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Home Closing Preparation: An Interview with Bob Douglas of Hagan Davis Mangum Barrett & Langley PLLC

By Bob Douglas

Tell us a little bit about your company and its foundation.

Hagan Davis Mangum Barrett and Langley was founded in 2007 by attorneys who believed that they could best represent their clients in a small firm atmosphere, rather than within the confines of a large firm. Their philosophy is to provide each client, large or small, individual or firm, with quality representation at a fair cost.

Please explain the general process of closing a home sale:

The process of closing a home sale begins with the identification of a home by the buyer: right price, right neighborhood, & right features. Most of this identification is with the assistance of a real estate agent (a Realtor is an agent who has completed specialized training). Once the buyer identifies the home, the negotiation with the seller begins. Upon reaching an agreement, which should be reflected in a written Offer to Purchase and Contract, the buyer applies to a lender for a loan to finance the purchase. Often, however, buyers will pre-qualify for a loan with a lender, in order to gain negotiating power with the seller.

Although most contracts are negotiated between buyer and seller, we recommend having an experienced real estate attorney review the Offer to Purchase and Contract before it is signed. This often enables the buyer to avoid issues down the road, such as what personal property is included in the sale or what to do if issues arise concerning the construction or condition of the home.

Next, if the buyer has not already selected an attorney, one should be selected to examine the title to the property to insure that the seller has good title and can convey good title to the buyer. The title examination also reveals the existence of issues such as utility easements and restrictive covenants that might affect the buyer's enjoyment of the property. For example an easement might prevent the construction of a garage or swimming pool in a desired location. Likewise, restrictive covenants might restrict additions to the home or adding a fence. Covenants might also govern the location of a house on a vacant lot or impose dues for the support of a homeowner's association.

Another important step is the inspection by a licensed home inspector who will inspect the house for construction issues including the wiring, the heating, air conditioning and plumbing systems and the roof. This is done during the "due diligence" period included in the Offer to Purchase and Contract, which gives the buyer the right to opt out of the contract if there are physical problems with the house which cannot be repaired or which the seller refuses to rpeair. This is also the time for a pest inspection to determine if there is termite infestation or termite damage to the property.

We recommend obtaining a survey to confirm where the house is located on the property being purchased and to locate any easements or encroachments that might interfere with the buyer's enjoyment and use of the property. Quite often a fence or outbuilding thought to be on the property is actually located on adjoining property, or a fence or outbuilding belonging to an adjacent owner is actually located on the property being purchased.

Once the title examination is complete, the lender will schedule a closing and send the loan documents to the attorney for completion. At closing the attorney will go over the loan documents with the buyer, including the promissory note and deed of trust which gives the lender a security interest in the home to protect it if the buyer defaults, and explain the legal significance of these documents. Once the loan documents and the seller's deed are executed, the attorney will then confirm that nothing has happened that will affect the title to the property since the initial examination. The deed is then recorded, and the attorney obtains a title insurance policy which protects the buyer from issues affecting the title.

What is the realtors role along this process?

The role of the real estate agent, preferably a Realtor, is to facilitate the sale by the seller to the buyer. The process begins with showing the house to the buyer, continues with the negotiations between the buyer and seller and finishes with assisting the buyer in the loan process and helping the attorney bring the closing to a conclusion.

How long can this process take?

The process, from start to finish, can sometimes be accomplished in a relatively short period of time, or it can drag on for a long time. Negotiations between buyer and seller may result in numerous offers and counteroffers until an agreement is finally reached, or there may be an immediate meeting of the minds. There is no real timetable for the loan negotiations. While some lenders require more information than others, thirty days is often an appropriate length of time before the closing.

What are some issues that can arise during this process and how can they be resolved?

As I mentioned, some of the issues that crop up during the process include negotiation of the terms of the Offer to Purchase and Contract, the determination that the house and its systems are in good condition, that the title is good and the owner has the right to convey good title, and that the loan documents are properly executed. Most issues that arise in the negotiation stage can be overcome by dealing with experienced Realtors. The condition of the property and any survey issues can be resolved by obtaining an inspection and survey. Any title issues that arise can usually be resolved with the assistance of an experienced real estate attorney working with the seller or the seller's attorney. It often pays to get loan term quotes from more than one bank. While most banks will offer similar rates and terms, you might be able to get better terms by shopping around.

In summary, there are numerous components to the closing process. It is to the buyer's advantage to surround himself with experienced representatives: Realtor, attorney, loan officer and inspector. This will enable the buyer to find the right home, insure that it meets his needs and that he can obtain good title to it.

What is the best way for people to reach you and or your company?

Our offices are located in downtown Greensboro in the Wells Fargo Tower, 300 North Greene Street. Our telephone number is 336-232-0650, and our website is www.hagandavis.com.

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About The Author

Bob is an experienced attorney, concentrating in commercial and residential real...

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