May 3, 2017 – Even when the real estate market is hot, focusing solely on speed can lead to stumbles, unless you’re familiar with the obstacles that might arise during a sale or purchase of real property.
The forms, checklists, and sample language in Real Estate Transactions System, now in its seventh edition from State Bar of Wisconsin PINNACLE®, will equip you to prepare clients for almost every circumstance that could arise during a transaction.
Protect Sellers from Unprepared Buyers
When houses in the sweet-spot price range are few, a would-be buyer might be tempted to put down, and the seller to accept, an offer immediately. What happens if the buyer encounters problems selling their current residence or obtaining financing?
According to the authors of Chapter 1 of Real Estate Transactions System, to prepare for such a situation, the seller should include the following contingency in his or her counteroffer:
“In regard to Buyer’s (describe contingency (e.g., financing contingency, contingency regarding sale of buyer’s property)) only, if another acceptable offer to purchase this property is submitted to Seller, Buyer shall have 72 hours after receipt of notice of the other offer to waive this particular contingency. If Buyer refuses to waive this contingency within such time period, this Offer shall be null and void, and all earnest money shall be returned forthwith to Buyer.”
Protect Buyers from Uninformed Sellers
In tight markets, even financially well-prepared buyers could be blind to potentially serious flaws in a property. But a deal is a deal, isn’t it? Not necessarily.
As explained in Real Estate Transactions System, sellers of one- to four-dwelling units must “provide buyers with a real estate condition report that attests to the seller’s awareness of various defects. These defects include, but are not limited to, seepage; unsafe concentrations of radon; structural, mechanical, and electrical problems; lot-line disputes; nonconforming uses; pending special assessments; and other conditions that affect the property.”
If the report discloses a defect, is incomplete, or contains an inaccurate assertion that an item is not applicable, the buyer’s sole statutory remedy is rescission of the offer to purchase. The authors thus advise that buyers should consider establishing a warranty, such as the following:
“Seller warrants and represents that Seller (will) (has) fully and accurately complete(d) the real estate condition report required under Wis. Stat. ch. 709, and Buyer is entitled to rely on it.”
This warranty incorporates the report mandated by Wis. Stat. ch. 709, and thereby creates duties independent of the seller’s duties under Wis. Stat. ch. 709, potentially giving the buyer additional remedies.
Leave No Loose Ends Untied
The house has passed the inspection; the buyer has financing and doesn’t need to sell another home; neither seller nor buyer has cold feet about the property or the price. Is the lawyer’s job done?
Not yet. Sellers and buyers won’t rest easy until the transaction closes, so their lawyers shouldn’t, either. As checklists in Real Estate Transactions System illustrate, the parties’ lawyers can ensure the closing is truly a happy ending by taking care of matters such as clearing of all contingencies; contacting the municipality about zoning; arranging for and reviewing title documents; setting the time and place for closing; and preparing the deed.
Even after the house keys change hands, the lawyers have a few more tasks. One that will be valued by clients and particularly easy for lawyers who have used Real Estate Transactions System is to gather and organize all the documents into a document clip or booklet with an index.
Anticipate and Account for Every Possible Detail
Real Estate Transactions System helps you confidently help your clients to avoid the potentially immense legal and financial risks of property ownership. The book presents the basic residential real estate transaction step by step and introduces other types of real property transactions.
It also contains chapters on the effects of Wisconsin’s marital property regime and the increasingly significant area of environmental considerations. The master information list and checklists will equip you to gather crucial information from a prospective property buyer or seller. The book includes the most current versions of dozens of forms required or recommended for use in Wisconsin real estate transactions.
How to Order
Real Estate Transactions System is available in both print and online via Books UnBound®, the State Bar’s interactive online library. The print book costs $219 for members and $269 for nonmembers.
Electronic forms from the book are available online to print book owners and to Books UnBound subscribers. Annual subscriptions to Books UnBound start at $159 per title (single-user price, call for full-library and law-firm pricing).
Subscribers to the State Bar’s automatic supplementation service will receive future updates at a discount off the regular price.
For more information, or to place an order, visit the WisBar Marketplace or call the State Bar at (800) 728-7788 or (608) 257-3838.