real estate law outline

8/9/2019 Real Estate Law Outline

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Real Estate FinanceFriday, December 08, 2006

2:04 PM

Residential Transactions

I. Brokers

a. Seller usually signs a r!"er#s $isting %greement &2%'i. (i)es br!"er e*clusi)e rig+t t! sell during a state time eri!d

ii. E)en i- seller -inds buyer !n t+eir !n t+e br!"er gets aid

b. /n M% t+e br!"er d!es n!t get aid unless t+e sale is c!nsummated

unless seller and br!"er seci-ically agree t! t+is in t+e $% Currierv. Kosinski

i. Must be en!ug+ seci-icity t! alert t+e seller t! t+e -act t+at +emig+t +a)e t! ay e)en i- t+ere is n! sale

c. %lt+!ug+ t+e br!"er ill get c!mensated i- a deal -alls t+r!ug+, can

be c!mensated i- t+e reas!n t+e deal -alls t+r!ug+ is r!ng-ulinter-erence !n t+e art !- t+e seller Tristam's Landing v. Wait

d. r!"er can reresent b!t+ t+e buyer and t+e seller but must discl!se+is dual r!le and get ritten c!nsent -r!m all t+e arties

e. 1Facilitat!r1 n! -iduciary duty t! eit+er arty, ust brings buyer and

seller t! t+e table ne)er used

f. r!"ers can be sued -!r treble damages -!r misreresentati!ns under

3+ater 5% !- t+e 3P% because t+ey are 1ers!ns in t+e business1 !-selling +!mes Mongeau v. Boutelle

II. Offers

a. --ers can bec!me binding c!ntracts c!mare 7%, 7 and 73i. /- t+e !--er lea)es n! material terms undeclared it can be

binding

ii. se t+e language 19+is is s!le remedy at la and euity1;. 1

b. sually a seller ill ant a rear!)al -!r a m!rtgage it+ an !--er

i. D!n#t ant t! aste t+eir time and ta"e t+e +!use !-- t+emar"et i- t+e buyer is n!t g!ing t! be able t! get a m!rtgage

and t+e deal is g!ing t! -all t+r!ug+

c. 3!nditi!ns in !--ersi. =!me insecti!n

ii. Pest insecti!n

iii. M!rtgage c!ntingencyi). $ead aint

III. Purchase and Sale Agreements


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I. %ommercial Offering

//. &ock u' the 'ro'erty +a)e already c!nducted s!me due diligence

a. sually it+ an !ti!n t! buyi. Maintains c!ntr!l

ii. uys de)el!er timeiii. 3an be used in an attemt t! ull multile arcels t!get+eri). an" may n!t gi)e -ull -unding u -r!nt !ti!n lets t+e

de)el!er get -unding t! start de)el!ment it+!ut buying t+e

landb. S!metime rig+t !- -irst re-usal m!re !-ten art !- a lease +!e)er

i. /- buyer declines t! e*ercise t+is rig+t, t+en t+e !t+er deal -allst+r!ug+, t+is rig+t is !-ten re)i)ed

ii. -ten gi)es t+e de)el!er t+e rig+t t! aly -!r ermits !nbe+al- !- t+e seller

c. S!metimes an !--er in a smaller transacti!n

///. (ue (iligence ) !r m!re due diligence c+ec"list d!cument 65

a. 4 t+ings t+at y!u need t! determine:

;. @+! is t+e b!rr!er lender ants t! "n! t+is

@+at tye !- entity see d!cuments 760$ayer mig+t +a)e t! gi)e due aut+!riBati!n !ini!n &6;%'

2. %re t+e e*isting real estate imr!)ements +at t+e lender

ants t+em t! be are t+ey su--icient t! ensure t+e ban" +ass!me secured interest

5. En)ir!nmental regulati!ns must be currently being c!mlied

it+

i. !rr!ers c!uncil ill +a)e t! get !ini!ns ab!ut t+is

4. %ll t+e ermits y!u are lanning t! aly -!r ants t! ma"esure t+ey are realistic and y!u alying -!r t+e rig+t !nes

b. %s t+e layer, y!u ant t! sit d!n it+ e)ery!ne early !n in t+e

r!cess &arc+itects, de)el!er, engineers' and determine +at needs

t! be d!ne and by +eni. @+at d! e need t! ma"e t+is r!-itable

ii. =! muc+ r!-it ill e need -!r t+e ban" t! gi)e us a l!aniii. @+at are t+e current leases

i). D! e need a B!ning c+ange). % secial ermit

)i. %re t+ere +ist!ric district issues)ii. @+at dates ill e)eryt+ing need t! be d!ne by

c. &eases ) t+is is t+e )alue !- t+e r!erty

i. /nitiated t+r!ug+ a letter !- intent t+at sets !ut basic terms

ii.


