Property 2 Outline (2)

Property 2 Outline (2) - I The Land Transaction A Buying...

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I. The Land Transaction A. Buying and Selling Real Estate 1. Consult real estate agent 2. Get an attorney and draft a proper contract, if he is a RP buyer. If not, he will sign the K of the agent and probably get screwed in the process. 3. Get a loan. He will be required to have credit and the assurance that the seller has a good title to convey. 4. The real estate agent will have to have obtained some sort of informal commitment for the necessary loan. Once credit has been promised, the agent will forward the application for the loan to the bank or other lending institution, where they will determine whether they qualify for the loan. 5. The investigation of title is the most involved and time-consuming part of the transfer process 6. The closing!!! It brings all interested parties together and permits them to execute necessary documents simultaneously with the payments of the purchase price and the settlement of the costs of the transaction (closing costs) 7. After the closing, the lender’s attorney will send the deed and mortgage to the courthouse and pay the necessary fees buyer now has title, subject to mortgage, and is presumably in possession Broker’s Role for the K for Sale of Land o The seller signs a K with a broker, giving the broker the right to list and show the property to prospective buyers and, if the property sells, to collect a commission out of the purchase price. o Commission may run from 5-8% of the selling price (usually 6%) o In most states, the broker prepares the contract of sale of a house, which is a standard form Broker – knowledgeable about piece of property increased liability: costs, water/sewage system, school district, environmental problems Attorney’s Role o Employed to draft a K, examine title, draw up a deed, and to close the transaction after the seller has accepted the buyer’s offer. o In many states, title abstract companies have grown these companies search title and furnish the lawyer with an abstract of title on which the lawyer bases his or her certificate of title o The Supreme Court has held a minimum fee schedule enforced by the state bar association constitutes a violation of the Sherman Anti-Trust Act. Lawyer – title search will uncover easements, covenants, other previous owners Money – buyer must obtain financing Mortgage – bank obtains mortgage Buyer = mortgagor (borrow) Lender = mortgagee If buyer defaults, lender can foreclose
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Contract of Sale: Seller gives buyer equitable title and keeps legal title Closing: seller conveys legal title to buyer and seller delivers deed to property B. The Contract of Sale Must be in writing Rights of buyer – buyer can get specific performance because piece of property is unique Real Estate contract governed by SOF – serves an evidentiary function Writing must identify: - party to be bound (seller) - description of what is being sold - price – if not agreed upon, must include a mechanism for determining price; ex)
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Property 2 Outline (2) - I The Land Transaction A Buying...

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