The first step for buyers who want to purchase a for-sale-by-owner house is getting a real estate lawyer to make sure the deal is legally sound.
“The regulations have changed so dramatically in the last three to four years that you should absolutely hire an attorney,” said David Thurston, a lawyer and president of Crown Title Corp., in Baltimore.
Thurston said that in Maryland, it is typical for both seller and buyer to hire lawyers to draft or at least review sales contracts. The cost can range from $500 to $750.
“The laws can be difficult to understand, especially for consumers who don’t buy and sell a lot of homes,” he said.
In a FSBO transaction, a lawyer basically takes the place of a real estate agent in certain aspects, said Vincent Keegan, a lawyer from McLean.
“They’ll need someone who can put together an enforceable contract as well as prepare the proper disclosure documentation,” Keegan said. “Other than a Realtor, an attorney is really the only party able to do such things.”
Keegan said the legal work usually cost between $300 and $500.
In Virginia, where the buyer usually selects a settlement agent, title agencies or settlement lawyers often are also hired, said Frank Sofocleous, a lawyer in Falls Church.
“If an attorney does prepare the contract, I would lean toward having an attorney who would not also do the settlement,” Sofocleous said. “If the settlement ‘goes south,’ the buyer may allege fraud.
Contracts used by Realtors are copyrighted and are available only for their use, said Roy Kaufmann, chairman of the District of Columbia Bar Association’s Real Property, Housing and Land Use Section.
Kaufmann and others advised against using contracts and other real estate documents downloaded from the Internet.
“Contract documents off of the Internet offer little attention to the specific requirements of Maryland, Virginia and the District,” he said. “Nor do they address the customs and practices of these jurisdictions.”
Consumers must also be aware that laws and regulations can vary among the three jurisdictions. For example, the District has laws governing the sale of rental properties that are not on the books in Maryland and Virginia.
Kaufmann said the Tenant Opportunity to Purchase Act mandates that before a landlord could sell a District property, tenants must be given the opportunity to purchase it.
“The D.C. Court of Appeals has gone so far as to say that the courts can award damages if these transactions are not handled properly,” he said.
