The process of purchasing a home for the first time can seem long and even a bit confusing. However, having the right real estate attorneys in your corner during a transaction proves to be essential. If you are considering the purchase of your first home in 2022, be sure to check out our First-Time Homebuyer Blog Series.
During a residential real estate transaction, both buyers and sellers go through a step known as “attorney review.” However, what exactly happens during this review process, and what information does a potential homebuyer need to know? This blog on attorney review will explain the steps for first-time buyers.
What is Attorney Review?
By law, if you have a realtor, you will sign a Standard Realtors’ Form Contract when you make your offer. When the seller countersigns accepting the buyer’s offer, then the contract is subject to attorney review which is a three (3) day period that either attorney, for the seller or buyer, can review the contract and disapprove of same in favor of certain suggested revisions.
Who is Involved in Attorney Review?
Once a contract is drafted by the buyer’s real estate agent, both parties’ attorneys are involved in the review process. During the review, both attorneys are in contact with one another to harmonize the requests of both parties, to reach a finalized contract at the conclusion of attorney review.
Specifically, once either attorney contacts the other in writing disapproving of the standard Realtors’ Contract as written, the “3-day clock” stops and the attorneys have as much time as they need to negotiate the final terms of the contract between themselves, obviously with input from their respective clients. The modifications to a contract of sale are usually done through a rider or addendum that each attorney prepares and sends to the other. When the riders or addenda are satisfactory to both sides, then the parties sign same to “bind the contract.” At that point, you will be “under contract.”
How Long Does Attorney Review Take?
As stated above, either the seller’s attorney or the buyer’s attorney must disapprove of the contract within three (3) days. After that, the parties, through their attorneys, have as much time as they need to offer revisions to the contract through a rider or addendum. As such, there are scenarios where attorney review takes longer than anticipated due to certain important issues that must be worked out between the parties.
What Issues are Negotiated During Attorney Review?
There are many issues incorporated in a real estate contract of sale that must be negotiated and agreed during attorney review. Issues pertaining to the amount of the deposit, the date that the deposit is due, the scope of inspections, the time period for the buyer to produce a mortgage commitment, and the date of the closing are all issues that must be resolved during attorney review. Moreover, there are other issues that may need to be resolved during attorney review such as a home sale contingency for a buyer to sell their existing home, or conversely, a replacement home contingency for a seller that needs time to find a place to go. Similarly, the parties may need to negotiate a use and occupancy agreement for the seller to hold over after the closing, while the seller pays the buyer’s carrying costs such as the daily cost of the mortgage and taxes.
When Does Attorney Review Conclude?
Once the terms of sale are finalized, and the parties agree to same, the contract is legally bound, and it is now considered “under contract.” At this point, no further modifications can be made to the contract unless both parties expressly agree in writing. After attorney review concludes, the buyer will continue to work with their attorney to tender the deposit and start inspections, while simultaneously working with their lender to obtain a mortgage commitment.
With the various steps of attorney review considered, it is crucial to have a skilled real estate attorney to guide you through one of the largest transactions of your lifetime. Contact Abdou Law at (732) 540-8840 or (201) 450-9990 for more information on attorney review, the contents of this blog or any of our other services.