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2. G!u ne tenant ill ay *H !- t+e ta* bill !)er t+e base&'

iii.


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2. Must udate all !- t+ese arranties and reresentati!ns

at t+e cl!sing

J. oning t+is is really art !- y!ur due diligence

i. Pr!blem is a l!t !- t+is ta"es time

ii.


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a. But a''eal 'eriod is 5!0 daysb. ecause aeal eri!d is s! l!ng, i- y!u are

getting a B!ne c+ange -!r ne de)el!mentlayer ill +a)e t! rite a B!ning !ini!n -!r t+e

ban" e*laining t+at t+is ill be u+eld !n aeal

2. Ma"e sure y!u t+e att!rney dra-t t+e r!!sal

5. =a)e t! atc+ !ut -!r:

a. S!t K!ning t! r!)e its n!t:

i. /- t+ere are a )ariety !- uses in t+e areaii. =as t+e site +ist!rically been treated

di--erently t+an !t+er sites in t+e areaiii. %s a result !- t+is B!ne c+ange ill t+ere

be ublic bene-its, and d! t+ey mitigatet+e imact !- t+is c+ange !- B!ne

b. 3!ntract K!ning

i. =e indicates t+at as l!ng as t+e legislature

acts be-!re t+e inducement is gi)en t+enit is !"ay

ii. /n !t+er !rds i- Syl)ania +ad gi)en t+ecity bene-its be-!re t+e B!ne as c+anged,

t+is !uld be illegal because it !uld +a)eb!und t+e city

iii. =e says agreements must be e*ecuted

subseuent t! t+e )!te

#I. 7inancing

i. G!u can#t get -inancing until all !- y!ur ermitting is d!ne;. ut aeal eri!ds may n!t be e*+austed, t+at is +y

y!u rite !ini!ns

ii. an" ants a c!mletely secure l!an;. M!rtgage !n t+e r!erty

2. Security in all t+e intangibles

a. $eases assignable t! t+emb. 9+ey can ste in t! y!ur r!le in de)el!ment i-

y!u de-ault

iii. %onstruction &oans usually 2 tyes

;. Reuires y!u t! +a)e ermanent -inancing in lacebe-!re y!u can enter int! a c!nstructi!n l!an

a. Permanent lender signs a buysell agreement

2. 9+e c!nstructi!n l!an c!n)erts t! ermanent -inancingat t+e end !- its term

; is m!re c!mmm!n


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i). 3!mmitment letter -!r c!nstructi!n l!an =;2

). 3!nstructi!n l!an c+ec"list 82

)i. 3!nstructi!n $!an %greement is d!cument 84

;. utline !- a 3!nstructi!n $!anL3!mmitment $etter =;5

)ii. G!ur e*enses and +at t+e ban" agrees t! ay -!r eac+ ill be

listed in t+e c!mmitment letter

)iii. @+en y!u need m!ney y!u ma"e dra reuests;. an" ill reuire certain t+ings at eac+ dra:

a. dated sur)eyb. %raisals

c. 9itle insuranced. lans

e. ini!ns, etc.

