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What Your Clients Need from their Attorney?

HOW TO ADVOCATE FOR YOUR CLIENTS?

SILENT DEAL KILLERS TO YOUR TRANSACTION: PROTECT YOUR BUYER
Code Violations
  • Violations and fines may NOT show up on title unless the city records the violations.
  • If Seller fails to pay the fines, Buyer is stuck with the fines on the property After the closing.
  • Unpaid fines and violations block your Buyer from obtaining permits, recording future deeds, and even selling the property.
PAST CONSTRUCTION WITHOUT PERMITS
  • Prior owners made changes to the property without permits.
    1. If discovered, Buyer may have to redo all the work and obtain permits resulting in significant damages and expenses.
    2. Inspectors finding unpermitted work may block the sale or refuse to issue transfer stamps.
    3. May result in city vacating the property and denying occupancy
HOW TO PROTECT YOUR BUYER
FOIA REQUESTS TO MUNICIPALITIES
  • Sending a FOIA request during Attorney review reveals all past & open violations (past and present problems).
  • Buyer’s Attorney review should be subject to Municipality’s FOIA response
  • Exposes whether Seller corrected the issues or masked them.
  • Verifies Seller’s disclosures
CITY OF CHICAGO
  • Chicago’s online portals list out open permits, and open violations.
  • Chicago does not record all their violations
  • Violations may be personal judgements that get recorded and then impact future title for your Buyer.
  • Ordering payoffs from City of Chicago payoffs will preempt the City to run checks with the administrative hearings and all revenue departments to expose unpaid City debts that may impact the property.
SILENT DEAL KILLERS TO YOUR TRANSACTION: PROTECT YOUR SELLER
Buyer’s Diligence vs Seller’s Disclosure
  • Are you prepared for Buyer’s diligence?
    1. Buyer’s FOIA, may expose Seller’s or prior owners’ acts.
    2. Chicago’s online portals shows past permits and violations
    3. Buyers FOIA may kill the deal

PROTECT YOUR SELLER: Buyer’s Diligence vs Seller’s Disclosure

Diligence vs. Disclosure
  • Have an Honest Seller conversations
    1. Conversation = knowledge = disclosures
  • Lack of Disclosures impacts sales price and values
    1. Lower sales price = deal closed
    2. Higher contract price = dead deal.

Use best judgment: Don’t hide. Sometimes best not to know.

Is Seller’s Attorney Prepared
  • NOT DISCLOSING
    1. If its not on title, shouldn’t block closing
    2. Taking a risk for either a dead deal now, or a lawsuit later
    3. Disclosure is best option
  • See “What you want from your Attorney?”
BIFURCATION: USING TITLE TO GET MORE MONEY
What is Bifurcation?
  • Seller’s attorney typically pulls title
  • Pulling Title means:
    • An Owner’s Policy to protect the Buyer from possible challenges to Buyer’s Title post closing.
    • A Lender’s Policy to protect Buyer’s lender to protect lender’s priority (paid by Buyer).
    • Title Company manages transaction escrow of the documents, signatures and money exchanges.
      (Loan = 100% Buyer paid. Cash deal = 50% Buyer / 50% seller)
  • Buyers get to choose who they want to pay in a Real Estate Transaction
  • Buyer’s Attorney takes over all of Buyer’s paid Title Costs
    • (Lenders Policy & Escrow)
    • To benefit the Buyer, Buyer’s attorney then provides all of Buyer’s Title expenses at a significant reduction
      • Up to $1200 in extra funds
  • Seller continues to handle Seller’s Title Expenses (owners policy)
BUYER SAVES MONEY
  • Done right, the consumer can SAVES from $500 to $1500 or more in closing costs.
    • Reduced escrow fees
    • Reduced lender’s title policy
    • Reduced endorsements fees
  • MORE money for the Buyer at closing.
  • Buyer can buy down their Interest Rate
    • Less cost to the Buyer over loan life
    • Lower monthly mortgage payments
WHY BIFURCATE TITLE?

