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Residential Real Estate Lawyer
There are few moments any greater in the practice of law than when Elliott Frazier is given an opportunity to assist homebuyers with the purchase of a new home. For most people, the purchase of a new home is one of the most important and largest financial decisions they will make. Elliott Frazier understands the excitement of this process, as well as our client’s concerns in making these decisions. Elliott Frazier works to make sure that our clients are comfortable in their understanding of the transaction and in the documents associated with the transaction. South Carolina is a buyer’s choice state, which means that the buyer has the right to choose their own lawyer, as well as their own insurance agent.
When a homebuyer decides to refinance their home, Elliott Frazier is ready to help.
1. Real Estate Contracts
Elliott Frazier encourages clients to engage the law firm to provide assistance with the preparation and review of real estate contracts. Agreements to sell or buy land are not enforceable unless there is a written and signed contract. All of the terms regarding the sale of the property should be included in the real estate contract since verbal agreements are not enforceable.
Once a contract is signed, a buyer is required to pay an earnest money deposit. A credit for the amount of the earnest money deposit is provided on the closing or settlement statement at closing. Any amount that is not covered by the earnest money deposit will need to be financed through a lender of the buyer’s choosing. Most real estate contracts will include a provision that specifically states that the closing of the transaction is contingent upon the buyer obtaining financing.
The main items involved in financing generally relate to the amount that is paid by the buyer each month for the loan. In other words, what is the bottom line. The monthly payment does not simply include the principal amount owed under the loan. The monthly payment will also include interest as well as amounts that are set aside in escrow accounts to pay for the taxes and insurance on the property. Escrow accounts allow banks to collect, on a monthly basis, a portion of the amount calculated for taxes and insurance each year. When the tax bills are issued, the taxes are paid from the money held in the escrow account by the bank. In other cases, the bank may charge the buyer with mortgage insurance. Mortgage insurance is a benefit to the lender, and it protects the lender in case the borrower fails or refuses to pay the amount owed.
Lenders provide a Good Faith Estimate to borrowers to disclose estimates of the costs associated with the loan.
3. Title Search
The attorney that performs the real estate closing will search the real property records and other public records to determine whether the seller can provide good title. Good title means that there are no other liens, judgments or other problems relating to the property that can impact title. The title search also includes a review of the covenants and restrictions to a property, which are then provided at the closing to the buyer. Any title issues that arise during the title search must be cleared before closing.
A survey is performed by an independent licensed surveyor that will determine the boundary lines of the property and mark those lines as part of the survey. The survey will often show where other features of the property are located, such as catch basis and wells. In addition, a survey will show the orientation of any house, driveway or other improvements on the property. If you desire to place a fence on your property after your closing, then the survey is helpful in determining where the fence will need to be placed. The survey will also disclose any encroachments on the property to make sure that an adjoining landowner hasn’t placed.
5. Termite Report
Buyers should require the seller to provide proof that the property is free from termites. A termite report is known as the CL-100 and is usually provided by a local termite inspection company. If termites are discovered, then any resulting problems can be repaired. In addition, most termite companies will provide a termite bond for the property. The bond can be maintained by the homeowner if the home is inspected by the termite company and an annual fee is paid
6. Hazard / Flood Insurance
In order to protect the lender’s interest in the property in the event the property is damaged or destroyed, the lender will require a homeowner to purchase homeowner’s insurance. The buyer is required to list the lender as an additional insured on the insurance policy. Flood insurance may also be required if the lender deems flood insurance is necessary.
7. Title Insurance
Title insurance protects and insures against defects in title. Defects in title may occur if a state or federal tax lien was not paid as part of a closing. Also, defects may occur if a judgment, mortgage or mechanic’s lien was placed on the property and was not released prior to closing. In some cases, heirs to a property are not properly notified of a sale to property and may still have a remaining interest in the property. A deed may not have been recorded properly.
A lender will require the purchase of title insurance policy to protect the lender from any title defect, but most buyers also wish to purchase title insurance to protect their interest in the property as well. The amount paid for title insurance is a standardized insurance rate and is the same amount no matter which title insurance company provides the insurance coverage. The fee for the title insurance premiums is collected at closing and included on the Settlement Statement. The fee is only paid once at closing.
8. Settlement Statement
The Settlement Statement is a 3 page document which sets forth the purchase price, loan amount, proration of real property taxes, payoffs for seller’s mortgages, the amounts that the buyer and seller will need to bring or will receive at the closing. In addition, the second page of the Settlement Statement sets forth the real estate commissions, lender fees, interest accruals, escrow accounts for taxes and insurance payments, along with the amounts paid for attorney’s fees, title insurance and the title binder. The third page of the Settlement Statement gives a comparison of the Good Faith Estimate originally provided by the lender to the actual fees included on the Settlement Statement. The attorney as part of the closing will explain the various items on the Settlement Statement and answer any questions you may have at the closing table.