Every week, we ask a real estate professional for their Short List, a collection of tips and recommendations on an essential topic in real estate. This week, we talked with Lema Khorshid, a partner at Fuksa Khorshid, LLC, on how agents should navigate real estate transactions in Chicagoland.
It’s paramount that agents have a trustworthy, knowledgeable attorney to guide them and their client through legal turf – the below tips will help provide you with some necessary background knowledge on navigating the legal details in a real estate transaction in Chicagoland.
5. The First Step – Contract! Once a buyer and seller have met and come to terms on a price, each will have an opportunity to have an attorney review the contract. Normally, attorneys are not permitted to change the contract price; however, lawyers will add value in a myriad of other ways. For buyers, the attorney can help review the home inspection report and discuss various options available to the buyer to rectify issues illuminated by the report, including, but not limited to, obtaining monetary credits from the seller or having the seller make repairs to the property.
The attorney can also work with the buyer and his or her chosen lender to ensure the bank has all of the documents necessary for it to make a determination on any mortgage application submitted by the buyer. For sellers, the attorney can ensure that the proper disclosures have been attached to the contract and help review home inspection reports supplied by the buyer, as well as the repair and credit requests from the buyer’s attorney.
4. Get Your Documents in Order! Once the contract has been approved by both attorneys, the seller’s attorney will be crucial in gathering the documents necessary to transfer the property from the seller to the buyer; the buyer’s attorney will also need those documents in order to agree to verify that the seller is the legal owner of the property.
These documents may include water bill full payment certificates, underlying documents vital to obtaining the real estate transfer tax stamps (which are required in certain municipalities and Cook County), condominium disclosures and a paid assessment letter (if the property is a condominium), a payoff letter from the seller’s bank (if there is a mortgage on the property), a legal survey, and a commitment to issue a title insurance policy, which will help protect the buyer from certain clouds on the title. The buyer’s attorney will then review the documents to confirm that the seller owns the property and is able to sell it to the buyer, unencumbered by any unsettled liens, taxes, assessments or claims against the property.
3. Inspections are Key! – The buyer’s attorney can also help with the pre-closing inspection of the property, where the buyer is given an opportunity to conduct walkthroughs to inspect the property and ensure that is in the exact condition as stipulated in the contract. If there are any damages or problems, a buyer can consult with his or her attorney about delaying the closing and/or receiving compensation from the seller for the damage.
2. Time to Settle Up! In addition, prior to (and during) closing, both sellers and buyers will want to review and approve, with their attorneys present, the HUD-1 Settlement Statement, which lists costs related to the sale of a residence, or an estimate of closing costs on the property given by the mortgage lender.
This is the final statement that breaks down all expenses for both the seller and the buyer. Both seller’s and buyer’s attorneys will want to make sure that all credits, taxes, fees, and expenses are listed. Both attorneys will also want to review the documents necessary to transfer the property from the seller and the buyer, including, but not limited to, the deed and affidavit of title, which the seller’s attorney will also be responsible for preparing.
1. Closing Time! Finally, during the closing, the buyer’s attorney will review mortgage documents required by a lender, if any. The buyer’s attorney will also ensure that the necessary disclosures are received from the lender, if any. Also, both attorneys will work together to ensure all documents required by the city, county, and state in which the property is located are properly completed and/or filed to ensure a smooth transfer and recording of the transfer.
While selling or purchasing real estate may seem mountainous at first, having a prepared lawyer by your side throughout the process can turn what looks like rough waters into smooth sailing.
Lema Khorshid is one of the founding partners at Fuksa Khorshid, LLC, where she handles a wide range of legal matters for small to mid-sized closely held businesses in Chicago and New York. Bringing 15 years of business experience to her counsel, she helps encourage her clients to be proactive about their ventures by developing sound legal and business strategies that work in tandem to help them maximize their profit and ensure their long term success. Lema received two bachelor’s degrees from the University of Illinois at Champaign-Urbana in finance and marketing, with a concentration in international business and Italian. She received her Juris Doctorate from Loyola University School of Law in Chicago.