Sorry this is a bit off topic, however lots of repairs were done to this home before selling.......
Anyhow, I have a relative who is going to sell a home on a land contract. The price and terms have been discussed with the buyer. Now the paperwork needs to be filled out and legalized. Who who do they go to to do this legal paperwork? I assume it's either a realtor or lawyer. But which is the preferred method? If it's a lawyer, I know lawyers specialize in different matters, what would be the type of lawyer needed? (definition). Also, the home to be sold and home of the seller are in two different states. Am I correct to assume the transaction has to be done in the same state and county of the home to be sold?
Presumably you mean in the US. Usenet is a global medium.
You definitely don't need a real estate agent, although one might be able to refer you to a good real estate lawyer. I had a grandmother (not a lawyer or even close to one) who manged her own land contracts, but I wouldn't recommend it.
Any competent general purpose lawyer should be able to manage the transaction, but you might ask what experiences they have in conveyances and land contracts.
Doesn't have to be, but that makes things somewhat easier for the seller. The contract gets recorded in the county where the property is located. The signing can occur anywhere.
*Ideally the buyer and seller will each have their own attorney to represent their respective interests. It is most important for the buyer to have an attorney, however the seller doesn't want something from the transaction to come back and bite them in the tush afterwards.
I would hire an attorney located in the county that the property is located and who has experience in real estate transactions. Be wary of attorney's who advertise low rates. There may be a lot of "Extras" tacked on that are standard procedure for any real estate transaction. Also, find an attorney who returns phone calls in a timely manner.
In some states it's routine to do real estate transactions without an attorney, using for example a title company to do the closing. Here in NJ, sales are almost always handled by an attorney, which I would think is the safest and best way for most people. You really should have someone that is looking out for YOUR interests when writing the contract and making sure it's all done correctly.
I'd ask around for recommendations for attorneys. Failing that, the local bar association probably has a website with lawyers listed. A general purpose lawyer typically handles real estate. If you look in listings of lawyers, their websites etc, you'll also find some ones that will list real estate as one of their specialties.
The deal and closing could be held in either state. Their would be advantages and disadvantages to using one in one state vs the other, eg how convenient it is for the buyer/seller, familiarity with the laws in the state the property is in, etc. I'd probably go with a lawyer in the state the property is located in, unless a local lawyer you already have is familiar with the other state.
Get a name from a satisfied client (friend, neighbor, relative). Contact him. If he doesn't do real estate stuff, he can refer you to another.
Um, the "transaction" can be done anywhere. The final results will have to be filed in the county where the property is located.
Note: A "land contract" is superior - from the seller's perspective - to an outright sale with a mortgage. In a "land contract", the seller retains ownership of the land until the "loan" is paid. If that's really the mechanism by which the sale you mentioned is going to take place, neither a lawyer nor a real estate agent is necessary inasmuch as title to the property is not changing.
I definitely do not agree with that. It would be important to use an experienced real estate attorney -- meaning one who specializes in real estate transactions. A general practice who does not specialize in real estate would be a mistake.
Just a note about New Jersey (which is where I am located). There are actually two different "typical" systems or "standard practices" in New Jersey regarding real estate transactions. In North Jersey the closings are almost always handled by an attorney and usually conducted in the attorney's office. In South Jersey, many (or most?) closings are handled by title companies, often in the title company office, and people may or may not have attorneys representing them in the transaction. That is what the "custom" is in New Jersey.
In this case in particular, especially since the plan is to sell using a land contract and the seller is out of state, using an attorney would be important.
State real estate laws vary. Sometimes you need a lawyer and some times not. You could enlist a realtor that knows these laws and have him draw up the contract and have it executed. They might do this for say 1% of the sales price.
Lawyers usually have set fees, not dependent on property price. You should get a lawyer that specializes in real estate and realtor or any lawyer could tell you who they are.
If you would be willing to post what state this is in, and maybe even the location (such as town or county) of the property, people here may be able to suggest an experienced real estate attorney from that area.
Definitely do not use a Realtor or real estate agent since they do not function as attorneys in real estate transactions and they do not represent your legal interests. Their job is to match buyers and sellers and they only get a commission if a sale goes through. They do not get any commission if they tell you that the deal is not in your best interests and convince you not to do the sale. An attorney represents you and your legal interests, and the attorney gets paid even if he recommends that you do not do the deal -- which sometimes happens.
It is important to use an experienced real estate attorney and not a general practice attorney. There is no difference in cost. This would be especially important in a transaction where you want to do a land contract or other type of seller financing option, but it is also important in any real estate sale -- even a traditional transaction.
Get an attorney who is located where the property is located, and (to repeat) get one who specializes in real estate. He/she can handle the whole thing for you from the state where the property is located.