2. an" ill als! it++!ld ;0H !- eac+ dra and ut it in a

reser)e -und in !rder t! balance t+e l!an

a. S!metimes t+e rice !- materials can g! u, andban" ants t! ensure t+at t+ey can balance t+e

l!an acc!rdingly s! t+ey +a)e t+is reser)e -undi. G!ur c!ntract!rs +a)e t! understand t+at

t+ey are !nly getting 0H u -r!ntb. 9+ey may als! -r!m time t! time reuire t+e

b!rr!er t! in-use t+is reser)e -und it+ caital

#II. O'inion &etters

i. %ssurance t! t+e ban";. an" ill alays ant m!re and m!re assurances

2. G!ur -irm c!mmittee ill ant t! gi)e less and less s!t+ere is tensi!n

ii. e )ery c!ncerned ab!ut t+e sc!e:

;. Ma"e clear it is an !ini!n -!r !nly !ne entity d!n#t

ant any!ne else relying !n t+is2. Ma"e clear t+e sc!e !- t+e r!erty t+at it is c!)ering

5. Sc+edule % 1E*ceti!ns and $imitati!ns1 &=;'

e*licitly states +at y!u are n!t gi)ing an !ini!nab!ut

iii. utline !- an !ini!n letter &see d!cument ;04'

;. @+! t+e !ini!n is -!r2. Detailed descriti!n !- t+e r!erty t+at t+e !ini!n

c!)ers5. %ssumti!ns

a. %ll signatures !n d!cuments are accurate, etc.b. 9+ings y!u d!n#t +a)e time t! in)estigate


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4. %ll !- t+e d!cuments y!u rely !n listed

. 9+e ini!na. =a)e e)eryb!dy else say as muc+ as !ssible

&arc+itects, engineers' s! t+at y!u t+e layer sayas little as !ssible

b. 1ased !n t+e arc+itects certi-icateN1

i. 3!uc+ y!ur !ini!n in reliance !n t+ese

!t+er c!nsultants

c. Say as little as !ssible 1c!urt !- c!metent

urisdicti!n could u'holdt+e )alidity !- t+ebuilding ermit1

#III. 2thical Issues7 Et+ical issues

;. !rr!er ants t+e ban"s layer t! reresent +im as ell

i. =is !ini!n is d!n#t d! itii. ut i- y!u !btain a c!nsent and ai)er letter y!u can g!

-!rard

a. E*amle !- c!nsent and ai)er letter isd!cument 2

2. 9! artners +a)e l!ngstanding clients t+at t+ey d!n#t ant t!

l!se but t+ey end u being t+e b!rr!er and t+e lender in adeal

i. G!u can d! it, but y!u need t! get in-!rmed c!nsentii. %nd set u an et+ical screen it+ all t+e c!muter

t+ings &=2'

5. nreresented arties !bligati!n t! tell e!le in a

artners+i t+at y!u reresent, t+at y!u d!n#t reresent t+emindi)idually

i. F!ll! it u it+ a ritten letter

4. Multile de)el!ers +! are interested in a r!erty call y!u t!

+el it+ a bid ant t! ut y!ur name !n t+e alicati!ni. usiness art !- t+is i- y!u decide t! g! -!rard it+

!ne ers!n, y!u#)e ut y!ur eggs in bas"et % can#treresent an!t+er ers!n

ii. 9! get ar!und t+is y!u tell t+e -irst de)el!er t+at y!u

are +ay t! +el, but d!n#t ut my name !n it;. / am g!ing t! tal" t! %, , and 3 as ell and gi)e

t+em t+e same ad)ice2. /- t+at is !"ay / am g!ing t! g! -!rard it+ it

5. /- y!u say n!, / ill n!t +el y!u and !nly +elt+em

. 9itle insurance


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i. 9+e same layer can reresent b!rr!er, lender, andtitle insurance c!many

;. 3!uld lead t! +uge r!blems but it is all!ed, but+e !uld ne)er d! it

6. =idden c!n-licts a -irm +as 2 l!ngstanding clients

i. %ll !- t+e sudden a c!n-lict s+!s uii. G!u are reuired t! it+dra reresentati!n -r!m b!t+,

it+!ut in-!rming eit+er +y y!u are d!ing t+at

;. ut in ractice usually t+e client +! +as been

t+ere l!nger stays !n2. r t+ey "ee b!t+ and set u t+e et+ical screen

7. /- e disc!)er s!met+ing t+at c!uld a--ect a 5rd arty, e are

reuired t! n!ti-y t+e t+ird artyi. G!u disc!)er !il !n r!erty y!u tell t+e client y!u

must tell t+e ban" and t+e neig+b!rsii. 3lient says n! y!u it+dra y!ur reresentati!n

;. %nd t+en y!u still g! a+ead and tell t+e ban" and

t+e neig+b!rs

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