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What is a Real Estate Short Sale in Ohio?

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What is a Real Estate Short Sale in Ohio?

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Matthew A. Schwartz
Matthew A. Schwartz

Ohio Real Estate Attorney

Short sales are a legal sale of a property when a property owner sells the property for less than the amount owed on the mortgage associated with the property. The buyer of the property is not the lender and the proceeds from the purchase all go to the lender.

What is a Real Estate Short Sale?

Short sales are legal sales of a property when a property owner sells the property for less than the amount owed on the mortgage associated with the property.  The buyer of the property is not the lender and the proceeds from the purchase all go to the lender.  In the case of a short sale real estate translation, the lender has to decide if they will write off and forgive the remaining balance on the previous mortgage or seek a deficiency judgment in court to get the previous owner to pay all or some lesser portion of the outstanding balance of the mortgage including interest.

When a real estate short sale is conducted, it’s common that these terms for the deficiency judgment or balance forgiveness are in the agreement with the buyer of the property from the owner in default or distress.

5 Key Components in a FSBO Real Estate Short Sale

  1. A real estate short sale is when a property is sold for an amount less than the amount currently owed on the mortgage lien against the property.
  2. The mortgage lender approves any terms of a short real estate sale in the State of Ohio.
  3. In the terms of the agreement for the short sale, the lender determines if the remaining balance is forgiven or if they will seek a deficiency judgment against the property owner.
  4. FSBO Sellers have to disclose if they are delinquent in their mortgage payments or if they are seeking a short sale of the property and will need to secure the permission of the lender to complete the transactions.
  5. FSBO Buyers will want a contingency in their offer to stipulate the sale of the property is contingent upon the short sale approval from the lender.

An Example of a Real Estate Short Sale

A homeowner wants to sell their home for $200,000 and the mortgage balance on the property is $250,000 creating a deficiency of $50,000.

The first part of listing the property includes getting permission from the mortgage lender to agree to the execution of a short sale which is commonly known as a pre-foreclosure sale.  The mortgage lender will seek information from the buyer on why the short sale is required and for an FSBO seller that may mean a loss of income, or an inability to care for the property due to injury or age.  While a short sale may take several months to approve with a mortgage lender, a short sale is not as detrimental to the credit of a seller as a full-on foreclosure may be. 

Once the short sale is approved by the mortgage lender, the homeowner can market the property and receiver offers.  In the event that the seller is unable to sell for the price differential agreed to by the mortgage lender, the lender will have final approval on acceptance of the offer and may change the short sale agreement if the deficiency increases.

In the end, a real estate short sale can enable a distressed homeowner to surrender the property to a third party and have the mortgage lender forgive the deficiency between the sale price and the market price.  There are many steps in this process and many potential caveats like mortgage lenders not wanting to conduct short sales, requiring property owners to be in default or having the mortgage lender still require some partial form of payment from the deficiency between the mortgage amount and the sale price.  Short sales are expensive to undertake, they require a knowledgeable real estate agent or attorney, a legal representative from the lender and may take months to even as long as a year to get to any type of agreement.  FSBO may be a method to unload your short sale real estate using an attorney to avoid the real estate commissions and fees and free you from the obligations of your mortgage.

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What is a Real Estate Short Sale in Ohio?

Short sales are a legal sale of a property when a property owner sells the property for less than the amount owed on the mortgage associated with the property. The buyer of the property is not the lender and the proceeds from the purchase all go to the lender.

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LEGAL DISCLAIMER:
The information contained on this website is presented for informational and marketing purposes only and is not to be understood as legal advice. You should consult an attorney for advice respecting your individual needs. The Law Office of Matthew A. Schwartz looks forward to speaking with you about your particular needs. Please note, however, that the mere act of contacting our firm does not create an attorney-client relationship. As a result, you should never send any confidential information to our office until a Representation Agreement has been signed by both you and The Law Office of Matthew A. Schwartz. 

