What to expect from your attorney in a property purchase
I was unaware of the role that my attorney would play when I made my first real estate purchase. As first time home buyers, it is helpful to know the steps entailed in this crucial process. I wanted to shed some light on the process for fellow first-time property owners. This post will, therefore, guide you on what you should expect from your attorney in a property purchase transaction.
A lawyer will be involved after the loan is approved, and all the documentation is in place. The lawyer stage can be quite lengthy, and can span for couple of months. Your lawyer, the vendor’s lawyer and the lending agency work together to expedite this part of the process.
Out of the bank’s hands, and into the lawyer’s. You are one step closer to owning your piece of the rock. Let’s press on!
There is no exchange of monies in your first meeting with your attorney, so you can rest easy. However, you should ask yourself whether you will use the agency’s attorney or your own?
The Agency’s Attorney or Your Attorney?
The choice of attorney is completely yours; my husband and I did not have a personal attorney, so we used the same one as the lending agency. The decision to use the agency’s attorney has no impact on the process described below. However, it does reduce the attorney’s fees which you will have to pay.
What should you expect from your attorney in a property purchase?
Initial Meeting with Attorney
Let’s begin at the first meeting and take it stage by stage, shall we!
You will have several meetings with your lawyer, where you are required to sign a number of documents.
It is important to note, an excellent lawyer should sit and explain the terms and conditions outlined in any documents involved in the acquisition process, especially the ones which require your signature. They must also be willing to answer any questions that you may have.
We met with our lawyer in December 2018, after first meeting with the lending agency. They passed on our information to their lawyer, who became our lawyer.
Our initial meeting with the lawyer was concise. The objectives were to:
- Meet face to face to become familiar and introduce ourselves.
- Receive an explanation of the overall process which will occur.
- Inform her who the vendor/seller was.
- Find out who the vendor’s attorney was.
Consent Letter and Commitment Letter
The initial meeting occurred after we signed a consent letter at the lending agency indicating we would like their lawyer to act as our attorney in the land acquisition process. The lawyer also received a commitment letter, outlining the terms and conditions of the mortgage agreed upon with the financial institution. You will receive a copy of this for your records.
Purchase & Sales Agreement – What is it?
Purchase and Sale Agreement – This is a legal document outlining the terms and conditions for each party involved in the transaction, that is the vendor and the buyer (you).
The Purchase and Sale Agreement will be the first document which needs a signature from you. We perused the agreement in our first meeting and discussed the details of the document in our second meeting.
Bear in mind that each Purchase and Sales Agreement will vary depending on the parties involved. For example, a clause in the agreement can state that the land must be cleared before purchase. This may not be present in another contract for a similar transaction, this may occur because the terms and conditions are designed to meet the seller’s and buyer’s needs.
THE PROCESS
The Purchase and Sale Agreement was drafted by our attorney, who also assisted us with all of our queries and concerns.
The agreement was sent back to the vendor’s attorney, for any amendments on her behalf. This is done so that he/she may look at the adjustments and make any others if necessary.
The process repeats itself until both parties are in total agreement. If there are no adjustments, your lawyer will call you up to sign the agreement and discuss the final terms and conditions. We signed the final Purchase and Sale Agreement on April 24, 2019, in the third meeting.
Downpayment/Deposit Request for Property Purchase
In our previous blog post, you would recall that a deposit is required, in most cases, for all real estate transactions. For more information on this click the following link. Buying Land in Barbados – Four Initial Costs
Our attorney informed us that as long as the terms in the Purchase and Sale Agreement were accepted and signed by both parties, the next step would be requesting the 10% deposit for the land transaction.
The lawyer sent correspondence to the lending agency requesting the 10% deposit after the Purchase and Sale Agreement was signed.
The documents for the downpayment were signed on April 12, 2019, at the lending agency. Click the following link to read our post on the deposit meeting held with the lending agency. How to make the First Deposit on Your Land Purchase.
Conveyance, Assignment Letter and Mortgage
Alright, the downpayment has been made, both the buyer and the seller agree to the conditions outlined. So, what’s next? Honestly, you wait! We spoke to our lawyer and she kept us informed on what was happening behind the scenes.
On June 20 2019, we had our fourth meeting with the lawyer to sign the conveyance and mortgage documents. These can be signed in any order.
The conveyance transfers the property from one person to another. It is prepared by the seller’s lawyer after the deposit has been received from the buyers. See an extract of the conveyance below.
Mortgage Document
The mortgage document should be prepared by your lawyer. This is an agreement between the mortgagee (lender) and the mortgager (borrower) outlining the terms and conditions of the mortgage:
- The process of notification for early repayment
- The process of notification for the change of interest rates
- Restrictions on the land, such no as no leasing allowed
It also speaks to the repayment terms of the mortgage and the duration of the mortgage, normally calculated by month.
Assignment Letter for Insurance Policy
We took out term insurance to cover the residual portion of the mortgage which not covered by our lending agency. A term insurance policy was chosen because it is cheaper than whole life insurance policy.
We were required to sign an agreement which stipulated that ALL MONIES in the policy, including PROFITS and BONUSES (at present and to be incurred in the future) have been assigned to the mortgagee. This was signed in duplicate.
We also signed an assignment letter indicating that the insurance policy is in the lawyer’s possession and has been assigned to the mortgage. We signed the letter acknowledging this and to indicate that we no longer have the physical policy. This is kept with the title deeds.
Change of Ownership
We also signed a document entitled “Property Tax Act Chp 12A” for the Barbados Revenue Authority. This document indicates that the property has changed ownership, so that the upcoming land tax bill will be in the new owners’ names and address.
We got a call from our lawyer on June 26 2019, informing us that everything was in good order. She said:
- The vendor’s lawyer sent the final documents to her.
- The next step would be to request the rest of the funds from our lending agency
- The lending agency will call us to sign documents, releasing the remaining funds for the transaction. We call this the final drawdown.
FINAL DRAWDOWN
After all of the above steps, the transaction was finally completed. :). Have you reached this stage with your attorney?
The lawyers made the request for the remainder of the funds to settle the transaction and brought it to a close. We met on July 8, 2019, at our lending agency to have the funds disbursed.
The drawdown included lawyer fees and the remaining balance for the land transaction. This was sent by cheque to our attorney.
Click the link to read our post which addresses the process of ” Making the FINAL payment on your Land Purchase”.
Summary
In summary, you should expect the following when interacting with your attorney in a property purchase:
- To sign a letter approving the lawyer to act on your behalf regarding this purchase.
- Your lawyer to set up the meetings with you to sign and discuss documents. You should also expect the lawyer to call you to provide updates throughout the process.
- An explanation of the terms and conditions of the Purchase and Sale agreement.
- The Purchase and Sale agreement to go back and forth between the seller’s lawyer and the buyer’s lawyer.
- Your lawyer to make a deposit request for the transaction.
- To sign the conveyance document which transfers the property from one person to another
- A copy of the Mortgage document which outlines the terms and conditions of your mortgage with the bank, which requires a signature.
- To complete the assignment of your insurance policy to cover the mortgage.
I hope this post was helpful in providing a glimpse of what to expect from your attorney in a property purchase. Feel free to share this with your friends and family. Best of luck!
Photo Credits
Photo by Christina @ wocintechchat.com on Unsplash
Credits for photo to Cytonn Photography on Unsplash
Photo by Bernd Klutsch on Unsplash
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