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Buyer and Seller

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You may have read some of the recent blogs about parties to a contract who acquired ownership through death or through fraudulent means.  I’d like to provide a more broad overview regarding the simple question: who is the Buyer and who is the Seller in a real estate contract.  Agents can sometimes be anxious to get the listing agreement or the sale and purchase agreement signed, but problems can arise prior to closing when the title commitment states that you need to get the proper authorization from the actual owner of the property or the name of the person or entity that is purchasing the property.

So what kind of inquiries should be made if you are representing either side of the deal?  Make sure you know exactly who your client is.  Is the property owned by an individual, an estate, a trust, a corporation, an LLC, or some other entity?  Is the purchaser wanting to buy the property individually, with a spouse or family member, through a business, or through a trust?  Below is a quick checklist to follow to ensure your listing agreement is enforceable or your Sale and Purchase Agreement can get to closing without an issue of whether one of the parties has the ability to sign the closing documents.

Identifying the Buyer and Seller:

  • Seller is an individual, single, and alive: If the owner is still alive, does that person own the property individually or are there other owners such as remaindermen to a life estate, co-tenants or joint tenants?  A simple review of the most recent deed will provide valuable insight as to this information.  In addition, if the client is single, you may need to know if the person is divorced or widowed to make sure that you identified any possible owners or other persons with an interest in the real estate.
  • Seller is an individual, married, and alive: Similar to the previous scenario, but you may want to ask if there is any ongoing dissolution of marriage proceedings and if the property is homestead.  This is also to make sure that you properly identified who may have an interest in the property and who may need to execute some of the closing documents.
  • Seller/Buyer is an individual, alive, but not the person you are working with: If the client is still alive, is the client the person you are dealing with, or is it another person, such as a relative or friend?  If your client is not the person you are communicating with, does the person you are working with have the legal authority to enter into an agreement?  What you would be looking for under those circumstances is a valid Power of Attorney or Letters of Guardianship.
  • Seller is an individual and dead: If the property is owned by an individual, while it may seem like a nonsensical question, is the individual owner still alive?  If not, then you need to look for a possible open probate action, or, if one is not open, that may be required prior to even entering a listing agreement.  Further, if there is a Will, the property may be transferred to a trust through probate, so the opening of the probate may only be the first step.  As eloquently put in a recent blog, unless “a Personal Representative is appointed by the Probate Court, there is no person authorized to sign legal documents on behalf of an Estate.”
  • Seller/Buyer is a trustee or wants to title the property into a trust:  If the property is owned by a trust, you must get a copy of the trust agreement or, at least, a memorandum of trust or certification of trust that identifies who the current trustee or trustees are.  You want to avoid the mistake of assuming that the person who signed the contract is to sole or current trustee only to find out later that everything required a co-trustee to sign or there is a new or successor trustee.  Same with the Buyer: if the purchaser wants to place the property into a trust, make sure you have a copy of the trust or some other qualifying documentation that identifies the name of the trust and who the trustee or co-trustees are.
  • Seller/Buyer is a corporation, LLC, partnership, or some other business entity: If the property is owned by a corporation or an LLC, do you have the necessary corporate or LLC documents establishing that the person you are dealing with has the full authority to enter into the agreement?  Simply checking the website is a useful first step to ensure the name of your client is correct and that the person who is entering the contract has the authority to do so.  And if you are representing the Buyer, you want to confirm the same type of information.

This is by no means an exhaustive list of possible parties to a listing agreement or a sales and purchase agreement, but it should provide a good starting point on what to look for and what questions to ask when engaging with your client or potential client.   As always, before you have your “client” sign the agreement, if you have any concerns about who your client is, or what documentation you should be looking for under any of these scenarios, please reach out to a qualified real estate attorney.

Picture of Mark C. Mann, Esq.

Mark C. Mann, Esq.

Mark focuses his practice on representing individuals in civil litigation including personal injury and wrongful deaths, real estate disputes, contract disputes, contested probate matters, and family law cases.

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