When purchasing a piece of real estate, you may wonder if it is really necessary to hire an attorney to facilitate the transfer. After all, people buy and sell real estate all the time; it seems like it must be fairly routine and straight-forward. However, hiring an attorney at the time of purchase may eliminate costly and unnecessary headaches down the road. For example, an attorney will search for any title defects that could cause financial loss, draft and file a properly executed deed to protect your interest, and review any association documents that may obligate the property owner to follow certain restrictions and pay association fees.
Title to property is actual ownership of the property. If a proper title search has not been completed there could be unforeseen issues with the title, including: liens or mortgages encumbering the property, easements such as a right-of-way, non-conforming zoning issues, or the purported seller’s lack of authority to transfer the property. A title search includes a review of the chain of title for any of these types of errors, assessments, debts, or other restrictions by reviewing documents at the Registry of Deeds, records on file with the Clerk of Courts, judicial liens, taxes, street easements, sewer easements, special taxes, and other documents. The buyer may require that any encumbrances revealed by a title search be corrected before closing such that the seller can provide marketable title, or in some cases it may prevent the deal from going through all together. Imagine buying a property without having a proper title search done, assuming it is entirely free of title defects, and suddenly another individual claims he or she owns the property because the person you purchased it from was not authorized to make the transfer. Or maybe you are expected to pay off a sizable lien you did not know about. Or you are notified that the building you own is not within the required set-back limits. A proper title search would uncover these types of issues. Additionally, an attorney can help you purchase title insurance, which is a low cost, one-time premium paid at the closing after a title search has been conducted to protect against financial loss due to unknown, adverse claims against the title to your property.
An attorney can also prepare and record a properly executed deed. A deed to property is the legal instrument that actually transfers the property from the seller to you. The deed should provide an accurate description of the property and be signed by the seller. It also should be recorded with the Registry of Deeds in order to put others on notice of the transfer and your ownership. Recording a deed is crucial to protecting your interest against others who may claim to have some interest in the property. For example, someone may sell a piece of property to you, but if you do not properly execute and record a deed, the seller could turn around and sell the property to someone else who will then claim to own the property you paid for. Maine has a race-notice statute governing these types of situations, which says that the later purchaser prevails if he or she had no notice of the earlier transfer and he or she recorded a deed before you did. On the other hand, if you had properly recorded a deed, you would prevail because the subsequent purchaser would have had both notice of the transfer to you and he or she would not be able to first record a deed for the property. Therefore, the proper execution and recordation of a deed is crucial to protecting your property interest.
Finally, if the property is part of an association, it will be necessary to have the association documents reviewed for any restrictions or obligations placed on the property. For example, annual association fees may seem straightforward, but looking more closely may reveal much higher sums that can be collected in the form of special assessments that the buyer should know about. Also, there may be restrictions about: what paint colors can be used, types and sizes of houses that can be built on a piece of land, types of vehicles that can be parked in a driveway and for how long, tree removal, fence construction, set-back limits, or a number of other rules. In order to fully understand the obligations and restrictions of a particular association, it is important that these documents be reviewed carefully.
Ultimately, it is less expensive and less time consuming to hire an attorney to make sure you take the right steps during a property transfer than it is to go to an attorney after a problem with the property arises. Whether an attorney is able to pick up on an error that can be corrected and allow the transaction to move forward, or the attorney finds such a substantial defect that you no longer wish to purchase the property, seeking proper legal advice can help you make an informed investment decision and avoid trouble down the road.
Tamlyn Frederick is a real estate attorney at Frederick, Quinlan & Tupper in Portland, Maine.