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For Sale By Owner

How To Protect Yourself with a Home Sale Contingency Clause

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How To Protect Yourself with a Home Sale Contingency Clause

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Matthew A. Schwartz
Matthew A. Schwartz

Ohio Real Estate Attorney

A home sale Contingency Clause in a purchase contract protects the potential buyer of a property from carrying two mortgage payments when they own another property that they are attempting to sell.

Home Sale Contingency Clauses Prevent You from Being Stuck with Two Mortgages.

Protect Your Assets While Buying a Home

A Home Sale Contingency Clause in a purchase contract protects the potential buyer of a property from carrying two mortgage payments when they own another property that they are attempting to sell.  In the offer phase, a contingency clause can delay the obligation to close on the property while the buyer’s current property remains on the market.  The contingency clause typically provides an expiration date for an offer based on an expected sale of the buyer’s current property.  In the event the buyer’s current property fails to sell within the designated time period, the offer to the seller is void.  If the buyer’s home sells prior to the expiry date, then the ”home sale” contingency has been met, and the transaction moves forward.

3 Key Components of Home Sale Contingency Clauses

  1. Contingency clauses protect buyers selling one home to buy another and would be incorporated into the offer to buy.
  2. If a buyer’s property does not sell by a designated date, the offer is null and void.
  3. A contingency clause for an FSBO seller can provide assurance that your property sells before your offer on another property is binding.

Settlement Contingency Clause

A “settlement contingency” is a clause that enables the Buyer to make the finality and the timing of an offer dependent upon the closing of another property being sold by the Buyer.  This would apply only in cases where the Buyer making the contingent offer was already under contract to sell their original property.   A settlement contingency typically does not allow a Seller to accept other offers while the Buyer’s property closes or for a set period of time.

Sale and Settlement Contingency Clause

A “sale and settlement contingency” clause is appropriate in cases where the Buyer making the contingent offer is also attempting to sell another property.  Since the Buyer has not yet secured an acceptable offer on their other property, sale and settlement contingencies typically permit the Seller to  accept offers from other potential buyers .  If the Seller receives a suitable offer from a different buyer, the initial Buyer will typically have the opportunity to waive the contingency and/or otherwise modify their offer in an attempt to maintain first position.   sale and settlement contingency including matching or beating the additional buyers offer.  If the buyer is unable to remove the contingency, the buyer’s offer becomes null and void.  Sale and settlement contingencies often come with earnest money that is returned if the buyer cannot execute the clause because their home has not sold.

How Contingencies Help & Hurt FSBO Sellers

Contingency clauses can impede an FSBO Seller in the process to sell your home while you wait for a buyer to settle and close on their property.  A few things an FSBO Seller should do before accepting a contingency clause:

  • Review the buyer property. Is it listed in real estate marketplaces?
  • Is it listed to sell or are comparable homes in the neighborhood selling faster or slower?
  • Assess the time on market for the neighborhood – if the time on market is long, you may not want to accept the contingency offer if it will delay the sale of your home.
  • Is the property listed with a real estate agency or FSBO?
  • A Real Estate agent may move quickly in the market to get the buyer’s property sold and commissioned.
  • An attorney might take more time with other work that could delay the sale of your home.
  • A “kick out” clause can also be added to contingency clauses that gives the buyer a certain number of days to sell their property and if not, they have a certain amount of time to remove the contingency clause or their offer is null and void.

A contingency clause can benefit FSBO buyers if your property is not selling quickly at the market price. If your market is slow or your listing has been up for a number of days, a contingency might benefit you.  

Contingency Clauses are there to enable buyers and sellers mutual time to sell and acquire properties.  Talk to an attorney about the clauses and make sure you include the right language that helps your property sell in the market.

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How to Use a Gift of Equity in Ohio FSBO Transactions

A Gift of Equity in a property allows the future owners and buyers of the property to leverage their newfound equity in the property as a down payment on the loan to finance the property and to avoid Private Mortgage Insurance (PMI) potentially.

