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Expert Advice on Buying a Home: An Interview with Michael H. Warren, Attorney at Law

By Mike Warren

Please tell us a little bit about your firm and the areas of law that you practice.

I began the firm in 2007 after leaving a large, multi-state law firm. It was a rough time in the real estate market, but I focused on giving the best customer service possible. I was able to gradually build a loyal clientele. I mainly practice in the area of residential real estate closings. I also do wills and some personal injury cases.

What are common things that you've seen go wrong during the purchase and sale process?

If you buy a home in a subdivision, you can assume that there are restrictions recorded for it. However, people often don't expect restrictions for property out in the country, but anyone buying property like that needs to ask the attorney about any restrictions and any specific use that they intend. You may want to put a mobile home on the property or have farm animals, and that may be prohibited by the restrictions. If the property is within city limits, the city may have restrictions, and they will not show up in the attorney's title search because they are not recorded with the Register of Deeds. Bring up the subject as early as possible to avoid wasting your money and time.

Another issue is bringing money to the closing. All the recent problems with fraud have resulted in stringent rules on how money is handled in real estate closings. Unless the amount that you need to bring is small, don't expect a personal check to be accepted, or a sack of Ben Franklins. Bring a certified check, or even better, have your bank wire the money to the attorney. If the numbers change right before closing, the attorney can cut a check back to you to refund the difference, or you can write a personal check for a small additional amount that you may owe.

If you are a seller expecting a large amount of money coming to you, the best thing is to have the money wired into your bank account. Give the attorney a voided check from the account you want the money deposited in. That way the attorney has your correct account number and bank routing number. When you receive money by wire, you don't have to worry about keeping up with a check, and there is little if any hold time on the money before you can use it at your bank. If you are buying a house immediately after selling one, the attorney for the sale of your house should wire the money to the attorney handling your purchase, and the second attorney will be able to disburse the money immediately at the end of the closing.

Be aware that some closings are "dry," meaning that money cannot be disbursed after all of the documents have been signed. This can happen for several reasons. The lender may have to review some of the signed documents before they will authorize disbursal. Sometimes the lender's wire has not arrived in the attorney's trust account. Even if the wire has been sent from the lender, it has to go through the Federal Reserve system. Sometimes it arrives within minutes, but sometimes there is a delay of a couple of hours in the system. Of course, if the buyer did not bring the money that they needed, or brought it in an unacceptable form, like a personal check, there will be a delay in funding.

If you have a dry closing on a Friday afternoon, and the buyers just drove half-way across the country and parked all their worldly goods, their five kids, and three dogs outside the attorney's office, expecting to be able to move in that day, tensions can run high. They may have to find a hotel room for the weekend. The seller could have compassion on them and let them move in anyway, but a lease agreement needs to be signed so that a month-to-month lease is not implied. If the closing falls through Monday morning, the seller does not want to have to go through an eviction hearing to get the buyers out.

What are some of the main ways that a real estate lawyer can help when you're buying a home?

The main jobs of the attorney in a real estate closing are to check the title, explain the documents to the parties and have them executed correctly, disburse the money, and record the documents. So questions about any of these areas are best addressed to the attorney. The real estate agents usually work out the contract, although you can ask for an attorney's advice on that.

Specific questions about your loan are best answered by your lender. Anything that needs to be physically inspected should be done by a specialist in that area, like a surveyor, home inspector, or plumber. The attorney should point out any problems to buyers on the plats that have been recorded or provided by a surveyor, such as an encroaching building from a neighbor's property, an easement across your property, or an easement that you need to use across someone else's property in order to access your own. If there is an encroachment or easement issue, the attorney can draft a recordable agreement that can be signed by you and the neighbor to resolve the issue. If there are any liens on the property other than mortgages by the current owner, the closing attorney will probably need to help get those cleared from the title.

What is one of the biggest challenges for homeowners when it comes to closing?

The biggest challenge in the closing process is usually getting the loan approved by the lender. With greater restrictions imposed on lenders in the last decade, the process can be lengthy. Plan on at least a month for approval. Sometimes it can take several months. The buyer will be required to provide documentation on seemingly everything that they have ever done in life, such as where they have worked and lived and why money has recently been deposited or withdrawn from their bank accounts. The lender will have to provide disclosures at certain points before the process can move forward, and then if things change, the information will have to be redisclosed. The lender will have to wait on appraisals and other inspections to be completed, and if too much time passes before the loan closes, those inspections will have to be redone.

The biggest challenge for sellers is when there is a judgment, tax lien, or an old lien from a previous owner still showing on their title. A payoff amount will have to be obtained from the lien holder, and the lien holder will need to sign a lien satisfaction to remove it from the county records. Finding those lien holders, and then waiting for them to research their old records, can often be a challenge.

How can a buyer help make sure the sale goes smoothly?

The buyer should provide everything that the lender needs as quickly as possible, and then bring certified funds once the Settlement Statement, which shows their bottom line figure, has been approved by the lender. Bring your drivers license because the lender will require a copy to be included with the signed loan documents.

What advice would you give to first-time home buyers?

Don't panic. Be patient. What you have to go through to get your loan approved is probably normal, even though it's trying. You will have a large stack of papers to sign at the closing, but as long as the numbers are right that you are shown on the Settlement Statement, there shouldn't be any surprises in the other documents.

What's the best way for people to contact your firm?

Call my office at 864-278-0203, or email me at mike@warrenlawsc.com.

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