Whether you are in the market to sell or purchase a new home, the real estate transaction process can be overwhelming and complex, especially when you attempt to do it on your own. There are a lot of people or agencies that may be involved and each has its own role to play. There's also a lot of paperwork, deadlines, and legal requirements that must be met.
At Alabama Property & Estate Law, LLC, our firm wants to make sure the process moves along seamlessly for you. Here, we answer some commonly asked questions, but if you have more specific questions or want smart representation in your residential real estate transaction, contact us today at 256-489-0038 to schedule a consultation:
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What is a real estate transaction?
A real estate transaction is a process where a seller offers a home for sale and a buyer agrees to purchase it. At a very basic level, the process involves a number of tasks and activities before closing can occur and the property is officially transferred to the buyer. Many actors are involved in a real estate transaction and could include:
- Real estate attorney
- Real estate broker
- Real estate agent
- Seller
- Buyer
- Mortgage lender
- Home inspector
- Title company
Who is involved and how the process flows is often dependent on state law and regulations. Each agent, broker, attorney, and party has their role to play to make sure the transaction is seamless and client focused as possible.
Generally, the a transaction will begin with the seller listing or offering the property for sale through a realtor or for sale by owner. A buyer and seller negotiate a contract either individually or through realtors and then sign a binding sales contract. A real estate sales contract may allow for inspections, repairs, and financing contingencies. Also, the parties will agree to a closing date. This gives the buyer, seller, agents, and attorneys time to complete the transaction on or before the closing date. Before closing, a title search should be performed by an attorney and title company. After all the terms of the contract are performed, the lender has done their investigation, and the title company is ready to close, the parties will meet for the "closing." Closing involves signing the final documents to transfer the property (deed), to formalize the financing (note & mortgage), and complete the transaction. While the process can be confusing, it is important to have someone on your side that can walk you through the legal terms and help you develop and implement solutions if problems arise.
Below are some of the common terms, legal instruments, and phases of a real estate transaction that you may encounter during the process.
What is a deed?
A deed is a legal document that is used to transfer property from one person (grantor) to another person (grantee). They are typically used to transfer real estate as they are the proper way to transfer ownership rights in the property.
A deed to real estate must meet certain requirements to be considered valid. While the exact requirements vary between states and jurisdictions, they must be written, witnessed, and notarized. Deeds also need to be recorded in the county in which the real estate is located. Each county will have an office for this purpose, and it may be called the Register of Deeds, Recorder of Deeds, or something similar. In Alabama, the probate courts oversee and manage the recording of deeds and property records. Recording the deed is required to avoid future issues with ownership or title issues. A search of the public records will generally reveal who owns a certain piece of property. However, the only way to be certain of ownership is to get a full title review or title search.
Why do I need a title review in a real estate transaction in Alabama?
When you are buying a home you want to know that the seller actually owns the home and no one else will come to claim ownership. As a seller, you will want to make sure that you are giving your buyer clear title. To do this the seller's title must be reviewed through a title search. A title search will go back a certain number of years and document:
- Who has owned the property during that time period
- Whether there are any mortgages or other liens on the property
- Whether there is anyone else that may claim an ownership interest in your property.
- Whether there are any judgments against prior owners that may interfere with the transfer.
Any time you purchase property without a title search and title insurance you risk adopting unknown title issues and future lawsuits. Getting a title search and title insurance, even for a cash deal, is the best way to be sure of what you are actually purchasing.
Does a real estate lawyer help with both residential and commercial real estate transactions?
Whether or not a real estate lawyer is able to help with both residential and commercial real estate transactions depends on the attorney. While there are a lot of similarities between residential and commercial transactions, there are even more differences. Some attorneys are comfortable handling both while others prefer to focus on one or the other.
What is a seller's market?
When you hear that it's a “seller's market,” it means that there is more demand for homes than there are homes available. Buyers often compete for homes in a seller's market, driving up the cost of the properties and often resulting in bidding wars. It is not unusual for a home to sell for more than the asking price in a seller's market. Sellers have a definite advantage, as buyers are paying more and overlooking property flaws just to be able to purchase a home.