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Tax Liens & Tax Certificates in Ohio

Property taxes are the most confusing and complicated aspect of real estate transfers in Ohio. The Law Office of Matthew Schwartz helps you mitigate taxes when buying or selling property.

What is an Affidavit Of Title in the State of Ohio?

An affidavit of title is a legal document provided by the seller of a piece of property that explicitly states the status of any potential legal issues with regard to the property being sold or the seller of the property.

LEGAL DISCLAIMER:
The information contained on this website is presented for informational and marketing purposes only and is not to be understood as legal advice. You should consult an attorney for advice respecting your individual needs. The Law Office of Matthew A. Schwartz looks forward to speaking with you about your particular needs. Please note, however, that the mere act of contacting our firm does not create an attorney-client relationship. As a result, you should never send any confidential information to our office until a Representation Agreement has been signed by both you and The Law Office of Matthew A. Schwartz. 

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For Sale By Owner

FSBO Escrow | 7 Steps To Conquer the Process

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FSBO Escrow | 7 Steps To Conquer the Process

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Matthew A. Schwartz
Matthew A. Schwartz

Ohio Real Estate Attorney

The FSBO Escrow Process Can Be Managed in 7 Steps with the Help of Inspectors, Notaries and and Attorney.

How to Manage FSBO Escrow when Selling or Buying in Ohio

Escrow in a real estate transaction refers to the period of time between the signing of an agreement and closing.  The escrow process helps to ensure a smooth transaction between the parties by ensuring that funds are not released to either party unless/until all relevant terms and contingencies have been addressed.

1. Executing a Valid Purchase Agreement

The first step in the escrow process is to make an offer on a property.  The offer letter becomes part of the escrow cache of documents and includes any contingencies and the terms of the offer, including the offer price and expiration date.  For parties who are not represented by a real estate agent or attorney, standard templates may be available through a local Bar or Realtors association to aid in ensuring that an enforceable contract is achieved once the parties agree on general terms.  

Buying a home is typically the single largest asset purchase for an individual.  In some cases, unrepresented individuals may be tempted to create an offer from scratch or rely on a contract format suggested by the other party.  In such cases, the hundreds of dollars spent on a qualified contract review can help to avoid potential damages that could be in the thousands or tens of thousands of dollars.  A professional contract review will ensure that the party is aware of any risks associated with the material terms of the contract, that they have an opportunity to artfully present alternatives that are in line with industry practice, and that the contract is structured in a manner that does not provide an improper advantage to the opposing party.  

Once an offer has been finalized, an escrow account can be opened, typically by a title company, a financial institution or an attorney.  In an FSBO transaction, it’s not uncommon for the attorney to establish an escrow account to manage documents and funds exchanged during the transaction.  If an attorney handles the escrow process, it may also be known as a “settlement” account depending on the legal jurisdiction where the sale occurs.

The escrow or settlement account may include any earnest money or good faith deposit involved with the offer.

2. Lender Ordered Appraisal

In an FSBO transaction, the buyer pays for an appraisal ordered by the financial institution that is underwriting the mortgage.  The financial institution often selects the appraisal company to validate the market value of the property and protect their financial interest in the property should it ever foreclose.  If the appraisal value is less than the offer price, the bank will base the loan on the lower (appraised) value.  In such cases, the seller will need to agree to accept the lower sales price, or the buyer will need to establish funds for the difference between the selling price and the appraised value. The purchase contract remains in place until either the buyer or seller satisfies the lender’s request.

3. Receive and Accept Seller Disclosures

During the selling process, the seller is obligated to specify or disclose, any irregularities with the property that may impede closing or reaching an agreement on the value of the property.  That may include zoning violations, failed inspections, non-permissible uses, damages to the property, etc.  The seller disclosures are added to the escrow or settlement account.

