I want to share the story of a person I had a meeting with recently. They had purchased a property for over $400,000, and within 2 weeks after closing were informed by an attorney, no less, that they could not use the property for business as they had intended when the contracted to purchase the property. As I reviewed the contract, I noticed that there was no indication one way or the other as to the intended use of the property, nor was there any indication that the property was subject to an association or property restrictions. So, this was a neutral factor, it neither helped nor hurt the case. Next, I asked if they had been given a title commitment, which they had. Upon reviewing the title commitment, the first item on the Schedule B (which is where the list of exceptions to title are listed) was a document establishing the subdivision and the restrictions. Upon review of the restrictions, sure enough and clear as day was the restriction that stated that no business could be done on the property.
They insisted on telling me, “No one told us that we could not put our business on this property.” I let them know where the stood and they were grateful to at least have their footing. As a transnational attorney, I knew that this was beyond my role in this transaction and that they would need to seek litigation council in order to try to recover their funds. I wished them well and invited them to come back when they were ready to proceed with their next purchase, I could help guide them though the process, and have them create a structure that would provide protection from lawsuits. The moral of this story is that it is worth the price of having an attorney who represents you and understands your needs and goals to guide you through the process or purchasing a piece of property. Often times, it is necessary to make legal interpretations of documents affecting title, and that requires an attorney, not a real estate agent.
An attorney can provide the guidance and confirmation of the status of the property as provided by the title company to be sure you are buying what you think you are buying. As a good friend of mine said, “It is easy to erase and redraw plans on paper, it is more expensive and difficult to change plans in real life”. Lastly, by seeking legal counsel, they would have also been able to enter into the transaction with an asset protected entity, instead of their personal names.
A qualified and dedicated attorney will be able to see important issues that may not be apparent when only focused on the transaction. It is important that you have legal counsel that can see the big picture of what your plans, goals and aspirations are, so they can guide you along that path while avoiding pitfalls that befall the unwary.
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