Describe the process of a residential real estate transaction.  

A typical real estate transaction progresses through four stages and should take from 30 to 60 days (it can go more quickly when necessary and desirable).  The initial stage is the contract stage.  A buyer presents an offer to a seller and it’s accepted.  An enforceable contract now exists.  The next two stages that I describe can overlap.  One stage involves an inspection of the property.  A buyer will typically have his licensed inspector review the property and check on its condition.  Often a buyer will request that the seller make appropriate repairs to the property.  Another stage occurring simultaneously is the buyer financing stage.  For many buyers this is effortless and simply a matter of waiting a week or two for your bank to get everything approved.  For others, it can be a harrowing few weeks where credit reports must be cleared up and various payment histories must be submitted to your bank.  The final stage of the real estate transaction process is the closing.  At the closing the buyer and seller each sign large piles of documents.  The buyer signs all of his mortgage bank’s paperwork and both the buyer and seller review and sign the documents which actually convey the real estate. 


What is the attorney’s role in a residential real estate transaction? 

At The Olson Law Firm, LLC we believe in being meticulous and thorough, period.  Ideally, the attorney would begin his involvement before a contract has been signed.  The first thing the attorney should do is review a buyer’s offer before it is submitted to the seller or the attorney should review the buyer’s offer once it has been submitted to the seller, prior to the seller’s execution.  However, too often we get the contract after it has been signed.  Still, there is an attorney review period in most contracts that allow for modification during the first 3-7 days after a contract has been signed.  The attorney will thoroughly review your contract and if necessary, written changes can be proposed to the buyer or seller respectively.  When we represent buyers, we generally recommend that an inspection of the property be done by a licensed home inspector.  When we receive the inspection report it is thoroughly reviewed.  If any repairs are required, we would make a written request that various repairs are completed prior to closing.  Often the seller will offer a credit amount rather than completing the repairs.  Once the contract and inspections are finalized, the time until the closing should mainly be a waiting game.  Sometimes buyers have difficulty qualifying for a mortgage and we often must request an extension of time for the buyer to qualify for a mortgage.  Prior to the closing, when we represent the seller, many, many documents must be prepared.  If things have been done properly prior to the closing, the closing itself should be uneventful.  The attorney will review the various documents that the buyer or seller respectively is signing and in all likelihood the transaction will close in about 1 to 2 hours. 


Is buying a condominium much different than a single-family home?  

Yes.  Buying a condominium is actually a more complex transaction and using counsel familiar with the Illinois Condominium Property Act is critical.  Here’s the gist of it, when someone buys a condominium unit they are buying both the unit itself and also a share or part of the condominium’s common elements.  Without getting into all of the nitty-gritty, the common elements are the condominium building other than the individual units that are managed by the condominium association.  See my blog, Closing Real Estate in Chicago (http://closingonrealestate.blogspot.com/), for more information about buying condominiums. 


Why should I use an attorney for a residential real estate transaction? 

First, an attorney is not required to be involved by Illinois law when real estate is being bought or sold.  However, the purchase or sale of a home is often the largest transaction a person will undertake during his or her lifetime. As a result, a prospective homebuyer or seller should take all precautions possible to make sure that the deal concludes smoothly and correctly.  Is it wise to save some $500 and not use an attorney when multiple hundreds of thousands (if not millions) of dollars are at stake? 


What is the Offer?

Once the buyer finds that home, their real estate agent typically helps the buyer fill out and sign a contract that is sent to the property owner, usually accompanied by an earnest money check. At this point, the signed contract is known as an "offer". No offer should be submitted without careful consideration of the attorney's role in the transaction. Just about all "standard" real estate contracts contain "attorney approval" or "attorney modification" clauses. No offer should be submitted unless the contract contains one.


When should the attorney review the contract?

Real estate agents will usually point out that the contract has an attorney modification clause and changes can be made later. The agent is only half right! In most cases, the buyer's attorney can iron out many problems in a contract during the contractual period provided for attorney review, however situations may arise that lead to disaster for a home buyer.  Modification clauses do the job most of the time, however, a few cases have come down from the Supreme Court of Illinois which indicate that a "modification letter" from your attorney to the Seller actually constitutes a counter offer and thus, the Seller could back out of the contract when presented with such a letter. For example, on Monday, "Buyer One" offers $100,000 to Seller who accepts. The contract is forwarded to Buyer One's attorney who reviews it and makes various minor changes and sends a modification letter to Seller. On Tuesday, "Buyer Two" offers $125,000 for the same property. Seller then receives the modification letter from the attorney for "Buyer One". His lawyer, being current with Illinois law, tells Seller that he may cancel the original contract with "Buyer One" and enter into a contract with "Buyer Two." Legal?? Yes! How can buyers avoid this problem? Allow your attorney to look at the contract before it is signed.


Does the buyer have the right to do a property inspection? 

