The real estate industry concerns land and anything that is permanently attached to it, such as buildings and other structures. Every state has its own unique real estate laws that apply only to their jurisdiction.
Real estate transactions are governed by a wide range of federal statutes as well as a combination of common and state law statutes. The Federal Fair Housing Act was developed to protect people in real estate transactions from racial, religious, national origin or sexual discrimination. The requirements that are established by state laws often differ significantly according to each state.
Real estate brokers are hired by sellers (as agents) to find buyers for their property. Real estate brokers and salespeople are regulated and licensed by state laws. The contract between sellers and brokers is referred to as a listing agreement. Most of these agreements are open, and brokers only earn commissions when buyers are found and deals close.
Once a prospective buyer is found, he or she initiates an investigation to determine whether the seller’s title to the property is clear and marketable. To accomplish this, the buyer may use an attorney’s services to verify the seller’s claims of ownership.
Exclusive listings entitle agents to commissions for finding buyers. Under exclusive arrangements, brokers may be entitled to payments whether the buyer was found by the broker or not.
General principles of contract law govern real estate transactions. For example, the Statute of Frauds, according to the UCC, requires that real property contracts be in writing. Also, because real estate transactions involve land sales, real property law also influences real estate law.
For example, it is a common requirement of these contracts that the title to the property being sold be marketable. As previously noted, that requires sellers to possess and provide proof of title so that third parties may not make any claims due to undisclosed interests. However, real property is not considered synonymous with real estate. Real property refers only to land, whereas real estate includes any structures or other improvements on the land.
Attorneys enlist the services of title insurance companies to investigate and verify whether titles are free, clear and marketable. Title insurance companies may also insure buyers against any losses that may be caused by invalid titles.
In order for a property to be properly conveyed, deeds with proper land descriptions must be prepared and delivered. Most states require that deeds be officially recorded to establish property ownership and provide notice of transfer to subsequent purchasers. Because this process can be complex, real estate and property purchasers generally use the services of a qualified and experienced real estate lawyer.
Like many other aspects of real estate law, mortgages are governed by the principles of contract law. For instance, the UCC regulates any conflicting interests noted between property mortgages and other liens.
Buyers of real estate can choose to use a bank or mortgage firm to purchase real estate. When borrowers mortgage real estate, they receive loans from lenders. In exchange, lenders typically obtain interest paid on the loans as well as liens on the real estate.
If borrowers should fail to pay lenders according to the terms of the mortgage, lenders may foreclose on the mortgaged real estate. Foreclosures involve forced sales of real estate. Proceeds from foreclosure sales are used to pay off the lender’s outstanding loan amounts secured by the property.
It is advisable for anyone buying or selling property to enlist the services of a qualified and experienced attorney. Real estate lawyers understand the governing laws, how to read and prepare contracts, provide advice on transactions and ensure that their client’s best interests are protected.