Alexander W. Tighe
Attorney At Law
12 Old Boston Post Road
Old Saybrook, Connecticut 06475
(860) 388-0049
Fax: (860) 388-9605
Selling Property in Connecticut
The Listing Agreement:
This is a contract between you and the listing agent
whereby you are agreeing to compensate the Realtors for the services they
will provide in offering your house for sale and procuring a buyer. This
contract also contains a description of what you want to sell, e.g. the
property located at 123 Elm Street, Westbrook, and those items of
personalty that are sold along with the house such as the range,
washer, dryer, AC system, curtains and drapes . It should also specify
any items which you do not intend to sell with the house (you do not
have to include furnishings, clothing, lawn equipment, vehicles, etc.).
In the end, the Realtor must have a clear understanding as to what he or
she is to be selling and what is not included in the sale. This
is particularly important for showings where the Realtor will
undoubtably be asked by prospective buyers whether the small lawnmower
shed in the back will stay or be removed prior to sale.
Disclosure:
Connecticut Statutes require that prior to the
execution of a contract or binder (only Fairfield County seems to use
binders with any frequency) that the prospective purchaser be given a
written residential condition report. Failure to do this will result in
a credit to the Buyer of $300.00 at closing. You are required to
disclose only that information regarding the house of which you
have actual knowledge. Your agent will give you a copy of the form and
will often help you fill it out. This form does not act as a substitute
for the Buyer's inspection, but the report has been used in the event
a Seller commits fraud. This has occurred in many instances, including situations in which the Seller
has stated that there have been no problems with the septic system and
after closing the system fails and the Buyer subsequently learned that the Seller was
having to pump the system monthly.
Purchase Contract:
In Middlesex County, it is the general custom for
the Realtors to prepare the contract using the Middlesex Shoreline
Association of Realtors, Inc. Purchase & Sale Agreement. This is
generally prepared by the Buyer's agent. Some offices however have their
own contracts. Read them carefully. As a seller you are at an advantage
here. Often, due to the shortage of homes for sale, the prospective
Buyers feel they must submit a contract immediately so as not to lose
the property to another Buyer. This often does not leave time for their
attorney to review the agreement prior to its being submitted. Sellers,
on the other hand, will receive a contract from the Buyer and it will generally give you 24 to 72 hours for a responce. Now is a
good time to contact your lawyer to have him or her review it with you. The
contract should include and exclude those items listed in your listing
agreement unless you have changed your mind about excluding the riding
lawnmower. Here being specific about what is being sold and what is and
is not included is very important.
You will also find that the contract is likely to
contain such conditions as the Buyer will have a right to inspect
the property and if he or she is unhappy with the results the Buyer can
either terminate the contract or request that it be modified such that
the offending conditions are addressed either by being repaired or by
having some sort of monetary credit to the Buyer at closing. You, the
Seller, are
not obligated to make a concession although you may risk losing that
prospective Buyer. If it is your intention that the place be sold "as
is" and that you will not entertain any requests for modification or
adjustment, let your Realtor know prior to signing the contract. This
will undoubtably influence a number of prospective purchasers and may
scare a few off. Remember, making a deal often requires some
flexibility.
Another common condition is a mortgage contingency.
Here the Buyer agrees to buy the house only if a bank will lend him or
her the money. A certain period of time is set out in the agreement in
which the Buyer must obtain a commitment from a bank. If the Buyer does
not get a mortgage commitment by the date stated in the Agreement and
properly notifies you our your attorney, the Buyer may terminate the
Agreement and the deposit must be
returned. There are various rules with regard to the Buyer having to
use diligent efforts to obtain the mortgage. Also, it is not uncommon
for the Buyer's broker or attorney to have to ask for a short extension
to the commitment deadline. The option to continue the contract then
becomes yours. Also be aware that nearly all mortgage commitments are
contingent. They are contingent upon small things being done
by the Buyer such as the Buyer providing copies of tax returns, pay
stubs, or proof that he or she is still employed. Generally these are
all things within the control of the Buyer.
The next contingency is that you will provide clear
or marketable title to the property. You must have the power to sell it
free and clear of mortgages, UCC filings, attachments, judgment liens,
real estate tax obligations or succession tax liens. The proceeds from
the sale may be used to discharge those items if you are unable to have
releases at time of closing. Your attorney will assit in obtianing the
necessary releases.
Sometimes the Buyer will insert a "Hubbard Clause"
which says that the Buyer is only obligated to buy your house on the
condition that the Buyer can first sell his or her home. You are not
obligated to accept this or any other condition, but at times it
may be the fastest way of completing the sale.
Finally, you have a chance to insert, prior to your
signing the contract, any contingencies you may require. Some such
contingencies might be that you will not close until school ends in the
Spring so that your child might remain in his or her class, that you
not close until you, as executor, receive probate court approval, or
until you find a new home to purchase.
Options:
Transactions can be structured in many different
ways. The above contract is the most common or conventional way. There
is sometimes used a rental with an option to purchase whereby some of
the rent may be applied to the purchase price. Another option is to
have you, the Seller, take back a first or second mortgage. If the
property is investment property, you may wish to look into the tax
advantages of a like-kind exchange.
The Lawyer:
Generally it is a good idea to contact your lawyer
early on in the process. Have him review the contract. If you feel more
comfortable, you can have him review the listing agreement as well. The
lawyer is there to protect your interests and to assist in making the
deal happen. It is for this reason that I suggest you use a well
experienced Real Estate Attorney, one who has considerable experience
with real estate matters. I suggest this for a number of reasons. First,
it is not unusual for there to be found title issues which need
resolving prior to closing. These can often be dealt with quickly by
one who has done this before. The second reason is that as a matter of
skill, knowledge and temperament a real estate attorney may be better
able to hold a deal together without creating a combative situation. A
real estate attorney works to draw the parties away from litigation and
toward the amicable resolution of disputes.
