Texas Real Estate Law: Common Transaction FAQs

What steps to expect at a real estate closing?

A real estate closing, often referred to as "settlement," marks the culminating point where property ownership is formally transitioned from the seller to the buyer. This essential meeting brings together the buyer, seller, their respective legal representatives, real estate professionals involved in the sale, a lender's representative, and the closing agent. During this process, any unresolved matters are addressed, the intricate details of the closing statement are validated, and all requisite documents are signed to finalize the property transaction.

Engaging an attorney seasoned in real estate closings is crucial. They will guide you through the process, ensuring that your rights remain safeguarded at every step of this pivotal transaction.

Closing Costs

Closing costs can often be a mystifying component of the home buying process. While seasoned closing agents will guide buyers through these expenses, the expertise of an attorney from AWA Law Firm can offer deeper clarity. Our team ensures that these costs are fairly distributed between both the buyer and seller.

Though closing costs can vary based on locale, they typically range from two to five percent of the property's purchase price. These costs can encompass:

• Legal representation fees
• Escrow charges
• Pro-rated property taxes and HOA up to the closing date
• Interest spanning from the closing date up to one month prior to the first payment
• Fees for initiating the loan
• Charges for recording the transaction
• Fees for property surveying
• Mortgage insurance, if required
• Title insurance for both the purchaser and the loan provider
• Points to reduce the loan interest rate
• The inaugural escrow contribution towards impending real estate taxes and insurance
• Payment or documentation for homeowner's insurance
• Charges for property valuation (appraisal)
• Fees for specific inspections, including pest assessments
• Charges for preparing necessary documents

With AWA Law Firm by your side, you can navigate these costs with confidence, ensuring a transparent and fair real estate transaction.

What Happens At Closing?

During the closing phase, it's customary for the buyer to present either their paid homeowner's insurance policy or a binder accompanied by a receipt indicating the premium has been settled. The closing agent will then delineate the sums owed by the buyer to the seller and vice versa. The seller ensures delivery of any items mandated by the contract. After both parties affirm the accuracy of the financial details, several documents come into play:

• The parties endorse the closing statement.
• The buyer puts their signature on the mortgage note and the mortgage document.
• The seller grants the buyer the property's title through a signed deed.

Typically, the buyer settles all closing costs with the closing agent. During this process, the closing agent presents the buyer with a detailed statement itemizing all financial elements of the deal. To complete the process, the closing agent promptly registers the deed and mortgage with the County records completing the transfer of the property. 

Items The Buyer Receives

At the culmination of a real estate transaction, a buyer can expect to receive the following documents and items, ensuring transparency and adherence to legal standards:

• Settlement Statement: A detailed breakdown of services rendered and the associated costs.
• Truth-in-Lending Statement: An official document outlining the terms of the loan and the costs of borrowing.
• Mortgage Note: A promise to repay the loan amount under stipulated terms.
• Deed of Trust: Legal documentation securing the loan with the property as collateral.
• Sales Contract: The finalized agreement detailing the terms of the property sale.
• Affidavits (if applicable): Any sworn written statements or declarations.
• Copy of the Deed: An official document proving property ownership.
• Home Keys: The tangible step into your new property.

Speak To Our Real Estate Lawyers

The closing process can be swift and intense, with both parties often engaging in discussions, and occasionally differing opinions, about the financial aspects. Remember, these figures represent your valuable investment and hard-earned funds.

Navigating Home Inspections in Texas Real Estate

The depth and type of home inspection a potential buyer requires can be influenced by several factors. Every buyer should begin with their own rudimentary inspection. Beyond this, it's vital to commission a professional, comprehensive inspection from a trusted source to unearth any hidden issues. For those using FHA or VA loans, an appraisal-based inspection will also be conducted. However, this primarily focuses on the property's value and doesn't delve into its condition like a full inspection would.

Inspectors center their attention on the safety and overall integrity of a home. They don't assess if you're getting a value deal. Their purview covers a home’s electrical setup, plumbing, waste systems, water heater, insulation, HVAC systems, water quality, foundation, and the potential for pest invasions, among other facets. If any red flags arise during this process, the inspector might recommend a more specialized review. For a holistic understanding, buyers might also consider evaluations for health risks such as radon gas, asbestos, or lead, if not included in the main inspection.

Though not mandatory, many buyers opt to accompany the inspector for firsthand insights. Post-inspection, this professional can elucidate their findings, and provide an unbiased assessment of the property.

Choosing the Right Inspector in Texas

When embarking on the home-buying journey, choose an inspector with proven credentials and experience. In many states, including Texas, inspectors need proper licensing. We advise securing an inspection prior to finalizing any written offers. If circumstances prevent this, inserting an inspection clause in your negotiations becomes essential. Such a clause can either obligate the seller to address specific issues or make financial adjustments based on the inspection outcomes before the sale concludes.

Consult a Texas Real Estate Attorney

Astute buyers in Texas recognize the indispensable nature of a meticulous home inspection. Think of it as an investment rather than an expense. These evaluations spotlight any shortcomings that might compromise the safety, comfort, or future resale value of the property. If you're navigating the Texas property landscape, seeking guidance from a seasoned real estate lawyer is your best bet.

Understanding 1031 Exchanges: Simplified

At Abrams, Walt & Associates, we recognize that real estate decisions often come with their own set of complexities. One such term that often arises in the real estate world is the "1031 Exchange." Let’s break it down into simpler terms and address some of the most frequently asked questions about it.

What is a 1031 Exchange?

A 1031 Exchange, named after Section 1031 of the U.S. Internal Revenue Code, allows property owners to exchange one investment property for another. The major benefit? By doing so, they can defer capital gains taxes, which would typically arise from the sale of the property.

Why is 1031 Exchange beneficial?

It allows investors to reinvest the full amount from their sold property into a new one, potentially upgrading or diversifying their investment portfolio without an immediate tax hit.

Frequently Asked Questions:

What kinds of properties qualify for a 1031 Exchange?

Both the sold (relinquished) property and the new (replacement) property must be for investment or business use. This generally excludes primary residences.

Is there a time limit on 1031 Exchange?

Yes. From the date you sell your relinquished property, you have 45 days to identify potential replacement properties and a total of 180 days to complete the purchase.

Can I do a 1031 Exchange for properties outside the U.S.?

No. Both the relinquished and replacement properties must be located within the U.S. to qualify for a 1031 Exchange.

What happens if I sell the new property in 1031 Exchange?

You can continue to defer the capital gains taxes by doing another 1031 Exchange. However, if you decide to sell without an exchange, you will owe the deferred taxes.

What if I receive money or other non-like-kind property in the 1031 exchange?

This is termed as "boot" and may be taxable. It's crucial to structure your exchange properly to ensure you reap the full benefits.

Consult with 1031 Exchange Specialist.

1031 Exchanges can be intricate, and one misstep can jeopardize the tax benefits. If you’re considering leveraging this powerful tool, be sure to consult with a 1031 Exchange Specialist.