Real Estate Frequently Asked Questions

Q. I have just signed a contract to purchase real estate; what should I do next?

A. Immediately after signing the contract, follow these steps for a successful closing:

1. Contact attorneys to discuss legal representation. Your realtor will provide names and numbers. Ask the attorneys what their closing fee will be, if the fee includes the title exam, and whether the fee will be waived if the contract fails to close.

2. Deliver a copy of the signed contract to the attorney you retain. Your attorney needs the contract to order the title work and ensure that your rights are protected. Your attorney should be retained and delivered a copy of the contract within one week of it being signed.

3. Apply for a mortgage loan. To expedite the loan approval process, immediately deliver copies of the following documents to your lender: the contract; two years of W2's; a year-to-date paycheck stub; three years of tax returns; and current bank statements.

4. Retain a home inspector and a termite company to examine the property and a surveyor to plat its boundaries. Your contract has deadlines on reporting property or title defects to the seller. Ask either your attorney or realtor to assist you with these matters.

5. Apply for hazard and flood insurance policies. To expedite the underwriting process, immediately provide the following information about the residence to your insurance company: the year it was built, the number of heated square feet, the type of construction, and its elevation above sea level.

6. Be prepared to obtain a certified bank check for the funds needed to close the contract. A personal check is not acceptable. Your attorney will let you know the exact amount needed to close the day before closing.

Q: Why do I need an attorney?

A: Conducting a real estate closing constitutes the practice of law, which only an attorney can do. In South Carolina, your mortgage lender will require that an attorney be selected to conduct the closing. South Carolina real estate law is quite complex and you need an attorney to examine the title records for prior conveyances, liens, encumbrances and errors in the deeds within the chain of title.

The purchase of a home is the biggest investment most of us will ever make and a real estate closing is a complicated legal process involving the execution of many legal documents which have significant financial implications; for example, the contract of sale, promissory note, mortgage, settlement statement, deed and many other documents. An attorney will examine the closing documents on your behalf to make sure your rights are protected. Anxiety is a natural part of buying or selling a home, and the guidance of a competent attorney can reduce anxiety and make it a positive experience for you.

Q: Why do I need a home inspection?

A: The purchase of a home is probably the largest single investment you will ever make. You need to learn as much as you can about the condition of the property before you buy, so that you can minimize unpleasant surprises and difficulties afterward.

The standard home inspector's report will review the home's heating and air conditioning system, interior plumbing and electrical systems; the roof attic and visible insulation; walls, ceilings, floors, windows and doors; and the foundation, basement and visible structure.

Your real estate contract may obligate the seller to repair any defects to the home. However, unless you notify the seller of the defects prior to closing and request that they be remedied, you may lose your right to have the seller make the repairs.

A home inspector is typically contacted immediately or within a few days after the contract has been signed. Do not delay ordering the home inspection or delivering a copy of the inspection report to the seller; often, the contract will limit the seller's repair obligations to matters which the seller has received written notification of within 14 days of the contract date. Also, before you sign the contract, make sure that there is an inspection clause in the contract, making your purchase obligation contingent upon the findings of a professional home inspection.

Even if the home inspection proves the home to be in good condition, it was still a good idea to have one done. With the home inspection report in hand, you can complete your home purchase with full knowledge of the condition of the property and all its equipment and systems. You will also have learned many things about your new home from the inspector's written report, and will want to keep that information for future reference.

Q: Why do I need title insurance?

A: Purchasing a home is likely to be one of the most significant investments you will ever make, both financially and emotionally. You can not afford to take a chance that your home will be taken from you due to a flaw in the title. Title insurance will provide you with peace of mind.

The quality of any title to real estate is a matter of opinion over which persons, learned in the law of real estate, may differ. Even though title to your property may appear to be perfect, there are many unknown risks that even the most thorough title search cannot uncover. For example, a party transferring title may have been legally incompetent or a deed could have been forged. Title insurance eliminates all of these risks and prevents losses in advance.

Claims against title, even when they are without merit, can involve lengthy and expensive litigation. If a loss claim is raised against an insured property, the title insurance company will not only compensate for any valid claims, but will also pay for legal fees and court costs to defend title.

Your mortgage lender will also want title insurance to protect its collateral, the title to your real estate, in case of foreclosure. Most mortgage lenders require title insurance, and the borrower is usually responsible for paying the premium for the lender's title insurance policy.

The premium that you pay for the title insurance policy is a one-time payment (unlike the annual premium renewals of most other forms of insurance). Also, as opposed to providing coverage for a specified, limited term, title insurance protects the property owner and/or the lender for the duration of ownership or interest in the property.

For the security of your investment, and for your peace of mind, protect yourself with title insurance.

Q: What are the different ways to hold title to property?

A: Most property owners hold title in one of three ways: sole ownership, tenants-in-common, or joint tenants.

Sole ownership: This is the most common way a single owner holds title. When the sole owner dies, his interest in the property is passed to whoever he names in his will or to his heirs (if he has no will) in accordance with the South Carolina laws of descent and distribution.

Tenants-in-common: Two or more people who take title to property usually take title this way. Tenants-in-common do not have to own equal interest in the property. For example, one owner could own one-third of the property and the other could own the remaining two-thirds. However, each tenant-in-common has an "undivided interest" in the property and a tenant's interest can not be broken down into a "you own this bedroom and I'll own this bedroom" situation without a separate written agreement.

Any of the tenants-in-common can sell their interest in the property to a third party without the consent of the other owners. When one of the tenants-in-common die, his interest in the property is passed to whoever he names in his will or to his heirs (if he has no will).

Joint Tenants: This is the most common form of ownership between married people, although the tenants do not need to be married to take title as joint tenants. The most important aspect of joint tenancy is that there is an automatic right of survivorship. For example, if a husband dies and he and his wife held title as joint tenants, then his interest in the property automatically passes to his wife (even if his will provides for it to pass to someone else).

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