Why it is Important to have an Attorney Review your Purchase and Sale Agreement Before Signing
Although customs vary from State to State, in Massachusetts it is important to have an attorney review the purchase and sale agreement prior to signing the agreement. It is very important to review the purchase and sales agreement with a lawyer who specializes in real estate. Our real estate attorneys, Attorney Nyles L. Courchesne and Attorney Katherine Milligan have collectively reviewed thousands of contracts in the greater Springfield area. Feel free to call our lawyers for a free consultation before you sign!
Below is a video interview with Attorney Nyles L. Courchesne explaining why it is important to have that contract reviewed by a lawyer. The video was created by Joe Martins as part of his “Ask an Expert” series for Mov’n On Up. Mov’n On Up provides home financing education and insight both online at www.movnonup.org and at live workshops in the New England area.
Inaugural “Ask the Experts” interview w/ Atty Nyles L. Courchesne: Using an attorney for real estate transactions
Transcription for video is below:
<Joe Martins> Welcome to Mov’n On Up. My name is Joe Martins and I’m here in Springfield, MA today with the law firm of Peskin, Courchesne & Allen. And my guest speaker today is Attorney Nyles Courchesne, and he’s here to help us understand some of the very important issues that buyers and sellers face in real estate transactions. There are many things that you really need to keep in mind, and there are many reasons why you should proactively engage an attorney rather than reactively after something goes wrong with the transaction. So, I’d like to turn it over to Attorney Courchesne and here what you have to say about the reasons to engage an attorney proactively with a real estate transaction.
<Attorney Courchesne> Thanks Joe. You know, real estate attorneys are often engaged in the last stages of a transaction – sometimes after many of the most important decisions have been made, sometimes after contracts have been signed – and we’re put into a position where we have to explain to our clients what they did rather than having the chance to consult with them prior to the decision making, and describe what they should do. So, instead of the question “What should I do?” we often get the question “What did I do?”. And, with buying real estate – and we can focus on residential real estate for the moment – there are three primary reasons why you should consider engaging an attorney in the “What should I do?” process:
The first major reason is, when you buy your home it’s usually the largest investment you’ll make in your life, and the impact that some of the first decisions have on that investment can carry financial consequences with you for a long period of time. So, for example, some of the things that people will take for granted when they’re looking at property is acreage size, or if there is another buildable lot on the property. Or, perhaps the property is near water and they assume there are beach rights that go with the property. Or they may make assumptions about what the seller’s liability would be if there are latent defects with the property. So, consumers can make large mistakes and make big assumptions that are not covered by the documents that they’ve signed, and they may find out much later and with very severe consequences.
Another thing that we talked about at one point was protecting your deposit. When you are in a purchase and sale agreement oftentimes you’ll be required to provide a good faith deposit of 5% of the purchase price. That’s a standard in Massachusetts, and when you think about a $300,000 home it’s substantial money (Fifteen thousand dollars that would be at stake). If you don’t understand how the contract works and what your rights are under the contract, you might be put in a position where you have to forfeit the deposit because of an error was made that could have been avoided had you consulted with an attorney at the outset.
Finally, a lot of times because attorneys have completed many transactions, sometimes over the course of a career an attorney might have been involved with literally thousands of transactions. We understand the logistics of a typical buy and sell situation, and we can see by looking at the contract and consulting with our client the logistic issues that can come up that would make the transaction much more smooth if we have an opportunity to discuss some of these hurdles that have to be crossed and bridges that have to be crossed and issues that have to be dealt with in a timely manner so that your closing is a much more enjoyable experience.
<host> And, basically it’s pretty safe to say that if they wait until later in the process – that they’ve signed that purchase and sale agreement, really without talking to an attorney first, without trying to understand what it is that they’re getting themselves into – they may set themselves up for far more expense or perhaps just disappointment later in the process. I would imagine if they find out that they can’t buy the property, of that it’s going to cost them considerably more than they thought, or any of the other issues that could come up – do you have examples of maybe one or two things that, if caught earlier on, wouldn’t become a much larger and more complicated issue for them later in the process.
<Attorney Courchesne> Yes, a very typical thing that will happen is that there will be inspection issues that may come up too late in the process. People don’t realize that the deadlines that are in the purchase and sale agreement – those dates are moveable only by agreement. So, a lot of people assume that there’s flexibility in residential real estate for example, and that if there’s a delay on their part that the seller is still bound to perform. And that is not the case. In different situations, in a heated marketplace a delay on your part may lead to a loss of deposit and the property being sold to another interested party. I have an example of a situation right now where because the buyer in this situation has signed what is called a “non-binding offer” and in my quick conversation with them I discovered that they thought they were bound. They thought that the seller was bound and they had some time to look at a few different issues more closely before they entered into a purchase and sale agreement. And, I explained to my client that no, that is not the fact and that you may want to speed this part of it up with some consultation. But, you can’t make assumptions about the legal documents that you’re signing. In this case, the buyer might lose the property this weekend if a higher offer came in. The seller is not bound to stay with this particular buyer even though they have a piece of paper signed between them. That piece of paper specifically says it’s not binding. And that means that the seller can sell to somebody else right now.
<host> And that’s literally one of thousands of potential issues that could come up during a typical real estate transaction depending on your personal circumstances. In other videos you’ll find that we talk about financial profiles and the property and your specific financial circumstances, and how that affects your ability to actually obtain that real estate. Or to sell that real estate. And that is why it is so incredibly important to engage an attorney early on in the process to be able to become aware of what issues you may face in that particular real estate transaction. So, I’d like to thank Attorney Nyles Courchesne for helping to explain some of the issues with the typical buying and selling of real estate and I hope you keep in mind that it’s very important to engage an attorney proactively not reactively. And, at the end of this video you’ll find Attorney Courchesne’s contact information and website information and I recommend that you reach out if you have any questions and find out more about how it affects your specific situation. Thank you.
<Attorney Courchesne> Thanks.