Are you prepared to buy or sell property? This article will cover the basic legal issues that should be considered when buying and selling property in Michigan.
The first document prepared in any real estate transaction is usually a Purchase Agreement. It is important to carefully review the purchase agreement to ensure that all material terms are included. In most cases, the Purchase Agreement should be a detailed, multiple page document that not only includes basic terms about the purchase price, parties, and property, but also identifies details about the transaction such as what items are included with the property, who is responsible for closing costs, and contingencies for the buyer and seller.
Before closing, the property Seller is usually obligated to provide an Owner’s Title Commitment to the Buyer which will protect the Buyer against any financial loss if there are any challenges that arise as to the integrity of the legal title to the property. It is important for the Buyer to carefully review the Title Commitment in order to ensure there are no exceptions or defects to the title policy that should be removed or dealt with prior closing, in order to ensure they are receiving clear title.
One part of property sale transactions where I see an increasing number of problems is Land Divisions. A land division usually arises when a Seller seeks to sell less than all of their property. For example, if someone owned a 40 acre parcel with a home on it they may wish to separate the farmland from the house in order to sell the house while keeping the farmland. Unless there is an exception, a person must submit a request to have their property divided to the local assessor before the property can be sold. If a person sells a piece of property without going through the proper land division process, the Buyer of the property has the option to void the transaction.
The last area of real estate transactions where it is often helpful to seek the legal advice of an attorney is the type of deed by which you give or obtain title to the property, along with how you hold title to the property. There are several types of deeds: Warranty Deeds, Covenant Deeds, and Quit Claim Deeds. Each type of deed contains a varying level of warranty for claims against title, with Warranty Deeds providing the most and Quit Claim Deeds providing none. If there is more than one owner of the property there are several ways to hold title to the property, including tenants in common, joint tenants with a right of survivorship, or tenants by the entireties. You should consult with an attorney to decide which type of ownership is appropriate to your particular situation.
In sum, real estate transactions can be very complicated. You should meet with an attorney well versed in real estate issues prior to buying or selling property to discuss your available options and to help you review and prepare the necessary legal documents for the transaction.