There are options for lower cost reverse mortgages in certain situations, however. An ideal situation for a reverse mortgage would be an individual or couple over age 70 with the home paid off and who may be having a hard time meeting monthly expenses on a fixed income. A traditional mortgage would not be as beneficial in this situation because it would simply create an additional monthly payment and create the...
Avoiding Pitfalls in Commercial Real Estate Transactions

Avoiding Pitfalls in Commercial Real Estate Transactions

By E. Drew Nelson, Attorney If you are considering the purchase of commercial property, there are some key things you should know before you make an offer or sign a sales agreement. Commercial real estate transactions can be significantly more complex than residential transactions. In general, the dollar amounts are also much larger. Here are a few common pitfalls you should be aware of: Real estate law in North Carolina requires the seller to disclose any known defects with the property. That said, the seller may fail to do so, or he or she may not be aware of all issues with the property. The buyer should always have the property inspected by the appropriate professionals to ensure there are no hidden issues that would otherwise cause the buyer not to purchase the property. In residential transactions, a single home inspector is often qualified to inspect and report on the entire property; a commercial transaction may require more than one inspector (i.e., a structural engineer, electrical inspector, mold remediation specialist, etc.) It’s a good idea to make any offer to purchase contingent on the results of the inspection(s). Financing a commercial real estate purchase is also much more complex than a residential mortgage (and if you have ever signed the paperwork required by the state of North Carolina to purchase a home, that’s saying something!). Due diligence is required on the part of the buyer. I strongly recommend you have a commercial real estate attorney review any legal documents before you sign them. “Other considerations” is how I label this next category. There are a variety of outside issues...