For months, you have been searching for your dream home.  You have met with many realtors, and you have seen dozens of homes and properties.  Now you have finally found the property of your dreams.  You have talked about price and you have reached an oral agreement on just about everything.  What happens next?

Before you sign your sales contract, it is important that it be reviewed by a lawyer.  In Delaware, most realtors use a form sales agreement.  However, do not be fooled by this fact that a standard form is used.  Each contract should be individually reviewed and, if necessary, drafted to the individual specifications of the purchaser.  Care should be taken to ensure that the agreement be drafted as specifically as possible to reflect, for instance, the appliances which shall remain with the seller.

Once the contract is signed, your next step is probably to apply for a mortgage.  It is no secret that mortgage rates have been and continue to be changing rapidly.  Shop around and compare for the best possible terms and rates.  Once you have secured a mortgage approval, it is time for you to find an attorney to prepare the property for settlement.

In the legal profession in Delaware, attorneys cannot advertise as “specialists” in any areas, including real estate.  However, before choosing an attorney, make sure you ask your attorney whether or not he or she has had experience in real estate matters.  Also, shop around for fees.  I have found in my experience that attorney’s fees for real estate settlements vary widely between firms.  However, don’t choose your attorney simply on the basis of fees.  Make sure that your attorney has experience in real estate matters.

Once your attorney receives your mortgage commitment, he or she should begin the process of the “title search”.  The deed records must be searched to make sure that there are no defects in the chain of title.  If the seller has any judgments entered against him, or outstanding mortgages, the payoff figures on these liens must be secured and paid off at settlement.  Also, the tax records must be checked to determine that all taxes are paid.  If the property is being sold by the estate of one of the sellers because of a death, then the attorney must make sure that the appropriate inheritance tax papers are filed to clear the property from any possible tax liens.

There are other requirements that the attorney must fulfill before going to settlement.  They include:  ordering a survey, making sure there has been a property termite inspection on the property, and securing the appropriate homeowner’s insurance on the house.

Title insurance is a topic that could take several additional articles to explain fully.  If a mortgage company is involved, you will be required to secure title insurance.  You can also purchase homeowner’s title insurance if you desire.  In general, title insurance protects either the mortgage company or you from defects in the property title.  Be sure to speak to your attorney about the costs for this insurance and its protections.

Finally, you have arrived to the date of settlement.  At settlement, your attorney will prepare a settlement sheet which lists all of the funds being received and disbursed.  Your attorney will also explain documents he or she prepared which normally include the deed, on some occasions the mortgage, and the settlement sheet.

The day has finally arrived for your settlement.  After you sit down at your real estate settlement, your attorney should take a few minutes to explain the legal documents you will be required to sign.  When you sign your mortgage with a bank, you are not only putting a lien on the property for the amount of the mortgage, but you are also making a personal obligation to pay the loan.  In the event of default the bank can not only choose to foreclose on the property, they can also sue you for the difference between what the property sells for in a foreclosure sale and the amount left on the loan.  Therefore, be sure that you understand all of the provisions in your mortgage.  For instance, some banks will not permit you to put a second mortgage on your property, without their consent.  In some purchase money mortgages (where the seller is actually financing part of the deal), your failure to pay property taxes in a timely fashion can result in an acceleration of the mortgage.  Make sure you review all of these provisions before signing.

Finally, if you have any questions about your settlement, you should, speak to your attorney or his or her assistants.  They are the ones who will work to make that “dream house” a reality.

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