To Our Colleagues in the Real Estate Industry,
We really hit the ground running in January, and February was just as busy. Positive economic indicators are definitely on the rise - could 2012 be the year for a turnaround?
We're extremely pleased to report a high level of closing activity in the first two months of the quarter - in fact, we haven't seen this kind of volume in several years. And we're happy to see many of the agents we work with successfully selling properties.
The purchase activity that we're experiencing is coming from a variety of sources, including short sales, bank owned properties, conventional transactions and cash buyers. There seems to be plenty of excellent financing options available.
Much of the activity our closing staff is seeing is from the backlogged foreclosure market, as banks become more skilled at managing the complicated proceedings. REO sales are setting the trend and gaining momentum with large numbers of properties finally hitting the market and selling.
In this month's feature article, MCA shares some insights on title issues and potential conflicts of interest we've seen come to light during REO transactions.
Manaker, Cipolla and Associates, LLC
The REO Sale
Protect Your Client from a Conflict of Interest
With the current glut of foreclosed properties on the books of many banks and lenders, the purchase of an REO property can be an excellent value for your client.
The transactions are challenging, as we all know, but making a few sound, initial decisions can help you protect your client from future complications.
As the purchase process unfolds, the seller may offer incentives for your client, the buyer, to use the seller's attorney, generally the same attorney that represents the bank.
We at Manaker, Cipolla and Associates (MCA) recommend exercising extreme caution when evaluating such an offer. The potential for a conflict of interest exists in this scenario, one that could leave your client exposed when a legal issue arises.
For example, different attorneys have differing opinions regarding the magnitude of various types of title issues - no one is right or wrong - it's just a difference of opinion.
If the buyer has retained the seller's attorney, much as in dual agency, representation may be divided, potentially leaving your client exposed when a judgement call is necessary.
At the very least, the shared attorney may miss a detail like a lien, or naming an interested party - we've seen this occur in a large percentage of closings we handle. The good news is, the issue normally can be resolved, and fairly quickly. The bad news: it delays the closing while the issue is addressed.
In our opinion, it is in the buyer's interest to be represented by his or her own, independent lawyer, and one who is very familiar with the REO process and knows what issues to look for. The potential monetary benefits of sharing an attorney with a seller and the seller's bank are far outweighed by the greater benefits of receiving appropriate legal protection.
Disclaimer: This newsletter is designed to provide general information only. The information presented within it should not be construed to be legal advice. Neither the use of this newsletter nor its contact links establish the formation of a lawyer/client relationship.
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|Meet Our Team
Michael Cipolla has been with MCA for almost five years. He was promoted to partner and co-owner in January 2011.
Mike's primary practice area is in residential real estate with an emphasis on resolving title issues.
He is a long-time Charleston resident, and a graduate of the College of Charleston and the University of South Carolina School of Law.
Prior to joining MCA, Mike distinguished himself as a real estate attorney working in the Charleston office of one of the largest law firms in the country.
Mike also has a masters degree in Special Ed, and
taught at one time at Mitchell Elementary School.
He is married to fellow College of Charleston graduate Anne Wyman Cipolla, who is a guidance counselor in the Charleston County School District system. They live in West Ashley with their son, Michael.
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