4. FSBO Buyer Funded Property Inspection

Home Inspection

While property inspections are not required to move forward with the purchase of a property, they can be extremely valuable in identifying non-visible conditions that could significantly impact the value of the house.  Most property inspections are under $1000 and they help the buyer to identify any (potentially major) problems with the property before the close of the transaction.  The buyer can ask the seller to correct any damage or repair the property at the seller’s cost OR request a lower price to allow the buyer to make the repairs before acquiring the property.

Any property that is listed “as is” indicates that the seller is unable or unwilling to make repairs or improvements prior to the close of the property.  FSBO properties in Ohio sometimes come with an “as is” contingency because the homeowner is in financial distress or otherwise unable to improve the property.

Other Property Inspections

There are a few other types of inspections to consider before closing on a property:

  • Pest Inspections – pests like ants, termites, roaches, rats, squirrels, mice, etc. may have made their way into the property and nested causing unseen damage to walls and even electrical wiring.  If there are pest problems present in the property, the buyer may demand that the seller remedy those problems through a pest remediation service or a reduction in the selling price.  Some pest problems can lead to structural damages and may cost thousands, or even tens of thousands, of dollars to remedy.
  • Environmental Inspections – radon gas, mold, asbestos, coal, oil or gas spills, and other contaminants that may be on the property can pose serious health risks and can involve extensive costs to remediate.
  • Natural Disaster Assessments – some properties may be in areas prone to earthquakes, major winter storms, tornadoes, or flooding.  Those assessments can identify the future risk of damage to the property that could substantially increase the cost of insuring the property.

All inspections and assessments are documents added to the escrow or settlement account for review before closing.

5. Acquiring Insurance on the Property

Appropriate insurance coverage will be required for any sale in which a financial institution is securing the buyer’s financing with a mortgage.  In addition to standard homeowner’s insurance, Lenders may require specific coverage related to hazards such as hurricanes, earthquakes, or floods, depending on the location of the property.  Costs for these provisions can be significant and may even exceed the base cost for standard coverage.  Insurance rates can also vary dramatically depending on coverage options such as whether claims are paid at declared value or the replacement value. Once insurance coverage is approved and attained, the certificate of insurance is filed in the escrow or settlement account.

6. Acquiring the Title Report and Title Insurance

A Title Report is a document that indicates if there are any liens or legal claims against the property.  Liens can arise from claims of unpaid debt asserted by contractors, financial institutions, or even Homeowners Associations (HOAs) and government entities.  The Title Report protects the buyer against future litigation by verifying that the seller is able to sell the property unencumbered.  Title insurance is a product that insures you and your financial institution against anything that might appear on the title AFTER the close that was not disclosed during the sale.  Any discrepancies in the title are the responsibility of the seller to cure before the closing can be completed.  The title report and title insurance are part of the escrow or settlement account.

7. Closing the Escrow Account

In preparation to close, you will receive a HUD1 document that shows the value of the home.  This should match the documents you already have in place from the offer.  Depending on the arrangement, there may also be a need to complete a final walk-through prior to closing.  

The closing process involves signing the mortgage loan paperwork and other documents that transfer the deed and title of the property to the buyer.  It’s strongly advised that you have a real estate attorney review your agreements.  

The seller will be signing documents indicating the sale of the property, which should address one of the final contingencies for the closure of the escrow account.  The escrow or settlement officer will prepare a new deed that is submitted to the county recorder for publication.  Your lender will transfer the mortgage funds to the escrow account.  Depending on the settlement structure, the buyer may need to provide separate funds at closing related to the down payment, taxes, fees, etc.

Upon completion of the closing, or as otherwise designated in the purchase contract and related documents, ownership, and possession of the property are officially transferred from seller to buyer.

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LEGAL DISCLAIMER:
The information contained on this website is presented for informational and marketing purposes only and is not to be understood as legal advice. You should consult an attorney for advice respecting your individual needs. The Law Office of Matthew A. Schwartz looks forward to speaking with you about your particular needs. Please note, however, that the mere act of contacting our firm does not create an attorney-client relationship. As a result, you should never send any confidential information to our office until a Representation Agreement has been signed by both you and The Law Office of Matthew A. Schwartz. 

