Becoming a homeowner is every young professional’s dream. The security that comes with owning your place is incomparable. You would be hard-pressed to find someone who misses the stress of struggling to make rent every month. And that is not even mentioning living with all kinds of strange roommates to save money!
But owning a home is much more than just having your personal space and no one to play loud music at 3 AM. It is a long-term financial investment that can even boost your credit score if you pay your mortgage in time. Additionally, it can serve as a financial asset that can gain value over time and later be sold for more than its original price.
Real estate is truly the smart choice to make when deciding on what to invest in your savings. Along with economic safety, it also can provide you with money through passive income. Namely, a lot of people protect their savings and even pay their mortgage by renting their places out. It is a convenient option for many who might not have the funds to pay off property at the time but plan on being homeowners further down the line.
Unfortunately, owning real estate is not all sunshine and rainbows. It is a serious commitment that comes with a lot of legal and bureaucratic ties, which, if you are not careful, could land you in a lot of trouble. That is why it is vital to inform yourself properly before deciding on making such a big step.
Now, it is common knowledge that you should have any legally binding contract you sign looked at by a lawyer, even if it is a friend of yours. But when undertaking such a big thing as purchasing a home, your college buddy or a cousin will not suffice. You need a hired professional throughout the entire buying process, which can often be a long and laborious one.
When they decide to buy a property, many people rely on the confidence of real estate agents. These specialists are undoubtedly useful in finding the exact kind of estate you need, as well as negotiating prices that suit your budget. However, they are not legal experts, and relying on them to cover all of the paperwork regarding your purchase can be dangerous.
That is where the lawyers come in! Once you hire an attorney proficient in property law, you can rest assured that your interests are exclusively represented in the transaction. This means that your rights as a buyer are fully protected, and with good counsel, you will not run into issues, both legal and financial, years down the line. Read more about the importance of hiring a lawyer here.
While you and your real estate agent could negotiate around the property price with the seller face-to-face, you should immediately contact an attorney when it comes to signing legally binding contracts. You might be wondering what for? Real estate agents are perfectly capable of drawing up agreements on their own.
Although that might be true, you do not know that real estate agents often rely on contract templates to draft a contract. In most cases, this is enough, but you never know when trouble might arise, and a small legal slip could cost you a lot in the future.
One such slip could be timing. Something that is not known to many that intend to buy a house is that in many states, both the seller and the buyer have up to three days to review a contract before it becomes legally binding. You could avoid this potentially disastrous mistake by consulting an attorney in time who will know the timeframe needed to review and change it.
Another crucial part that should be done before signing a contract is performing an inspection of the property. Sure, everything might look acceptable to your untrained eye, but hiring a professional contractor to inspect your future home could save you a lot of headaches. In fact, if the damages found are too expensive and challenging to repair, you could even pull out of the contract with absolutely no penalty at all!
What’s in a title?
A frequently overlooked part of the contract process is the transferring of the titles. Getting a lawyer involved could help you immensely here as they can investigate if the seller is allowed to sell the property. Namely, the estate may have a lien or court judgment on it, and the seller has no legal right to sell it. If you were to buy land without knowing a third party had a claim to it, you could be in some significant legal trouble later on.
Luckily this can be prevented with a so-called title search. Your counsel will be able to quickly find out if there are conflicting wills or back taxes that might cause you problems further down the road. Then, depending on the findings, they will either advise you to back out of the contract or negotiate a lower price for the trouble you have been through. In addition, the seller would have to sort out all the issues found.
However, a lot of prospective homeowners are hesitant to hire an attorney throughout the purchasing process. And with good reason, they can be costly, and many can’t afford additional legal costs on top of their buying budget. A good alternative to hiring a lawyer that could also protect you against past title issues is title insurance. Companies such as Primary Abstract Title Insurance Company offer title insurance to homebuyers to protect them from things like fraud, third-party ownership, and back taxes.
Now, you are probably thinking to yourself, “Wait, doesn’t insurance protect you against future events?”. And in most traditional cases, you would be correct! However, title insurance is the exception. It protects you from damage and loss from past events that you were probably unaware of and are most likely not your fault.
This type of insurance takes power as soon as you close the deal on your home. This is usually done either by a closing agent or an escrow who will collaborate with title insurance agencies in the region. Fortunately, you pay the title insurance fee only once, at closing. Bear in mind, though, the price depends mostly on the state you are in, the insurance provider you pick, and the cost of your property. Find out more about it on this link: https://www.investopedia.com/terms/t/title_insurance.asp
A quick summary
So, what have we learned? When making a big decision like buying a home, it is best to hire a lawyer. They know exactly what to do. And although it could result in some additional bills, the benefits outweigh the disadvantages. Just like the old adage goes, it is better to be safe than sorry. After all, you do not want to be the one in for a nasty surprise when the taxman comes knocking!