WHERE THE MONEY COMES FROM [up to $1200]

  • Seller’s attorneys & Seller’s Title Company charges the Buyer between $2,500 - $4,000 in title charges.
  • Buyer’s attorney collects $400 to $750 per closing. A Buyer’s attorney spends 30+ hours of work on a file, and it may not close.
  • In a bifurcation, Buyer’s attorney takes over as Buyer’s Title Agent for Buyers title. Buyer’s attorney can then reduce all Buyer’s Title costs ordinarily paid to Seller’s Attorney

** Note sellers attorney still collects all of Seller’s Title proceeds Seller’s attorney just makes a little bit less.

BIFURCATION MYTHS
  • Too Complicated - False
    • It’s more steps, but not complicate
    • A good buyers title company, and a Good buyers attorney that has a system in place designed for bifurcations.
  • Seller’s Attorney can refuse - False
    • Buyers have the right to choose title per Illinois Law
    • 215 ILCS 155/18.1
  • This will blow up the deal - False
    • Seller cannot cancel based on the bifurcation.
  • This will cause HUGE delays
    • It will not cause delays.
    • Bifurcation is initiated in attorney review, and runs in sync with the lender.
What’s the Law on Bifurcated Title?

Per Illinois Law, 215 ILCS 155/18.1 Buyers of residential property, as consumers, have a right to choose their own title company, because:

  • Saves the consumer money by increasing competition
  • Prevent fraud and fee gouging by title companies and other parties in a transaction.
  • Prevent parties to force persons to pay for services from specific vendors against their will, ie steering or cross-profiting.

This law coincides with the Real Estate Closing Disclosure affiliation rules in a residential real estate closing.

Who are the Obstacles to Bifurcation?
  • Sellers Attorney
    • IMakes less money ($2500 vs. $3500 normally)
  • Seller’s Title Company
    • Doesn’t want to lose escrow fees and other title fees
  • Real Estate Brokers
    • Afraid of losing the deal or upsetting Sellers attorney
  • Lender
    • Lender LOVES this
    • They get to save the client money, and maximize any closing cost credits to other costs.
Overcoming Obstacles to Bifurcation
  • Sellers Attorney
    • Illinois Law encourages it
    • They CANNOT put their own interests ahead of Sellers
  • Real Estate Brokers
    • Saves their clients money
    • Helps close the deal because Buyers can bring less money to the table.
    • Great for FHA loans
  • Buyers Team all on On the Bus
    • Buyer, Buyers broker, Buyers Lender, Buyers attorney
  • Honey vs Vinegar
    • Don't be combative. (firm ask, vs. demand)
    • Courtesy goes a long way
  • Early Bird and the Worm
    • Get it in the contract with Buyer’s offer.
    • Raise it in Attorney Review,
      • Slows down AI, to benefit Buyer
      • Sellers can plan and cooperate
  • Prepare everyone for the “Buy In”
    • Client Agreement and addendums clearly explain the benefits & savings
    • Provide a one pager on Buyer benefits and Process
What you want from your Attorney
BUYER’S ATTORNEY

What can the Attorney do to save your client Money, Time, and Headache?

  • Bifurcation (in attorney review)
    • Reduce closing costs
      • Buyer needs Less money to close
    • Helps Buyer buy down interest points
      • Reduce the Buyers mortgage payments
      • Offset the higher interest rates
  • Researching Property (Outside of Title)
    • FOIA requests
    • Municipal Portals
    • Verify Seller Disclosures
    • Written & Documented Requests
      • If it’s not asked for and not documented, it potentially defeats future post closing claims
SELLER’S ATTORNEY

Ability to Clear Title:

  • MOST Real estate closing attorneys can clear title
    • Basics: order payoffs from lien holders, order water and zoning, and draft documents.
    • Complex Title Challenges:
      • Title companies don’t typically fix titles, they identify.
      • Title companies can help, but needs innovative Legal Teams
  • By the time you realize Title Issues, it’s TOO Late to close.
    • Have the right attorney legal team in place at the beginning.
    • Things come up in Title or Judgement affidavits that shouldn’t be impediments to closing, and can be removed or raised.
    • Somethings dont need to be raised, everything needs to be cleared
      • Is it Really on title?
BUYER’S & SELLER’S ATTORNEY

ATTORNEY ENSURES YOUR DEAL CLOSES

  • Does you attorney have the tools in their toolbox to:
    • COmmunication, Technology
    • CLient expectations in writing, stepby step processes and information to client in dual langigae (ENGLISG AND SPANISH)

WHEN THE DEAL GOES SIDEWAYS

  • Does you attorney have the tools in their toolbox to:
    • Save the deal
    • Protect your client
    • Save the Earnest Money
    • Hold the line
    • Push Back
    • Negotiate for more
    • Can Challenge and Advocate without Conflict
    • Can Safely Kill a bad the deal
    • Uses Technology Resources
    • Multiple Communication Points
    • Has a Legal team
    • Has Legal Support staff
    • Convert Conflict into Resolution
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