Ask an Attorney - Q&A

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The following questions were questions posed to Picket Fence Preview, which were then referred to interested attorneys. Disclaimer: The following answers are not intended as, and cannot be taken as, legal advice on any particular transaction. Seek advice specific to your situation.

Q1) I am buying a house and my lender  says I need to use the bank’s attorney.  Can I use my own attorney?

Answer: You are entitled to have an attorney who represents you and not the bank. When there is a problem at the closing, ask the bank’s attorney who he or she will be representing, you or the bank? Your attorney will protect your interests throughout the entire process, not just at the closing. Your lender may  close hundreds of loans a year, you may purchase a house once every 5 or 10 years, and it is the likely the largest purchase you will ever make. Don’t rely on someone else’s attorney when buying a home.

Q2) The buyers interested in my property are represented by a buyer’s broker, who insists that I (the seller) pay her a 6% commission because “this is the way it is done.” What are my options as the seller?

Answer: Maybe this is the way that particular buyer’s broker would like to do it, but you are free to negotiate the amount of the commission paid to a buyer broker, if any at all. The seller is not required to pay the buyer broker at all, but may wish to pay 2-3% so that the purchase goes forward and closes (in an MLS real estate listing, the agency representing the buyer splits the usual 5-6% commission with the seller's agency). Consider asking the broker to reduce the amount of their commission or ask the buyers to pay a portion of the commission. This is negotiable, like many other issues involved in selling and buying real estate. Obviously you are in a better position to negotiate this if there are several potential buyers interested in your property.

Q3) When showing my house to potential buyers, should I disclose any defects or wait until I provide them with the seller’s written disclosure?

Answer: You should discuss any material defects with any prospective buyers as soon as they express an interest in your property. Major defects could include a leaking roof, cracked and leaking foundation, malfunctioning septic system, broken furnace, contaminated water supply, excessive heating and cooling costs, etc. Provide written disclosures at the time of signing a purchase and sale agreement with the buyers. Sellers who fail to disclose, or who even attempt to hide material defects are often sued by buyers and face expensive litigation, settlement payments and attorney’s fees.

Q4) We are selling our home in Vermont but we now live out of state. What do we need to be aware of as out of state sellers?

Answer: If you cannot be present to attend the closing, you can appoint your attorney to represent you by power of attorney. You may need to pay real estate withholding tax to the State of Vermont if you are a resident of another state at the time of your closing. Depending on when and how long you occupied your Vermont property, you may have to pay federal capital gains taxes as well. Consult an experienced accountant.

Q5) As a buyer, what are the normal contingencies I should include in a purchase and sale contract?

Answer: Make sure the contract contains a financing contingency so if you are not approved for a mortgage, you will get your deposit back. Also include an inspection contingency so you can negotiate the cost of any repairs or defects after you have had the property inspected. The inspection should include the  septic system, water supply, radon as well as the structural, mechanical and electrical elements of the home. Most buyers include an appraisal contingency; if the property does not appraise at or above the contract price, the buyer can either terminate the contract or negotiate the purchase price with the seller.

Q6) I'm selling my condominium. What information should I have available to share with prospective buyers?

Answer: Obtain copies of the condominium declaration, bylaws and any other association rules or regulations. Request a condominium resale certificate from the property management company. You must get a fire safety certificate from the state fire marshal, or local fire chief if you live in a large city or town. This entails an inspection; you might need to remedy any violations before a final certificate can be issued. Ask the town zoning office to provide you with a certificate of occupancy or statement of no zoning violations; this varies by name depending on the town. Have a copy of your deed available as well.