Buying Undeveloped Land in Maine
Buying land is not like buying a car or other personal property. You don’t want to just go to the supposed owner and hand them some cash and be on your way. Real estate purchases require proper written documentation to convey the land to you. The first step of a successful real estate deal is to bring on the right professionals to look out for your interests.
As an initial matter, you need to have a contract setting out the rights and obligations of both the buyer and the seller. For example, I recommend including a contingency in your contract that allows your attorney to review title history and zoning prior to you closing on the property.
Further, some circumstances would warrant further physical inspection prior to closing. For example, you may want to have a professional check the property for wetlands. Buying a lot that contains a large portion of wetlands is likely not ideal for someone looking to develop.
If the contract provides for all of these issues that may arise, when something comes up, you can have a way out of closing on land that does not fit your needs. This way you’ll only be out of pocket a small amount for attorney’s or other professional fees, as opposed to buying the lot and paying a tax bill every year on land you do not have a use for.
As mentioned in some of my prior articles, you should never buy real estate without a proper title search. Every piece of real property comes with its own transactional history. That history can impact whether the seller can give you full title, and how you can use the land. For example, a lot of raw land in Maine is part of subdivisions that never were never fully realized. Deed restrictions and subdivision plans that may not be apparent on the ground can have an impact on the property you are buying.
It's closing time should you hire a title company or attorney? Title companies handle a large number of closings these days. They do similar tasks that a transactional real estate lawyer would. However, there is one big difference. Title companies are not providing you with legal representation and are not bound by the same ethical standards. Title companies provide "law-related services" and do not provide the same legal protections that come with a lawyer-client relationship. For example, title companies have less concern with conflicts of interests and generally will prepare a seller's documents as well. Whose interests are title companies really looking out for? When you hire an attorney to represent you, that lawyer is bound by the Rules of Professional Conduct to look out for only your interests.
Briefly, the closing is when the title to the property is transferred to you and recorded in the registry of deeds and the sale proceeds are distributed to the seller, prior lenders, brokers, etc. In preparing for the closing the attorney will put together a closing statement that lays out the expenses and who is getting paid what out of the sale proceeds. This includes confirming that property taxes are up to date and ensuring you aren't buying land with past due taxes.
In conclusion, a successful real estate deal requires a bit of work to confirm the buyer is getting what they bargained for. Contact a real estate attorney early in the process.