January 2019 | By Chelon Carr-Newbold
Buying real estate – when to engage an attorney?
So you’ve found the ideal property to purchase – what’s the next step? Engage an attorney. A well-chosen attorney will help you to navigate the entire process from start to finish – not just the legal issues.
If you need to arrange financing, an appraisal, a home inspection or home insurance, your attorney can help to connect you with these key service providers. For your transaction to run smoothly and on schedule, your attorney should have a good working relationship with your lender, the broker, the land appraiser, the home inspector and any other key service providers. You will need an attorney to pull all of the pieces together and to keep everyone involved on track.
Ideally, your attorney should vet the offer letter, purchase and sale agreement, construction agreement, loan facility letter and any other key documents before they are signed. You need an attorney who knows and understands your goals and objectives – involving them early can help you to identify any potential issues at the outset of the transaction before you enter into a binding agreement.
Where financing is required, your attorney should have a clear and full understanding of the proposed transaction and how this may affect the structuring of the loan. This is especially true where land is being acquired in conjunction with a separate construction agreement for improvements to be built thereon. There are special factors to consider in construction financing – your attorney should review the proposed facility letter to ensure that the loan is structured to fit the specific needs of the property under construction. If the facility letter is agreed without the benefit of legal advice and, if issues are identified after the fact, this will lead to delays in having to re-address certain terms with the bank and may even result in having to amend the facility letter.
So it is best to engage an attorney early. As soon as you find the ideal property on your wish list and once the substantive terms have been agreed with the seller, you should engage an attorney before you negotiate and ultimately sign any purchase and loan documentation. A well-chosen attorney will map out the transaction, identify any real and potential issues upfront and connect you with the right people. Doing so will make the difference between a smooth transaction that meets your expectations versus one that is fraught with issues, unrealistic expectations and other obstacles which could have been avoided with the benefit of early advice and proper planning.