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Expert Advice on Buying a Home: An Interview with Michael Sweeney of Sullivan, Heiser & Sweeney

By Michael J. Sweeney

Please tell us a little bit about your firm and the areas of law that you practice.

Sullivan, Heiser & Sweeney s a general practice located in Middlesex County on the Connecticut Shoreline. We practice in Middlesex, Fairfield, Hartford, Litchfield, New Haven, New London, Tolland and Windham Counties. We have more than 40 years of combined practice experience. We have tried more than 50 cases to verdict in the state and federal courts of Connecticut and other states. We have closed thousands of real estate matters and prepared hundreds of wills in Connecticut. We represent individuals, businesses and regional and national insurers. We provide a broad range of legal services. No matter is too small or too large.

Atty. Sullivan is a litigator in the areas of personal injury, workers compensation, Home Improvement Act and criminal defense. Atty. Sullivan is admitted to practice in Connecticut, New York and federal court in both states.

Atty. Heiser is a litigator in the areas of employment discrimination, trade secrets and noncompetes, liquor liability, corporate/partnership disputes and premises liability. Atty. Heiser is admitted in Connecticut, Maryland and New Jersey and the federal courts in each state.

Atty. Sweeney is a practitioner in the areas of real estate conveyancing, foreclosures, probate administration, business transactions and trust and estate planning. Atty. Sweeney is admitted to practice in Connecticut in both state and federal court.

What are common things that you've seen go wrong during the purchase and sale process?

A lack of a shared expectation between client and attorney. I will say it once and it applies to each issue: Without a shared expectation, it is nearly impossible to measure success.

We would all love to have closings go smoothly. That does not always happen. In order for the client to appreciate what a typical closing will entail, we outline the role of the attorney and our billing format in our engagement letter. This letter lists not only what is considered 'typical' and included in the flat fee, but also what is not included and the hourly rate to address atypical issues.

Here's an example from the buyer's side: the home inspection reveals substantive issues that need to be addressed and/or remedied. This could be a leaky roof, radon in the basement or replacing three windows that will not open. More often than not, the realtors handle the home inspection issues. However, when the parties are at an impasse, rather than call the whole deal off, the issue(s) are referred to the attorneys to negotiate.

We then gather the reports, review the estimates for the cure and agree on a number to correct the issue. Next, we look at what the remedy will be and when the remedy will be performed; it will either be prior to closing or after closing. Both parties need to share the same expectation. This negotiation something that would be billed for by the hour rather than included as part of a flat fee pricing.

Another issue is when the seller can't meet the contractual closing date. For example, the buyer is relocating from the Midwest and wants to close on the first of the month. Buyer, three children and two pets are in short term (hotel) residence, commuting kids to school from three towns away daily. Furniture is due to be delivered on the second of the month. The rate lock on the mortgage expires on the fifth of the month. Seller has not found a place to move to and will not be ready on the first; seller would rather close on the first of the next month.

The lawyers then get involved to set a revised date, which if not met results in either return of deposit or lawsuit to make the seller convey and leave. Both remedies require time to be spent outside the contemplated scope of representation; the latter requiring a lawsuit to be filed. The lawsuit will require an hourly retainer, court entry fees and marshal service of process fees. This sets up a situation where there are two possibilities, neither of which are attractive. 1) No one wants to write a check for $3,000 (in the midst of buying a home) to force the seller to meet its obligation. 2) No one wants to find a house and lose it because the seller cannot find someplace else to live.

This is where the lawyers look at the universe of issues and then give the client a candid prediction of how the matter could be resolved. The factors that are considered in the agreement include whether to compensate the buyer for the unexpected temporary housing expense, storage of their worldly possessions, rate lock extension, updated appraisal value and any other consequential damages (no pain and suffering in this arena). This is something that would be billed for by the hour rather than included as part of a flat fee pricing.

On the seller's side, an example is no certificate of occupancy for remodeled portion of house. The bonus room or basement was finished without getting a building permit. Banks are not in the business of loaning money to borrowers to buy homes that are not 100% legally approved to use or to be lived in. Many times it is referred to the lawyer to deal with the local building department to have the proper drawings and applications prepared and determine what permit fees are required to pass inspection from the building inspector. This is something that would be billed for by the hour rather than included as part of a flat fee pricing.

Another seller's example is an unreleased mortgage from previous loan (or worse from previous seller who has passed away or moved out of state). The buyer is expecting that there will be no liens on the property when they close. For every mortgage that was put on the property, there needs to be a corresponding release of mortgage. Sometimes the release is in the home owner's filing cabinet. Sometimes it was released in the wrong town. Sometimes it just isn't anywhere to be found.

This situation requires the attorney to determine who should have paid off the mortgage that appears to be unreleased. If that lawyer is retired or no longer practicing, then we have to track down the bank that should have released the loan. If that bank is no longer in business, we have to determine who the successor bank may be. We then ask the successor bank for a duplicate release. The bank will, of course ask for a canceled check, which of course, we do not have. We are then referred to a "Lost or Misplaced Release Department," and start all over again. Eventually we get what we need. This is something that would be billed for by the hour rather than included as part of a flat fee pricing.

Another seller's side issue is a misplaced mailbox and/or driveway apron. The property lines on the approved subdivision map are do not match the property lines as they are used.

When builders approach the local planning and zoning commission to develop a parcel, they present maps with boundary lines, setback lines and the buildable square where the house and/or garage will eventually go. It is not uncommon for the boundary lines or the square footage calculations for each lot to be modified once if not multiple times before approval.