Normally, a contract will also contain an inspection provision providing the buyer with the right to obtain a professional inspector to check the property for defects. Inspection clause provisions vary from contract to contract. Some allow the buyer to request repairs be made to the property, some require that repairs exceeds a certain dollar amount and others merely allow the buyer to cancel the deal because the condition of the property is found to be unsatisfactory. The buyer's attorney will assist the buyer in negotiating with the seller's attorney regarding repairs.


What is a mortgage contingency clause? 

Most contracts contain a mortgage contingency clause. That is a contract provision which allows the buyer to cancel a deal legally if the buyer cannot obtain a loan which satisfies the terms of the mortgage called for in the provision. The attorney will make sure that the loan complies with the contract terms and that the proper notices as to whether or not the loan is approved are forwarded to the Seller.


Should I do a final walk-thru of the property immediately prior to the closing?

Yes.  We can’t tell you how many times various leaks or garbage and such have been discovered the day before closing.  We have seen sellers who have not moved out fully thinking they would simply finish moving after the closing (when they don’t own the property any longer).


What must the buyer bring to closing? 

Typically, a current, government-issued photo ID, homeowners insurance, and MONEY!


What is the buyer’s attorney role at the closing? 

At the closing, the lender will deliver a "package" of documents to the title company. This package is comprised of many documents, including the note and mortgage and maybe as many as sixty other pages of documents disclosures and agreements. It is the buyer's attorney's job to walk the buyer through these documents, pointing out important terms and protecting the buyer's rights against the bank.  The Seller will also come to the closing with a package of documents, including, most importantly, the deed to the property. The buyer's attorney will scrutinize these documents to make sure that the buyer is purchasing the correct property, that all taxes and liens are paid and that title is clear. This usually involves a review of the documents and a survey provided by the Seller. If a mistake is made in the process, someone else may end up owning legal title to the home just purchased by the buyer. The services of a real estate attorney greatly reduce the likelihood of problems, provide an experienced guide to this very long and complex process and provide peace of mind to the buyers.


What is the seller’s attorney role prior to the closing? 

The seller's attorney's real work begins after the attorney modification period. It is at this time that the attorney will order title insurance and a survey (if required by the contract) as well as to satisfy any municipal requirements (inspections, transfer stamps, or water, sewer, and septic tests) that be necessary before the county will allow the recordation of a deed.  The "title commitment" is a written commitment to offer title insurance from a title company. The title company will do a search of the county and state records to determine the legal description and tax identification number of the property, who is currently in title to the property and what, if any, impediments to title exist. Once the title company returns its title commitment, the seller's attorney may go about obtaining documentation to satisfy any "exceptions" to title. An exception is an item which may "cloud" the title and prevent the seller from passing "clear" title on to a buyer. Such items may be building lines and easements, mortgages, mechanic's liens, municipal requirements or any number of covenants or restrictions contained in past deeds.  After satisfying all title exceptions, the attorney will prepare the various documents required to transfer title: a deed, bill of sale, affidavit of title, ALTA statement, closing statement and any other various documents required. These might include a deceased joint tenancy affidavit, a pay proceeds letter or a direction to convey. The list could be endless. The seller's attorney will either have the seller execute the documents in advance of closing or at the closing table. In many cases, sellers need not attend the closing.


What is the seller’s attorney role at the closing? 

After the flurry of activity that precedes the closing date, the actual closing is a test for the seller's attorney. The attorney will make sure that all documents are properly executed by the seller, answer any questions or concerns of the buyer, and settle any contractual disputes or problems that arise. The buyer's attorney will be checking the seller's attorney's work to determine if it accurately conveys title to the buyer.  The Olson Law Firm, LLC can make the closing a quick and painless procedure from a seller. After all, the seller just wants a proceeds check, not a headache.


What are The Olson Law Firm, LLC’s services and fees?  

For Both Buyers and Sellers
Review of Listing Agreement
Review of Contract Prior to Signing or Post-Signing if the contract contains an attorney modification period
Attend Closing and assist in the following:

For Sellers
Order of Title Insurance and Survey;
Procure Illinois, County, and Local Transfer Stamps, if any;
Procure water certifications, inspections, or tests required by various municipalities;
Arrange for current mortgage payoff;
Preparation of all necessary closing documents.

For Buyers
Review inspection report and negotiate repairs
Work with mortgage broker to make sure financing deadlines and informational requirements are met;
Explain the voluminous amount of mortgage and seller documents in clear, easy to understand terms;
Make sure deed is properly recorded and title policy is issued.

We generally charge a flat fee of $500 for real estate closings, although some exceptions do apply.  This does not include any costs incurred to third parties.  Fees are slightly higher on For Sale By Owner transactions and new construction.


How to get started? 

The first step to the real estate closing process is to fax a copy of your contract for purchase or sale or your listing agreement to us for review and discussion. To get this process started, please feel free to contact Peter R. Olson (petero@olsonlawfirm.net) or any of the other attorneys at The Olson Law Firm, LLC at 312-629-9900. We handle real estate closings throughout Cook, Du Page, Lake, and McHenry County, Illinois.


CONTACT US:

          The Olson Law Firm, LLC
          312-629-9900
          petero@olsonlawfirm.net