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For Sale By Owner

How to Use a Gift of Equity in Ohio FSBO Transactions

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How to Use a Gift of Equity in Ohio FSBO Transactions

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Matthew A. Schwartz
Matthew A. Schwartz

Ohio Real Estate Attorney

A Gift of Equity in a property allows the future owners and buyers of the property to leverage their newfound equity in the property as a down payment on the loan to finance the property and to avoid Private Mortgage Insurance (PMI) potentially.

how to add a gift of equity to a sale

FSBO Sales Directed at Family Members Can include a Gift of Equity

While saving on realtor fees is an excellent benefit of choosing to proceed with For Sale By Owner, some of the most valuable advice we can offer involves structuring a deal with a family member, renter, or someone with whom you have a close relationship.

During the transaction to sell the property, you may decide to price the property BELOW the actual appraised value of the property and that creates something called a Gift of Equity.

A Gift of Equity in a property allows the future owners and buyers of the property to leverage their newfound equity in the property as a down payment on the loan to finance the property and to avoid Private Mortgage Insurance (PMI) potentially. The Gift of Equity is an actual gift to the buyer, it may not be a “loan” and it may not be cash. These factors are normally certified in a Gift of Equity Letter.

4 Key Components to a Gift of Equity

  1. A gift of equity involves the sale of a residential property for less than the appraised amount with no exchange of cash (or anything else of value) to offset the difference between the established market value and the purchase price.
  2. A gift of equity is normally conducted between family members although not strictly forbidden between a seller and a buyer with a close relationship.
  3. Lenders will require that the buyer is qualified for the mortgage they take on the selling price in order for the Lender to accept the Gift of Equity as a down payment on the mortgage.
  4. Gifts of Equity are quantified through a Gift of Equity Letter.  While the letter is not specifically required to be notarized, the use of a notary is recommended.

Potential Benefits for Gifts of Equity in Ohio

  1. The buyer may be able to significantly lower or even eliminate a downpayment on the purchase of a family-owned property. With required down payments ranging from 5% to 20%, the Gift of Equity can resolve situations where buyers may struggle to establish the up-front money required to complete a purchase.
  2. Gifts of Equity are conducted using an attorney to help draft the Gift of Equity Letter and manage the selling process from Affidavits of Title through the Mortgage Agreement with the lender.
  3. Family members can pass generational wealth on to their children or other close relatives by passing equity from their home to them during the sale of the property.
  4. Ohio has no Estate Tax or Gift Tax so sellers and buyers may be able to avoid a tax situation associated with the Capital Gains on the property.

Potential Drawbacks to Gifts of Equity in Ohio

  1. While there is no firm Gift Tax in the State of Ohio, a large gift from an estate might trigger another tax.  Consult an attorney or tax accountant to understand the full picture and potential tax implications.
  2. A gift of equity could actually lower the cost of the house being purchased by the buyer as any cost associated with improving the property is transferred to the buyer as equity.  But that can increase the capital gains value when the new owner sells the property potentially resulting in tax offsets.
  3. A Gift of Equity does not cover the closing costs on a loan or filing fees for titles and deeds.  A Gift of Equity is also filed using an attorney and legal fees may apply. 

What is Required for a Gift of Equity in Ohio?

In Ohio, a Gift of Equity Letter is required, and while notarization is not required it is strongly encouraged.  The letter contains the following:

  1. The property seller must pay to have a professional appraisal completed on the property to establish the market value
  2. The current market value of the property from the appraisal is stipulated in the Gift of Equity Letter.
  3. The Gift of Equity Letter must include the price at which the property will be sold to the buyer and the dollar value of the Equity being transferred

The Gift of Equity Letter is part of the closing process and is presented at the time of closing and to potential lenders as loan vehicles are created for the new buyer of the property. The buyer MUST qualify for a loan to receive the equity.

