By Kimberly A. Salerno, Esq.
sick? However, would you go to your primary
care physician to have your tooth pulled? The
answer is: No.
You would go to the professional to make
sure it is done correctly. If you are purchasing
or selling real estate I cannot emphasize the
importance of using an attorney specializing
in real estate.
During the boom in early 2000 real estate attorneys could barely keep up with the purchase and sale contracts flying over on the fax machines. It was a fertile market for all involved and the transactions typically flowed smoothly and quickly to the closing table. Unfortunately, we have all felt the economic decline, and are now optimistically looking at a strong recovery for the real estate market in 2013.
With that being said, how has this boom to bust to recovery affected real estate transactions? For one, sellers are not as eager to agree to a structural credit or repair; and purchasers are typically looking for more to be included in a real estate transaction than in prior years. Secondly, if a purchaser is applying for a mortgage, there is the additional element of working with a lender during the transaction and if anything, the economic downturn has forced lenders to tighten their policies and practices.
It is important to me that I surround myself with a professional, competent and aggressive team of players: real estate agents, loan officers, licensed home inspectors, and specialists (i.e. licensed plumber, septic system contractor, radon mitigation service, etc.) Oftentimes, in order to push the closing onto the closing table, it is more important than ever that the attorney, real estate agent and loan officer work together on each and every aspect of the transaction, essentially creating a team working for the client.
More issues arise than ever before that need to be negotiated and this can sometimes be the turning point in a contract if the attorney is not experienced specifically in real estate.
Here is an example: Purchaser has his structural inspection performed on the house and the inspection report reveals that the hot water tank is older than originally believed to be and may need replacing. Purchaser has a plumbing and heating specialist inspect the tank and has an estimate prepared to replace the entire tank for $1,485.
The threshold set forth under the inspection contingency in the contract is $1,500, meaning a substantial defect is considered to be any one individual repair which will reasonably cost over $1,500 to correct, regardless that it is just $15 shy of meeting that threshold. We are in a position where the client feels that the entire tank should be replaced but is asking the seller to provide a credit for $700 and meet him halfway.
The seller has already dropped the original listing down by $27,000 and is not willing to budge at all. The client is thinking on emotion and wants to walk away from the deal. This is a situation, like many other transactions, where the attorney can reach out to the real estate agent, who has a much more personal relationship to the client, and maybe have a matter-of-fact conversation with the client.
The attorney will review the inspection contingency in the contract with him and explain again that because the estimate did not meet the $1,500 threshold the seller is not obligated to do anything.
The attorney can ask the client to review all of the out-of-pocket expense to this point versus the potential of losing the deposit, and ultimately remind the client that the decision is theirs. There were other factors involved, but the point is that in today’s market it’s vital for the real estate attorney and the real estate agent to work together as a team to see things through to the closing table. In this situation, the client did take a day to think things through and it was a successful closing.
Kimberly A. Salerno focuses on residential and commercial real estate law and represents sellers, purchasers, builders and lenders.
Her office, at 20 Prospect St., Ballston Spa, can be reached at 309-3404. Her website is SalernoLawNY.com.
Photo Courtesy of Kimberly A. Salerno