The Basics of Buying Real Estate

Residential Real Estate:
In most cases, the buyer will sign a purchase contract before consulting an attorney. Fortunately, the contract will almost always contain an attorney approval clause, giving the buyer’s attorney a short period of time to review and try to make changes to the contract if necessary.

In purchasing a home, the buyer will want to do or consider the following, among other things:

Is there an underground storage tank, e.g., a fuel tank? If so, this will affect the marketability of the property, and the buyer may want to consider negotiating to have the seller remove the tank as part of the contract.
Is there lead paint or lead plumbing on the premises?
Are there asbestos or other hazardous materials on the property?
Obtain copies of the existing recorded deed, past title insurance or title abstracts, any existing survey of the property, and current property and school tax bills.
Inspections, including
- Carpenter ants, termites and other pests;
- Environmental concerns, such as hazardous materials;
- Structural inspection;
- Radon inspection;
- Well testing;
- Water purity and flow testing;
- Septic system inspection;
A survey;
Check for regulated wetlands;
Zoning Law, to be sure that a single family residence or other use is permitted;
If the seller has done any renovations to the property, check to be see if the seller obtained all necessary approvals and permits.

As a buyer who is financing the purchase of the property with a mortgage loan, you will be required by the lender to obtain title insurance. Your attorney should order the title insurance and not the lender. The title insurance that you will be required to obtain will be insurance that insures that lender. You will also be asked if you want to obtain owner’s title insurance. Both are one-time premiums and are paid at closing. For several reasons, attorneys will generally recommend that, if affordable, you do also obtain owner’s title insurance.

As a buyer, you will require the seller to provide a property condition disclosure statement as part of the contract. The statement is lengthy (some 5-6 pages) and will disclose a great deal of information about the property, including potential issues and problems and defects. Your attorney will review the property condition disclosure statement as part of the contract, for completeness and to look for problems that are disclosed.

Once a closing date has been scheduled, your attorney will prepare a statement of sale which, among other things, will include certain adjustments. The most common adjustments are adjustments for property and school taxes, whether paid or not paid. For example, if the seller has paid the property tax, which is usually a calendar year tax, and you close on, say, October 31, the seller will have paid also for the months of November and December, for which you should reimburse the seller.

Your attorney will also review the deed by which the property will be conveyed, along with related forms that will be required by the county clerk when the deed is recorded.

Finally, your attorney will attend the closing with you, to review documents that you will be signing and to otherwise protect your interest. Most of the documents to be reviewed and signed will be the documents provided by your lender. In most cases, the closing will be the first time that either you or your attorney will have a chance to review the lender’s documents, including the note and mortgage.

Commercial and Business Real Estate:
In most cases, the buyer will negotiate a purchase contract after or while consulting an attorney.

In purchasing commercial or business real estate, the buyer will want to do or consider the following, among other things:

Are there any underground storage tanks? If so, the buyer may want to consider negotiating to have the seller remove the tanks prior to the closing.
Is there lead paint or lead plumbing on the premises?
Are there asbestos or other hazardous materials on the property?
Obtain copies of the existing recorded deed, past title insurance or title abstracts, any existing survey of the property, and current property and school tax bills.
Inspections (keep in mind that the seller, unlike with the sale of residential real estate, is not required to provide a property condition disclosure statement), including
- Carpenter ants, termites and other pests;
- Environmental concerns, such as hazardous materials;
- Structural inspections;
- Radon inspections;
- Well testing;
- Water purity and flow testing;
- Septic system inspection;
A survey;
Check for regulated wetlands;
Zoning Law, to be sure that the intended use is permitted;
If the seller has done any renovations to the property, check to see if the seller obtained all necessary approvals and permits;
Check for compliance with the Americans with Disabilities Act;
An in-depth environmental review of the premises;
Are there currently tenants occupying the premises? If so, obtain copies of leases and perhaps even speak directly with the tenants;
Is there a sprinkler system? If so, you will need to inspect it. If there is no system, will one now be required?
Certificates of occupancy;
Is there sufficient parking available?

As a buyer who is financing the purchase of the property with a loan, you will be required by the lender to obtain title insurance. The title insurance that you will be required to obtain will be insurance that insures that lender. You will also be asked if you want to obtain owner’s title insurance. Both are one-time premiums and are paid at closing. For several reasons, attorneys will generally recommend that, if affordable, you do also obtain owner’s title insurance.