Gift of Equity and Internal Revenue Service (IRS) Guidelines

While a Gift of Equity may not have tax consequences in the State of Ohio, it may have consequences with the Internal Revenue Service.  In 2021, the IRS cap on gifts from a married couple to an individual is set at $32,000 a year and $16,000 from an individual to another individual.  Capital Gains tax may apply on the difference between the Market Appraisal and selling price less the Gift cap.  Consult a tax advisor or an attorney to find out more.

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LEGAL DISCLAIMER:
The information contained on this website is presented for informational and marketing purposes only and is not to be understood as legal advice. You should consult an attorney for advice respecting your individual needs. The Law Office of Matthew A. Schwartz looks forward to speaking with you about your particular needs. Please note, however, that the mere act of contacting our firm does not create an attorney-client relationship. As a result, you should never send any confidential information to our office until a Representation Agreement has been signed by both you and The Law Office of Matthew A. Schwartz. 

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For Sale By Owner

FSBO Pocket Listing | 7 Pros & Cons

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FSBO Pocket Listing | 7 Pros & Cons

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Matthew A. Schwartz
Matthew A. Schwartz

Ohio Real Estate Attorney

An FSBO Pocket Listing is a private Listing with an Attorney or other Agent to help sell the property without using public markets.

Pros and Cons of a Real Estate Pocket Listing in FSBO

In real estate, both residential and commercial, a pocket listing, or “off-market listing” is where the broker or agent representing the property does not list the property available to brokers or other multiple listing services.  The property is privately marketed and sold by the broker or agent.  Often in FSBO, the agent is an attorney representing a property on behalf of a client who is selling their property on their own.  

One of the primary reasons for a property not being listed with other brokers or MLS services is the desire of the property owner to keep the dealing private.  Another reason is that the sale of the property is already to a known buyer and there is no need for an MLS or broker to engage in the marketing and selling process. 

Key Components of a Pocket Listing

  • Pocket listings are exclusively represented by a single agent or broker.
  • Pocket listings do not notify or market in public the sale of the property.
  • Pocket listings protect the privacy of the seller and the real estate transaction.
  • Pocket listings are often sold directly to a known buyer and have no need for marketplace marketing or selling.

Pocket Listing Pluses and Minuses

Pocket listing offers some strengths and weaknesses for people selling their homes.  Let’s take a look…

Pluses to FSBO Pocket Listing

  • The agent or broker retains either the commission or has a legal bundle to help you save substantial money on selling your home – particularly homes with high market values.
  • Pocket listings provide privacy for both the buyer and seller.  Many reasons privacy may be warranted from work-related changes to high-value properties that remain out of the public eye.
  • The pocket listing enables the seller to look at selling prices outside of “comparable” values in the market and position the property as something that exceeds market prices for specific buyers.
  • For example, a reclusive private property may be very attractive public figures, sports figures, or highly affluent executives seeking privacy and security.  That can drive pricing that is outside of “comps” and focuses on the value of the property to the right buyer.

Minuses to FSBO Pocket Listing

  • When you Pocket List your property, you have entrusted the sale of your property into the hands of a single individual and their knowledge of the market.
  • Pocket listings are less likely to be engaged in a battle of competitive bids that can drive the price of a property up.
  • Pocket listings, by default, are not listed in the market, so the selling process can take longer.  This is not an issue for an FSBO seller who is looking for the right buyer.
  • While Pocket Listing gets you out of marketplaces, the listing agent may be a member of a chamber, a private club, or a group where the private offering can reach the ears of the right buyers.  While the market visibility is low, it should be fairly well targeted.

Example of a Pocket Listing

George has been playing a professional sport in town and has decided he wants to leave the market and move elsewhere.  George approaches an attorney and creates a pocket listing for the property with the client privilege and privacy needed to get the $5MM property moving in a market with a limited number of buyers.