The lawyer will prepare the deed, and conveyance tax
statements, arrange for the payoff and release of your mortgages,
calculate and make closing adjustments for taxes, oil, rents, and
common fees or association fees, and schedule the closing. He will also
assist in resolving title problems, but depending upon the nature of
the problem there maybe additional fees for this. There are often times
where it is difficult or impossible for the Seller to attend the
closing. In these instances, the lawyer can prepare documents ahead of
time for your signature or can prepare a Power of Attorney to allow
someone else to sign closing documents on your behalf.
From time to time, and particularly with transfers
within a family, the lawyer will be asked to prepare a mortgage and
note if the Seller is willing to act as the bank for the Buyer.
Your lawyer should also prepare a settlement
statement for you which itemizes all of the costs and credits having to
do with your sale. Preferably this will be done in a clear manner so
that you and your accountant will understand where every penny went.
The Seller's Obligation:
The Seller must provide the lawyer the following:
a. List of
mortgage holders with the account numbers and a phone number for each
lender.
b. Your social security number(s).
c. The address to which you will be moving.
d. A copy of the contract.
e. The name of your Realtor.
f. Phone
numbers at which you can be reached so that you can be kept abreast of
what is happening.
Your Realtor:
Your Realtor is not a lawyer. They do a wonderful
job of marketing, finding buyers, assisting in scheduling inspections
and coordinating moves but do not insist upon legal advice from them.
You have a lawyer. Use him.
Our Agreement with you, the Seller:
When representing the Seller in a residential transaction we typically render the following services:
1. If you have not entered into a binding
contract before retaining us, we will advise you as to proposed terms
and provisions for the contract and help you negotiate the
contract. If you have already entered into a binding contract
prior to contacting us, we will advise you as to the terms of your
contract and the local customs that affect residential transfers.
If you have not already, please instruct your realtor to provide us
with a copy of the contract as soon as possible.
2. We will contact the buyer's attorney to
advise him or her of our representation of you in this matter. We will
schedule the closing and advise you of the same. Please do not
schedule any movers until a firm closing date has been set. The
closing date in the contract is a target date and is not a firm closing
date until all parties agree to the scheduling of same. If there are
any dates on which you will not be available for the closing or you do
not intend to attend the closing, please let us know as soon as
possible.
3. We will request a payoff figure for any
mortgages or liens on the property. Kindly advise us of any
mortgages, home equity lines of credit or liens on the property.
Be sure to provide the lender or creditor's name, telephone number and
any loan or account numbers. When the buyer's attorney has
completed the title examination, we will discuss the results to ensure
that there are no other liens or encumbrances which must be released
prior to the closing. Frequently lenders and creditors do not issue a
release until payment in full has been made. If that is the case,
we will prepare a letter of indemnification for your signature.
The indemnification enables the closing to take place. Under
certain circumstances there are civil penalties associated with the
lender or creditor's failure to provide such a release in a timely
manner. An action to recover these penalties on your behalf is
outside the scope of the closing services defined in this letter.
If it becomes necessary to seek such penalties from the lender or
creditor for failure to provide the release in a timely manner, we will
enter into a separate fee arrangement with you.
4. We will prepare the closing statement,
calculating the appropriate adjustments and expenses of sale.
Sellers expenses at the closing include state and local conveyances
taxes, which are set by the state and based on the sales price.
Realtors commissions are separate expenses paid at closing and will be
reflected on our closing statement. We will confirm the adjustments and
expenses with the buyer's attorney and review it with you at the
closing.
5. We will prepare the deed conveying title
for your signature as well as all appropriate tax forms. If you
will not be attending the closing, we will prepare the documents in
advance for your signature and request that you execute a power of
attorney for real estate purposes authorizing Attorney Tighe to execute
any additional documentation at the closing. We will provide you
with copies of all pertinent closing documents at the time of closing.
6. We will represent you at the closing, issue our
firm's trustee checks in payment of the sale expenses and
payoffs. After payment of all sale expenses and payoffs, we will
issue our trustee check payable to you for the net proceeds of
sale. We will forward the appropriate payoff funds to lenders or
creditors via overnight delivery. This usually saves you several
days of interest. The cost of the overnight delivery service will
be reflected on our closing statement as an expense to you. If
you require any different arrangements, such as multiple checks, wire
transfers, certified funds or bank teller's checks, it is important
that you let us know in advance of the closing so we can make the
appropriate arrangements. Any bank costs or charges associated
with these alternative arrangements will be deducted from the net sale
proceeds. There will be a release tracking fee,
payable to an outside vendor, for each lien release required to be
filed on the land records.
Our fee for the closing services will be payaboe at
time of closing. If for some reason you do not close on the home,
you will be required to pay us all of the expenses incurred on your
behalf plus a reasonable fee for services that this firm has rendered
on your behalf.
The services described above and fees quoted relate
to a usual and customary sale transaction. If extended and
contentious negotiations develop and additional documentation results,
we will be entitled to additional fees. You will be advised of
those additional fees at the time when the services are rendered.
Our services do not include suits or claims by or against you or your
agents; negotiation or preparation of documentation relating to the use
and occupancy of the property; or the resolution of any claimed defects
relating to the physical condition of the property, the status of
title, the survey, or compliance with wetlands, zoning, building or
housing regulations. If necessary or appropriate, these legal
services will be billed at our hourly rate, or if possible, at
paralegal rates, which are substantially lower.