What is a buyer's market?
A “buyer's market” is generally the opposite of a seller's market. There are more homes for sale than there are purchasers interested in buying. Sellers are forced to lower their prices to be competitive and attract more potential purchasers.
What's the difference between a real estate agent and a real estate lawyer?
A real estate agent (agent) is completely different from a real estate lawyer (lawyer). When you seek to buy or sell a house, an agent is there to help you through the negotiation, inspection, and due diligence process. For sellers, an agent can tell you what your home is worth, list it for sale, and show it to potential purchasers. For buyers, an agent can help you determine your budget, assist you in finding the home of your dreams, and help you make an offer.
A lawyer assists with the legal aspects of a real estate transaction. In Alabama, an attorney assists with the title search, title insurance, and closing process. Alabama law does not require, a lawyer's presence but one is highly recommended for complex real estate transactions that involve unusual aspects of the contract or commercial property. A real estate attorney can help you make sure your legal interests in the real estate transaction are well-protected. Given that for most people, the purchase of a real estate is or will be one of the largest investments they will make in their lives, having your interests legally protected is as critical as it is reassuring. In common residential transactions, realtors, agents, brokers, and lawyers all work together to assist their respective clients.
How does a real estate lawyer help?
A real estate lawyer can help you understand the governing laws and the legal ramifications of your real estate transactions. They help with crucial aspects of the transaction, like:
- Contracts. Real estate lawyers may review, negotiate, and draft contracts, keeping your interests at the forefront of this process.
- Title Search. A real estate lawyer or title company will conduct a title search, and if a lien or another issue is discovered, the lawyer can help address it timely and can obtain proof that the lien is fulfilled.
- Closings. Any number of issues can arise during closing events, and only a real estate lawyer has the legal wherewithal to address them and keep the seller or buyer from being left in the dark or having their rights violated without their knowledge.
- Fraud. Real estate fraud and scams are an unfortunate reality of our world. Unrepresented buyers may lose out on their funds and the home they thought they were purchasing. Sellers may wind up agreeing to terms they don't understand. Using a title company to handle the closing is the best way to avoid becoming a victim of one of these types of real estate schemes.
- Advice. Generally speaking, real estate attorneys can provide legal advice that a seller or buyer cannot obtain from an agent or broker. Getting smart legal advice over any and all matters related to the real estate transaction offers value from the peace of mind to favorable and timely solutions.
Further, real estate attorneys make sure that once the property has passed hands, you have received the property (as the buyer) or compensation (as the seller) to which you are entitled.
Is litigation the only option to settle real estate disputes in Alabama?
Litigation is rarely the only option for real estate disputes. Informal negotiation, mediation, or arbitration are typically available and are highly recommended. Mediation is usually less time-consuming and less expensive. It also allows the parties a say in how the matter is settled. If mediation fails, litigation is always available.
How Much Does a Real Estate Lawyer Cost in Alabama?
Many factors go into determining what a real estate lawyer might cost. First, it depends on how they charge and what's included in that rate. There are two basic ways a real estate lawyer will charge for their legal services: (1) fixed fee; or (2) hourly rate. In some cases, a contingency fee may also be appropriate.
Second, you must consider all the many services a real estate lawyer may provide, from buying, selling, and renting real property. Then, consider the experience of the lawyer or law firm and how complex or contentious your real estate needs are. The range is wide: you can expect to pay a few hundreds to several thousands of dollars in fees.
Contact a Real Estate Attorney in Madison County or Limestone County Alabama Today
Before putting your home on the market or going to a real estate showing, consider reaching out to a real estate attorney in Madison County or Limestone County Alabama. At Alabama Property & Estate Law, LLC, our goal is to make sure your real estate transaction experience goes smoothly. Contact us today either by using our online form or calling us at 256-489-0038 to schedule a consultation.