In many builder transactions, an attorney, who is representing the builder, has drafted the builder’s contract from scratch. They most often favor their clients, the builders, rather than your clients. Here are a few things to look for and bring to the attention of your clients.
Types of Deeds in a Nutshell
The 3 most common deeds that we see in real estate are Quitclaim Deeds, Limited Warranty Deeds and General Warranty Deeds.
A quitclaim deed transfers the ownership interest of the grantor to the grantee without any warranties or guarantees that title is good or that the property is free of liens or claims. It transfers whatever is owned by the grantor. If the Grantor owns nothing, then nothing is conveyed. If the Grantor co-owns along with others, the Grantee gets what the Grantor owned – ownership along with others. The quitclaim deed is used mostly in non-sale transactions such as transfers between spouses or parents to children. It is used also in commercial transactions to clear title issues.
Limited Warranty Deed
When a special or limited warranty deed is used, the grantor only warrants that there are no title defects during the time the grantor owned the property. The limited warranty deed gives the grantee more protection against claims to title than a quitclaim deed, but less protection than a general warranty deed. If a tax lien or another lien pops up that was prior to the ownership of the grantor, the grantee may have to pay it. Note the title insurance comment below.
General Warranty Deed
A general warranty deed offers the best protection for the grantee because it guarantees, from the beginning of time, that the title is good and marketable. The grantor promises the grantee that the grantor will defend the grantee from any all claims made by third parties. That tax lien owed from before the time the grantor owned the property would have to be covered by the grantor.
There are 2 approaches to handling Multiple Offers.
The first approach is for the Seller to instruct the Listing Agent to ask for the “Best and Final” or “Highest and Best” offers from all potential buyers. This process carries some risk. It may cause some buyers to back away. Buyers don’t like to bid against themselves and don’t like bidding wars. It’s a risk the Seller takes.
The second approach is for the Seller to pick the offer that looks the best and negotiate that one. If it does not work out, the Seller can move on to the next offer – if it has not been withdrawn. There is no rule that the Seller must negotiate the offers in order or that the seller must choose any particular offer - so long as the process is fair and does not violate Fair Housing rules.
The key is that the client decides how they wish to proceed – not the agent.
Earnest Money is almost always involved in an offer to purchase. The terms of the contract determine when the earnest money is due. But what if the funds are not delivered on that required date? What are the consequences and how should it be handled?
If the funds are not delivered on time, is the Buyer in default?
Yes, the Buyer is in default. But that doesn’t mean the contract has failed. The Seller’s right to terminate when earnest money is late is limited. First, the Holder named in the contract must promptly give Notice to both the Buyer and the Seller that the funds have not been delivered. The Buyer then has three (3) banking days from the date of receiving the notice to cure the default. If the Buyer does not do so, the Seller may, within seven (7) days thereafter, terminate this Agreement upon notice to Buyer. If the Seller fails to terminate the Agreement timely, Seller’s right to terminate based on the default is waived and the contract is enforceable.
Describing a space in a way that appeals to all buyers is the law (and it’s just good business).
There are certain phrases that should never appear in a property description. Some phrases are very clear violations of Fair Housing, others may be in a grey area. When deciding if something might violate fair housing, assume that it does. Our unconscious biases are just that. Unconscious. Being sensitive to how others might react will avoid discriminatory language that violates fair housing. Here are some examples of language to avoid.
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