The Role of an Attorney for House Buyers in S. Carolina
In South Carolina, you have to use an attorney in buying a house. The attorney has five things that they must do. In this article, we review all five things.
The attorney begins work on your file after you ratify the sales contract with the seller. The first thing we need to is to do the title search. The attorney or his paralegal will go to the deed’s office in the county where the property is and search the public records for all information on the title, ownership of the property. Who owns the house? Are there any mortgages the seller took out on the property? Are there judgments or liens against the property? Are there outstanding mortgages from previous owners? Is the chain of title, transfer of deeds clear? Are there covenants and restrictions which may limit the usage of the property? Is the property where it is supposed to be? Are the real estate taxes paid? Is there legal access to the property from the street? These are just a few of the questions that need answering with the title search.
Once the raw data from the title search comes back, the attorney’s office will handle any problems with the title work, if possible. For example, if there is a mortgage or judgment against the seller, the attorney will contact the creditor to get a “payoff”, the amount necessary to satisfy the lien. The attorney will contact the Homeowner’s Association to verify the dues are paid and when they are due again. If there are serious problems, the seller will get a chance to correct the problems with the title work. If the title issues cannot be resolved, the closing is cancelled. The attorney’s office sends the title work to your lender and what needs to be done to give the buyer good title.
The second step for the attorney is to prepare and review the documents of the closing. Your lender will send the attorney the “package” of documents that the buyer must sign, the note, mortgage, payment lender, truth-in-lending, etc. The attorney will prepare many documents themselves. This includes the deed, (title to real estate), and the HUD, the closing statement. The HUD is the document which shows you all the closing costs of the purchase and loan and how much money you have to bring yourself to the closing. The attorney makes sure that all the documents conform with the real estate contract and with state and federal law. I had to stop a closing one time because the lender’s closing costs exceeded 5% of the loan which violated South Carolina law.
I have one note on the preparation of the deed. If you are buying the house with your spouse, you will probably want the deed to have you and your spouse own title as joint tenants with the right of survivorship. This means when the first spouse dies, the remainder goes to the surviving spouse. Otherwise, the property will go according to the wishes of your will or the intestacy laws of South Carolina if you do not have one. Do you have a will? You need to. (http://socyberty.com/law/you-have-to-have-a-last-will-and-testament/) If you are buying an investment property with a business partner, you may want to own property as tenants in common. This way, your interest in the property would go according to the wishes of your will.
Everyone knows Step Three of the closing. This is the signing of the documents. The attorney will go over every document with you and the seller to make sure you understand them and they are consistent with your understanding of the sales contract and your loan. We will review the closing statement, the HUD, first to make sure you understand all the closing costs and how much money you need to bring to closing. The attorney makes sure all parties agree with the numbers of the HUD. Speak now or hold your peace! We will go over your note so you know your payment amount and interest rate and where you send your payment. Does your payment include escrows, that is money for taxes and insurance? With the mortgage understand this, “If you pay, you will stay; if you stray, you’re going away.” There will be 50-100 documents to sign, but only a small handful of them are important. The attorney should give those documents, the ones mentioned here, full time and attention. Make sure you understand everything important before you are finished and leave.
One important thing in the closing is to make sure you buy owner’s title insurance. If the attorney made a mistake in the title work or something was missing at the deed’s office (like a missing heir), you will be protected. It is cheap, as low as $75 and you only have to buy it once. Get it!
Once the documents are all signed, the attorney will record the documents. The attorney will record at the deed’s office the deed (that you own the house), the mortgage (the lien to the bank) and any satisfactions of mortgages or liens when creditors are paid off.
The attorney also collects and distributes the funds. The attorney collects the funds for the closing, your down payment and the loan money from the lender. The attorney then will distribute the money to everyone listed on the closing statement. The attorney will wire funds to the seller’s mortgage company to pay off the loan, pay himself his fee, money to the agents, insurance company, everyone on the HUD.
Something an attorney cannot tell you is whether you should buy the house. This is why you have the real estate agent and your own good judgment. The attorney tells you the legal significance of closing, buying the house, or not closing. The attorney tells you what may happen if you don’t buy the house and the terms of your loan. This is determined by your real estate contract.
Congratulations to all the buyers of houses, especially first time home buyers!
Jack Donlan is the pen name of William H. Sloan, a real estate attorney in Summerville, SC. He can be reached at sloanlawfirm.net or at 843-873-7531
