Five Rules for a Safer Real Estate Transaction
Kelly Law Office
1013 Ford Road
Minnetonka, MN 55305
Phone: (952) 544-6356
Fax: (952) 546-3690
Mobile: (612) 735-3797
Email: dave@kelly-law.com
THIS PAGE AT A GLANCE
- Have a lawyer look at it first.
- Always ask for title insurance.
- Have your lawyer review the title insurance policy.
- When title insurance is not available, get a title opinion.
- When in doubt, have an attorney with you at the closing.
- A true story
- Conclusion
HAVE YOUR LAWYER LOOK AT IT FIRST!
It is always advisable, before you sign any document having to do with real estate, to have your lawyer review it first. If for some reason you really must sign a purchase agreement before you can meet with your lawyer, we suggest that you add the following to the document: "Subject to approval by buyer's (or seller's) attorney." Write it in by hand in pen and ink if you can't type it in. Then see your lawyer as soon as possible. Many of our clients have been thankful that they did.
ALWAYS ASK FOR TITLE INSURANCE.
Would you buy a car without having your mechanic take a look at it first? Wouldn't you at least check to see if the motor runs? It has always surprised us how so many people buy real estate, both residential and commercial, without any check of the public records to see if the seller actually owns the property. In most transactions either the seller or the lender will offer the buyer a policy of title insurance. Before issuing such insurance, the title insurance company does a title search and examines the history of ownership, liens and mortgages for the property in question. The usual effect of title insurance is that you have the guarantee of the title insurance company that the seller in fact is the owner of the property. Important exceptions may be listed in the policy, however.
HAVE YOUR LAWYER REVIEW THE TITLE POLICY.
One trouble with title insurance policies is that they are not written in plain English. Any title problem which the insurance company discovers will be listed as an exception in the policy. There are always a few exceptions listed, no matter how solid the title is. Some exceptions are harmless and others are serious problems. The only way to know for sure what it all means is to consult your lawyer and have him or her review the policy. Do this before the closing. After the closing is usually too late.
IF NO INSURANCE IS AVAILABLE, GET A TITLE OPINION.
In some transactions, such as a purchase from a private party on a contract for deed, title insurance may not be available, or it may be so expensive that the cost is prohibitive. In such circumstances you should find a competent real estate attorney and request a title opinion. The attorney will review an updated abstract showing the history of the title and provide a written opinion to you as to who the owner is and as to whether there are liens and encumbrances. If you are advised that there are massive amounts of unpaid taxes, that the property is subject to an unassumable mortgage, or that there are any number of other problems appearing in the real estate records, the lawyer may suggest that you cancel the purchase agreement.
WHEN IN DOUBT, BRING YOUR LAWYER TO CLOSING.
In transactions with conventional financing, the mortgage company and the closer who is usually hired by the mortgage company, can usually be relied upon to be honest and straight forward. As with any other group of people, however, they are human and sometimes make mistakes. In all situations, but especially where there is some unresolved issue which has to be settled at the time of closing, it is a good precaution and well worth the cost to have an attorney represent you at the closing. This could be the largest financial deal you may make in your lifetime. Where so much is at stake, you should be taking every precaution.
A TRUE STORY
I recently was at the Government Center, where I had scheduled a meeting with the Probate Registrar. As she was typing up an order appointing my client as Personal Representative of his mother's estate as provided in her will, we were discussing how sad it was that the deceased woman's husband had also died a few months earlier. We also talked about how I planned to probate only the woman's estate, since all the assets had been owned jointly. Jointly held assets can be transferred to the surviving joint tenant with just a bit of paperwork and without probate. Since she had outlived him, we would transfer any joint assets into her name, and then run everything through the one probate process.
The title certificate for the deceased couple's homestead was in my file, and as I sat in the Registrar's office I glanced at it looking for the usual and familiar words "as joint tenants." Both of their names were on the title certificate; but to my disbelief, I wasn't finding those magic words "as joint tenants" anywhere in the title certificate.
With the order in my hand appointing my client as Personal Representative of his mother's estate, I headed for the County Recorder's office to personally take a look at the deed under which this deceased couple had taken ownership. There I found that the deed did not create joint ownership. It would only have taken the addition of three words, but the words weren't there.
Back at my office I picked up the phone and called my client. I told him that the meeting with the Probate Registrar had gone well. He was appointed as Personal Representative of his mother's estate. BUT another probate proceeding would be required, this time of his father's estate. Now with two estates to probate instead of one, he could expect higher fees and expenses.
The extra expense of one entire probate proceeding could have been avoided if my client's parents had engaged a lawyer as part of the process of purchasing their home. Having a lawyer at your closing is very cheep compared to the cost of an extra probate.
CONCLUSION:
I have been representing clients and advising clients concerning both residential and commercial real estate for over three decades. My areas of practice include title examinations and opinions, document review and consultation, representation at closings, conducting of closings at our office, and resolution of title problems. As a party to a real estate transaction you are in the process of taking substantial risks. One of the best ways to protect yourself from the multiple things that can go wrong is to engage the services of me or someone like me.
Kelly Law Office represents wills, probate, real estate, bankruptcy and dwi clients throughout the Twin Cities - Minneapolis, Minnesota area including Bloomington, Edina, Minnetonka, Eden Prairie, St. Louis Park, Wayzata, Plymouth, Maple Grove, Brooklyn Park, St. Paul, Anoka, Shakopee, Hastings, Eagan, Burnsville, Buffalo, Hennepin County, Anoka County, Carver County, Scott County, Ramsey County, Dakota County, and Wright County.
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