Every now and then, a mailbox or a driveway apron may be ten, fifteen or twenty feet outside of where the approved site plan map has drawn the boundary line. Many times the solution is to swap a portion of the property via quitclaim deeds in the rear for a portion of property in the front. Many people think that so long as the square footage remains the same, no harm, no foul. This is not the case. The adjacent neighbor may have at least one mortgage if not two mortgages on their property. The neighbor's mortgage company made the loan with the specific legal description for specific dimensions to the lot. In order to change the legal description, the parties need a partial release of mortgage (for the piece being given up). This requires an opinion of an appraiser (chosen by the servicer; not the homeowner) that the land swap will not affect the value and a review by the bank attorney of the deeds to effectuate the swap. The appraiser and bank attorney will bill for their time. Because the seller has a greater urgency to correct the matter, the seller usually pays for the appraisal and attorney review. This does not happen quickly and is something that the seller's attorney would bill for by the hour rather than included as part of a flat fee pricing.

A lack of a shared expectation among the service providers to the transaction.

Realtors. Realtors are (usually) used by the buyer and the seller. It is imperative that the realtors set expectations that are reasonable. If a house is ten years old, so may be the appliances. If an appliance needs showing signs of age, the compensation isn't going to necessarily be new. Most likely it will be a discounted price from new.

If a buyer finds a property in August, needs to be in the property for September, and the subject property is part of an estate or a short sale, the realtor will explain that the closing will unlikely happen for the school start date. The buyer must then find out what the municipality needs to permit student registration in the particular district.

Buyers should be prepared that buying a house is not like buying anything retail. The are scores if wrinkles and issues with each property and with each seller. Good agents explain the range of issues so that when one arises, unpleasant as it may be, it is not completely unexpected

Home Inspectors. Home Inspectors test for a great many things. I recommend that every buyer have a home inspection. (I also strongly endorse the seller to have a pre-listing inspection to discover what a competent home inspector is liable to find). Home inspectors may discover evidence of a problem. This may require a professional tradesman to further diagnose. Buyers should be prepared to solicit estimates from each of the contractors support their negotiation position with Sellers. Home inspectors may not have the solutions to problems; however, they usually know where to find them.

Mortgage Originators / Loan Officers. The mortgage process will examine, in depth, the buyer's income, asset and credit, as well as the collateral to make sure the loan will be salable on the secondary market. Typically lenders will ask for three months bank statements, two years of fully scheduled tax returns and a month plus of pay stubs (YTD P&L for self-employed, not just a balance sheet). Income, asset and credit documents are good for 90 days and appraisals are good for 120 days.

Bank records collected from three months prior to the application will necessarily need to be updated if the closing is 60 days away. A month of paystubs prior to the application will necessarily be stale two months later if there is a quality control check. Buyers should be prepared to update all the documents, explain large deposits and trace all the money going into the transaction.

When the lender runs a credit report, the buyer should expect to have an answer for what appears to be adverse credit, i.e., late payments, charge-offs, collection accounts and/or filed lawsuits. Buyers should be prepared to have questions asked about their finances and spending habits more than they ever have had before.

A lack of a shared expectation between buyer and seller.

What stays and what goes? The chandelier. The sub-zero freezer. The outdoor speaker system. The tenant upstairs. Each presents a fertile ground for misunderstandings, which if addressed early can be negotiated early and avoid the stress later in the process.

What are some of the main ways that a real estate lawyer can help when you're purchasing a home?

A real estate lawyer (as opposed to a patent lawyer, divorce lawyer, criminal lawyer, bankruptcy lawyer, etc.) has seen the issues before. A real estate lawyer may know the lawyer for the other side and has hopefully built a modicum of trust so that when circumstances go sideways, the matter can be resolved. Or, alternatively, advise the client the matter will intensify and prepare the client for the option of withdraw from the transaction or be prepared to spend additional money.

Lawyers use words to describe situations. The words will determine whether something is good or bad; left or right; in or out. Buyers and sellers use the agreed upon words to get to the closing. Verbal agreements may be less expensive in the short run; written agreements (which may have a price tag) have a better chance of giving the parties what they expect.

What is one of the biggest challenges for buyers when it comes to closing a real estate sale?

The biggest challenge for buyers is to understand that not all matters are the same. Sellers come in all shapes and sizes. Some have control over the price and others do not. Owner occupants that are retiring; divorcing or selling to buy a bigger home. Investors that are retiring, divorcing/dissolving or cashing in their nest egg. Banks that have take title by way of foreclosure. These sellers can usually negotiate the price and will sell if the numbers work in their favor.

Other sellers may need third-party approval. For example, estates that are selling part of a probate administration. Or distressed sellers in foreclosure or a short sale (where the house value is less than what is owed to the lender).

How can a buyer help make sure the sale goes smoothly?

A buyer can help make sure the sale goes smoothly by having a clear idea of what type and location of home they want to buy; having the home inspected by a professional (including water, radon and/or septic as the case may be); and having all of their income, asset and credit information under control.

What advice would you give to first-time homebuyers?

Find professionals that you can trust. You are not the first person to ever buy a home and you most likely know someone who has done so recently. Ask them about their experience. Find out whom to rely upon or not rely upon for that matter. Real estate professionals undertake their role with a great amount of pride and diligence. Real estate professionals are in the industry for the long haul. Their success is predicated on referrals from doing a good job.

Price should be an element of who to select; it should not dictate absolutely. Buying a house has a lot of moving parts. The people you meet are in the community you are moving into. They will be a resource to you for years to come. Please choose wisely.

Thank you for taking the time to read this excerpt. I hope I can be of service to you in the future. If you call me, I promise to call you back.

What's the best way for people to contact your firm?

Michael J. Sweeney
SULLIVAN HEISER & SWEENEY
Attorneys and Counselors At Law
116 East Main St.
Clinton, Connecticut 06413
T. 860.664.4440 ** F. 860.664.4422
Email: mjs@sullivanHeiser.com
Real Estate, Probate & Business

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