George’s attorney represents his client and the property and quietly works through his network of targeted customers, an ideal buying profile, and discusses the opportunity for the private sale.  George’s attorney requires a mutual NDA before mentioning the location or the seller of the property.  George’s attorney charges a flat 5% fee on the listing and sale of the property and has 90 days to sell the property under the agreement.

Pocket Listings can be constructed for the mutual benefit of both buyer and seller and the buyer and his or her agent or broker.  Pocket Listings are not reserved for luxury homes but can be useful tools to maintain privacy while selling a piece of property.

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LEGAL DISCLAIMER:
The information contained on this website is presented for informational and marketing purposes only and is not to be understood as legal advice. You should consult an attorney for advice respecting your individual needs. The Law Office of Matthew A. Schwartz looks forward to speaking with you about your particular needs. Please note, however, that the mere act of contacting our firm does not create an attorney-client relationship. As a result, you should never send any confidential information to our office until a Representation Agreement has been signed by both you and The Law Office of Matthew A. Schwartz. 

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For Sale By Owner

Right of First Offer in FSBO Real Estate Sales

Right of First Offer in FSBO Real Estate Sales

right of first offer fsbo real estate sales image
Matthew A. Schwartz
Matthew A. Schwartz

Ohio Real Estate Attorney

FSBO Real Estate Sales May Include a Right of First Offer. Learn How it Can Work for Your FSBO Sale.

Right of First Offer in FSBO Sales

The right of “First Offer” is a legal obligation to allow a holder of the “right” to purchase a property asset before anyone else.  A right of First Offer may be found in a will that would allow a sibling or relative to buy a property first or may be involved in a business disposition.  If the holder of the right declines to exercise the right then the property can proceed to market and the right is retained and filed into escrow during the sale.

A right of First Offer may also appear in a lease agreement for commercial or residential property and allows the occupant to have the right to offer to retain the lease if the landlord opts to put it into the market.

How the Right of First Offer Works for FSBO

When an owner wants to sell or lease a property, whether occupied or not, the holder of the right is notified and they can make the first offer to the seller.  The seller is NOT obligated to accept the offer, even if it is above the market price the seller is looking for.  The holder of the right typically has a set amount of time to provide the offer before the right expires.  If the right expires, it is void.

A seller can sell the property to a third party after the right of First Offer is declined.  In the event that the seller does not get a reasonable market price, they are not prohibited from returning to the right of First Offer holder, but the right is no longer valid nor is their initial offer.

Right of First Refusal and Right of First Offer

A right of first refusal is a right that favors a buyer and gives them the right to match an offer made on a property.  The right of First Offer gives the holder of the right the permission to make the initial offer on the property.  So the holder of the right of first refusal would have to MATCH or beat the offer from the holder of the right of First Offer in order to win the property.

Rights of First Refusal are not common but may exist from a will or some other legal document associated with disposing of the assets of a deceased person.  Typically, the Right of First Refusal and Right of First Offer move quickly with expiration dates on the offers of no more than a few days.

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For Sale By Owner

Tax Liens & Tax Certificates in Ohio

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Tax Liens & Tax Certificates in Ohio

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Matthew A. Schwartz
Matthew A. Schwartz

Ohio Real Estate Attorney

Property taxes are the most confusing and complicated aspect of real estate transfers in Ohio. Without a well-crafted and state-specific purchase and sales agreement, Buyers and Sellers may be unknowingly on the hook for thousands of dollars.  A quality contract will go into detail regarding all of the potential tax issues to eliminate confusion. 

Ohio Counties Charge Taxes in Arrears: Property Taxes as Liens

A lien is a legal right to payment secured by property and in Ohio property taxes are automatically secured by a lien.  To complicate matters, you may have noticed that your property tax bill is one year behind as taxes are billed in arrears.  However, according to Section 323.11 of the Ohio Revised Code, the current year’s taxes are still a lien on your property even though you haven’t received a bill.  Therefore, In order for a Seller to transfer title free and clear, a credit should be issued to the Buyer to compensate for the lien of unbilled taxes usually calculated to the date of closing.  Miscalculation of those taxes, Special Assessments, and tax other discounts such as the Homestead or CAUV for agricultural use are the most common mistakes we see during review of transactions completed by professional title agencies.  

