What is an “Offer to Purchase Real Estate”

What is a “Purchase and Sale Agreement”?

What are some issues related to mortgage
financing?


What is a “title examination”?

What is “title insurance”?


What is a “Closing”?

What role does an attorney play in a real estate transaction?



Q: What is an “Offer to Purchase Real Estate”?
A: The offer to purchase real estate is a general agreement that offers to purchase a property at a certain price. It usually states that the rights of the parties will be set forth in a subsequent contract called a "Purchase & Sale Agreement." An offer is an important document and has been recently held in one Massachusetts case to constitute a contract that is binding on the parties. Back to top

Q: What is a “Purchase and Sale Agreement”?
A: I can draft a Purchase & Sale Agreement that will protect you throughout the process. This is generally the contract that sets forth the full rights and duties between Buyer & Seller and sets the time for performance. There are many issues that are crucial in this contract. For example, is there a "Mortgage Contingency Clause" that allows the Buyer to cancel the contract if he or she can't get a mortgage? What happens to the deposit if one party fails to honor the contract? These issues should be carefully considered by your attorney and not left to a Broker to determine by using a standard form. Home inspection rights, for example, can lead to negotiations that can reduce the purchase price. In this area, it is not wise to represent yourself. Back to top

Q: What are some issues related to mortgage financing?
A: Not all lenders or mortgages are the same. Rates and terms vary. Some require "Points', while others do not. "Points" are loan fees that the lender charges you, usually in exchange for a lower interest rate. Good Faith Estimates of loan costs as well as the "APR" (annual percentage rate) are terms that you need to understand to evaluate the true cost of a loan. Back to top

Q: What is a “title examination”?
A: After the purchase and sale agreement has been signed and financing arranged, a full examination of the title must be undertaken. Title examination requires interpretation of all the deeds, mortgages, court decrees and all other documents affecting the title, considering the time sequence of transactions and events affecting the title, and applying the law and court decisions to the various situations arising in the title examination. Since the cost of correcting title defects is the seller's obligation, it is important that the title examination be completed and that title defects be corrected by the seller's attorney, before the buyer takes title and possession of the house. Back to top

Q: What is “title insurance”?
A: The vast majority of lenders require that a lender's title insurance policy be procured at the closing. This policy is part of the costs paid by the buyer at the closing. At the same time the buyer may elect to purchase for an additional one-time premium an owners title insurance policy which will protect your equity interest against any claims that might arise during the period of time you own your home. Back to top

Q: What is a “Closing”?
A: The Closing is the final stage of the purchase transaction where a Buyer receives the legal Title (by deed) and possession of the property in exchange for a payment by the Buyer. Usually the purchase money is obtained by the Buyer from a Lender who then secures the loan with a mortgage and note. The financial aspects of the closing are summarized on a HUD Form that discloses any charge and cost involved in the loan. Back to top

Q.What role does an attorney play in a real estate transaction?

Real Estate (Representing Buyers)
When representing Buyers, duties include:

  • Conference with client, including issues such as how to take title, information on type of property to be purchased (i.e., single family, multi-family), and financing issue
  • Review offer to purchase
  • Review or prepare purchase and sale agreement and negotiate about its terms, including who should hold the deposit
  • Advise concerning financing and tailoring of purchase and sales terms to lender's requirements
  • Review inspection reports
  • Review title examination
  • Attend closing and review papers which buyer is required to sign
  • Set up escrows and special arrangements to correct title, complete construction or assure possession
  • Arrange title insurance protection for buyer against losses due to title defects, if desired
  • Transfer of security deposits and notices to tenants

Normal Buyer’s expenses include:

  • attorney's fee, including negotiations, drafting documents
  • cost of the title examination
  • recording charge for deed, mortgage, and municipal lien certificate
  • miscellaneous expenses, such as certificate of municipal liens, plot plan, title insurance, bank application fee, points and other finance charges, if any of these are required

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Real Estate (Representing Sellers)
When representing Sellers, duties include:

  • Confer with client
  • Review or prepare purchase and sale agreement and negotiate about its terms, including who should hold the deposit
  • Prepare deed and power of attorney if necessary
  • Deal with title issues
  • Attend closing and review papers which seller is required to sign
  • Escrows and special arrangements to correct title, complete construction or assure possession
  • Transfer of security deposits and notices to tenants


Normal Seller’s expenses include:

  • Attorney's fee, including negotiations, drafting documents, correction of title defects, removal of liens, etc.
  • Massachusetts tax transfer stamps
  • Recording costs of instruments necessary to clear title
  • Real estate broker's commission

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