Think very carefully before you go ahead and do a "land contract" type of sale. Depending on the circumstances, there can be a variety of other ways to handle the sale with "terms" if that is what you need to do or want to do. On the other hand, there may be specific circumstances involved here that are the reason that you want to do a land contract, and reasons why it may make sense in your particular case.
Please do yourself a favor and do not have a Realtor or real estate broker draw up the contract or paperwork. They are not attorneys. They serve a very good function in selling properties, matching up buyers and sellers, helping to negotiate a deal between buyers and sellers etc. But they are not your lawyer and, since you already have a buyer and already have at least an initial understanding between the buyer and seller about the terms of the sale, you do not need a Realtor. You need an experienced real estate attorney.
Interesting the things you learn. So, even in South Jersey they use title companies. I know that's the practice in CA for example, but didn't know it was going on here too. I'm in south central NJ, near the border of Ocean County and here it's routinely done by lawyers.
One thing I think we's all agree on is that if there is any reason to be especially concerned about a deal, if it is in any way not straightforward, etc, then I'd always go with a lawyer. I'd also get the total cost nailed down upfront. A friend did a closing a few years ago with a lawyer who I believe was unethical. He asked her fee for doing the closing and she told him $1100. In the middle of the deal, she made a comment about her "paralegal" doing some of the work and told him "Oh, and you're paying for that too...." He didn't challenge her on it and wound up paying another few hundred.
But, maybe karma goes around. After closing, months later, he was reviewing water bills and saw that he was billed $700 for water that was before closing. What had happened was the closing was set for a certain date, but did not happen because the mortgage company backed out at the last minute. That's another story of totally unethical behavior. So the closing didn't occur for another month or so, in which time the loons were watering the lawn every day. The paralegal did not bother to get an updated water bill for the closing.
It took about a year of hounding the lawyer, but finally he got his $600 from her. She may have gotten it from the sellers, but good chance she didn't. They had moved many states away and were already having some legal troubles of their own....
I'm pointing out that licensed realtors know the state requirements and it is one route that can be taken. Having had experience here in Delaware, I'd go right for the lawyer but in some states you can probably get by without either. Depends how much work you want to do yourself. I know somebody here filing for divorce without a lawyer.
Pretty sound advice thus far thought some in tinted just a bit here and there.
Now for the bad news. Many states mine included have recently adopted a "no owner financed sales" without a mortgage license for property that is not the sellers primary residence.
That sucks really big time but it is the law. That is the first hurdle to overcome. The requirements to become licensed are quite burdensome IMO.
I almost wrote South "and East" Jersey because I know that Ocean County tends to follow the North Jersey custom of only using attorneys to conduct closings and not title companies. I am in Camden County and title companies is the way it is usually done here as well as in Burlington, Gloucester, Atlantic, Salem, Cumberland, and Cape May counties.
I agree that your friend appears to have been deceived by the attorney who quoted a flat fee and then upped the cost later on by saying her paralegal was going to do some of the work. Attorneys in New Jersey are supposed to have a signed fee agreement with their clients up front although they don't always do that. Most real estate attorneys in South Jersey state up front what their flat fee is for a routine real estate transaction, usually from review of the agreement of sale and documents through the actual closing.
Well maybe, maybe not. Realtors are not attorneys and they are not allowed to practice law. Drawing up the legal documents for a client is considered practicing law -- EXCEPT -- there is an agreed-upon waiver of this that was established in South Jersey in the feud on this topic between attorneys and Realtors. The attorneys agreed that Realtors could use a previously-vetted standard legal form for the Agreement of Sale (AOS) and could prepare the AOS for their clients if they used that form. Included in that form in bold print is an advisory that the parties should seek legal counsel and that the form also includes a 3-day Attorney Review Period. All parties have a 3-day period of time after all parties have signed the documents to have their attorney review the documents and either void them or suggest changes etc. Even though all parties had signed, the documents do not become enforceable until after the 3-day attorney review period.
I think that comes from a recent federal law and there are waivers and exceptions to that requirement. One is that if an individual does less than
3 such transactions per year (I think that is the standard -- I would have to check) he/she is exempt. The law was designed to protect buyers from investors who buy lots of properties (sometimes "subject to" the existing mortgage -- a mortgage takeover ) and then flipping them to buyers who may not be qualified by taking back owner financing. In other words, they were selling properties on terms that the buyers didn't really have the qualifications and income to meet and then those buyers later lost their homes in foreclosure.
Here's a link dated September 19, 2011 with updated information on this issue:
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And here's a link to a video on the topic:
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The bottom line appears to be that he original poster will not have any issues related to the S.A.F.E. Act regarding providing owner financing when selling his/her property -- primarily because he/she is not habitually providing owner financing, but instead is just doing it with this one property that is being sold to a consumer buyer.
I don't know about the whole state but it is the same thing in my part of PA. You go to a title company who collects the info, does the title search and prints out a standard sale agreement.
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