Reason #6457 Why Your Residential Closing Needs a Lawyer at the Table



Lawyers have war stories.  Stories about deals gone wrong and documents drawn up on a napkin, but missing an essential element.  Most of those stories originate with someone who decides to forgo legal advice (because it’s too expensive) then it costs them a TON of money to right the wrong. Sometimes money cannot fix the wrong, like this war story:

Sellers have lived in their house, in a very desirable town, for about 7 years.  They purchased at the height of the market and when the kids finished with the fantastic school system they decided it was time to downsize. To get ready for a sale, the property was spruced up, delayed routine maintenance addressed and the house made generally ready for the next family.

Typical, right?

Not so fast.

The property hit the market and a potential Buyer expressed interest early on but, with some simple questions.  The property has a driveway providing access to a neighbor’s house and the Buyer enquired as to the exact nature of this apparent easement.  A single, elderly woman did not want to be responsible for snow blowing, maintenance and taxes for anything more than necessary. Incredibly the Seller did not know the answer.

Obviously the potential Buyer needed more information to even assess interest in the property.  So the agent pulled a title search and after much research, including hiring a lawyer, the legal interests were determined.  The Seller learned (for the first time) the easement is permanent, that the tax burden for the property is theirs and responsibility for maintenance their neighbors.

Not a bad outcome, right?

Wrong. By the time it was sorted out, the potential buyer was long gone.  So was the Seller’s appetite for continuing on in the sales process.  Sellers have instead decided to stay on in the town with the great school system (no kids left in the schools) and pay the notoriously high taxes.

What does this mean to you? Well, the Seller was unaware there was an easement that ran with their property, and had no idea who was legally responsible for the upkeep.  Their first inclination when the Buyer asked these questions was to sue their form Realtor if the outcome was not satisfactory.

But what would they sue for?

The standard Realtors’ form agreement of sale, on the very first page says THIS IS A LEGAL CONTRACT. GET A LAWYER. However, most Buyers or Sellers don’t because who wants to spend another few hundred dollars unnecessarily.

Well, if the Sellers fully understood the easement at the time of purchase, perhaps they would have paid less, or during their 7 year tenure at the property, worked out a deal with the neighbor to purchase the strip, relieving them of the tax burden.  Or maybe they would have done nothing differently at all.  In any event any decision would have been an informed decision with the assistance of a lawyer next to them at the time of closing.

Interestingly the Sellers’ initial reaction was to sue their former Realtor.  Okay, but what exactly did that Realtor do wrong?

The first page of their contract of sale says THIS IS A LEGAL CONTRACT. GET A LAWYER. The Realtor’s job is to shepherd their Seller through the process.  It is not their job to interpret the language of contracts, review and offer opinions on surveys or explain title commitments and more importantly exemptions from title policies.  The answer is, the Realtor did their job and did nothing wrong.  The Sellers assumed the responsibility for accepting and understanding the transaction without the aid of legal counsel.

So do yourself a favor in your next real estate purchase or sale – get a lawyer.  Lawyers are not involved in the sales process to slow things down or impede the process, but rather to help you make appropriate and informed decisions throughout the process.

So what happened with the Seller and the easement?  Nothing.  They had been provided with a survey disclosing the easement at the time of closing, the easement was excepted from coverage in the title policy and they have paid taxes (and will continue to do so) on property with a restricted use.  Had they hired a lawyer to guide them through the process, maybe the only difference would be that they fully understood what they owned and the restrictions attached to their new home.

When you make what is likely the biggest purchase in your life, isn’t a few hundred dollars’ a price worth paying to understand every aspect of that purchase?  If you are buying or selling real estate in Pennsylvania or New Jersey, call Bergmann & Good.  We’ll guide you through the process.

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