What Is a Tax Certificate?

When real property taxes are not paid, the County may issue a tax certificate and then sell the certificate to a private party

The private party may attempt to collect the debt by any legal means, including foreclosure.  If you receive notice from a private party attempting to collect on a tax certificate, it is important not to ignore the issue, as you may lose title to your property; but also beware of scams. It is prudent to verify the identity and legal claim of any company or law firm attempting to collect on a tax certificate. 

FSBO Properties with Tax Issues

Properties with delinquent taxes can cause issues for the Buyer and the Seller.  

Sellers are often concerned with their ability to sell a property that has delinquent taxes, and often that may be the best strategy.

Buyers may unwittingly find their newly purchased property subject to a foreclosure for taxes owed long before they purchased the property. 

More about FSBO

LEGAL DISCLAIMER:
The information contained on this website is presented for informational and marketing purposes only and is not to be understood as legal advice. You should consult an attorney for advice respecting your individual needs. The Law Office of Matthew A. Schwartz looks forward to speaking with you about your particular needs. Please note, however, that the mere act of contacting our firm does not create an attorney-client relationship. As a result, you should never send any confidential information to our office until a Representation Agreement has been signed by both you and The Law Office of Matthew A. Schwartz. 

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For Sale By Owner

What is an Affidavit Of Title in the State of Ohio?

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What is an Affidavit Of Title in the State of Ohio?

Matthew A. Schwartz
Matthew A. Schwartz

Ohio Real Estate Attorney

An affidavit of title is a legal document provided by the seller of a piece of property that explicitly states the status of any potential legal issues with regard to the property being sold or the seller of the property.

An affidavit is a sworn statement of fact specifying the seller of a property holds the title to the property and acts as proof that the seller of the property in fact owns the property.  An Affidavit of Title also includes an attestation from the Seller that any other facts about the property are correct and is notarized by an official notary public.

What Property or Seller Details Could an Affidavit of Title include?

An Affidavit of Title can include that there are no contractor liens on the property, that the seller is not in a legal proceeding that could attach to the property or that the seller is delinquent in taxes related to the property.  Other details may include information from a site survey that stipulates issues with the zoning of the property or boundaries of the property.  The Affidavit of Title is there to protect the buyer from any errors or misrepresentation of the property or the seller from the seller.

Contents of an Affidavit of Title in Ohio

The basic content of an Affidavit of Title include personal details about the seller like name and current address. Other statements include:

  • The seller is the owner of record for the property being sold to the buyer;
  • The seller is not simultaneously selling the property being sold to any other party;
  • There are no liens from lenders, contractors or other parties on the property being sold;
  • There are no outstanding assessments for the property being sold or assessments outstanding against the property.
  • The seller is not in bankruptcy proceedings or is filing bankruptcy proceedings that may attach to the property being sold.

Other Things Covered by an Affidavit of Title in Ohio

  • A mortgage lien is still on the property as a method to identify what liens are on the property being sold;
  • There are easements on the property from a prior survey or an easement may need to be done with a new survey of the property
Key Components of an Affidavit of Title
  1. An Affidavit of Title is a Legal, notarized document that requires the seller to disclose any legal issues regarding the property being sold and the sellers personal legal status.
  2. The Affidavit of Title protects the BUYER from legal issues surrounding the seller or the property.
  3. Ohio REQUIRES an Affidavit of Title in real estate transactions.
  4. Ohio title companies REQUIRE an Affidavit of Title before title insurance can be issued.
  5. The Affidavit of Title can be used in legal proceedings if issues arrive after the transaction for the property and the seller failed to disclose the issues.

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