Real Estate

Purchase Contracts

At Moffatt & Moffatt, we often prepare Real Estate Purchase and Sale Agreements. (PSA) for residential and commercial transactions PSA’s should address the following terms:

1. Identification of parties, property, price, payment, and closing date
2. Contingencies
   1. Title
      1. Obtain the preliminary title insurance commitment as early as possible to determine what hurdles may exist for good and marketable title
   2. Financing
      1. Ensure specific financing terms are included such that if they are not met, the PSA can be terminated
   3. Due Diligence/Inspection Period
      1. Determine the feasibility of the intended use
      2. Seller provides buyer all materials related to the property which seller possesses (i.e., studies, surveys, inspections, appraisals, prior title policies, etc.)
3. Representation and Warranties
   1. Zoning compliance
   2. Pending litigation
   3. Legal access to property
   4. Pending/confirmed assessments
   5. Contracts related to the property (i.e., property management, leases, etc.)
4. Conditions to Close
   1. Sets forth all things that must be completed prior to closing such as the delivery of executed documents, satisfaction of title defects, etc. This is often repetitious of other sections of the PSA.
5. Risk of Loss
   1. What happens if the property is destroyed prior to closing or the property becomes subject to eminent domain?
6. Breach and Remedies
   1. If seller breaches, the typical remedy is either specific performance or termination of the PSA and return of the earnest money to buyer.
   2. If the buyer breaches, the seller typically is entitled to terminate the PSA, retain the earnest money and possibly sue for damages

Easements/Right-of-Way

An easement is the right to use or enjoy the land of another for a specific purpose which is not inconsistent with the owner’s property. An easement is not an estate in land but is a non-possessory right in land. Understanding the meaning and impact of an easement or right-of-way can be crucial to your use and enjoyment of your real estate.

Foreclosures

Below is a general outline of the steps in a North Carolina Special Proceeding Foreclosure

1. Default occurs- Debtor fails to make a payment.
2. Creditor sends acceleration letter which includes the principal due, interest due, late charges, fees, penalties, per diem interest and total due. The Notice of Foreclosure hearing must be filed within 30 days following the date of this letter.
3. Creditor refers case to Trustee – If the original Trustee will not be handling the foreclosure, then the Creditor executes a document called a Substitution of Trustee. The Substitute Trustee document is recorded in the local Register of Deeds office before the foreclosure. If the creditor chooses, the Trustee then sends out the letter referenced above rather than the creditor.
4. Trustee updates the title to the property.
5. Notice of Foreclosure Hearing is filed the Clerk in the county where the property is located, and a hearing is scheduled.
6. A copy of the Notice of Foreclosure Hearing is served on all debtors and owners. Service may be by sheriff, certified mail and/or posting of the property being foreclosed.
7. If service is obtained by sheriff or certified mail, it must be served at least 10 days prior to the hearing date.
8. Service can be obtained by posting the Notice on the property if the debtors or owners cannot be served personally. The Sheriff must post the Notice on the subject property at least 20 days prior to the date of the foreclosure hearing.
9. If service is timely on all debtors and owners and any applicable creditors, then the hearing is held at the time and date contained in the Notice. The Clerk hears the evidence at the hearing, and if appropriate, enters an Order allowing the foreclosure to proceed.
10. Once the Clerk signs the Order, the Trustee posts the Notice of Sale on the bulletin board at the courthouse at least 20 days prior to the date of the sale. The Notice of Sale must also be advertised in the legal section of the newspaper. The ad must run for 2 (two) consecutive weeks prior to the sale date.
11. At the sale, the Trustee reads the Notice of Sale and answers any questions. The Trustee may start the bidding with an opening bid, if the creditor so elects. Thereafter, generally, anyone can bid in any amount. The high bidder pays the Trustee a deposit of $750 or 5% of the bid, whichever is greater. The Clerk of Court holds this bid deposit. Any special terms of the sale are contained in the published Notice of Sale or announced at the Sale by the Trustee.
12. The bid is open for 10 days for raised bids. Any interested party can go to the Office of the Clerk of Court to raise the bid. The bid must be raised by 5% each time, and a bid deposit of $750 or 5% is required (whichever is greater); the bid deposit is paid to the Clerk.
13. If there are any raised bids, the Clerk notifies the Trustee who then notifies the prior bidder. Once the bid has been in place for 10 (ten) days, the Trustee contacts the high bidder to collect the full balance of the bid (deposit not included). Prior bid deposits will be returned based upon the usual practice of the Clerk’s Office.
14. Once the Trustee collects the balance of the purchase price and gives the deed to the buyer, he or she then files a Final Account. The Clerk reviews all of the receipts and disbursements associated with the foreclosure. If approved, he or she signs an Order that finalizes the foreclosure and releases the Trustee.

Property Owners’ Associations

A homeowner’s association (or condominium association) is made up of two or more property owners who are members of an organization responsible for maintenance of common areas, property improvements and regulation of member-owned properties. Community developments are usually required to form a nonprofit entity that manages the properties. HOAs have a duty to manage their communities in the best interests of the members and in accordance with related state statutes including the North Carolina Planned Community Act, the North Carolina Condominium Act, and in many cases, the North Carolina Nonprofit Act. These “planned communities” may feature various types and styles such as single-family units, townhouses, etc.

At Moffatt & Moffatt, we provide homeowners’ and condominium associations the following services:

• Creating key HOA governing documents: bylaws, covenants, declarations, and restrictions.
• Providing transitional support between developers and establishing a board and meeting structure.
• Protecting the HOA by resolving disputes and litigation against contractors for faulty work or material defects.
• Assisting with collection of assessments (dues) and implementing property liens and foreclosures as needed.
• Maintaining compliance with ordinances, the N.C. Nonprofit Corporation Act, and providing representation before local and state agencies.
• Evaluating insurance, protection of assets, and limiting risk and potentially costly liabilities.

Construction Contracts

The relationships among the parties in a construction project, including the owner, lender, architect, general contractor, construction manager, subcontractors and suppliers, are all governed by one form of contract or another.

Whether it is a standard form industry contract such as those published by the American Institute of Architects, by the consortium of numerous trade organizations or simply a handshake agreement, contracts dictate the terms and conditions by which the parties operate.

The construction industry relies, in good measure, on the use of standard form contracts and related, integrated forms. These organizations’ standard form documents have their supporters and detractors. Standard form agreements have many advantages, including familiarity among the various actors in the construction industry and permitting the proponent to establish a uniform set of terms and conditions to guide its transactions regardless of the parties or project involved. A standard form agreement not only increases certainty in the contractual relationship, it may also expedite contract negotiation. Standard form agreements also have drawbacks. Parties can fall victim to assuming that a standard form document is always applicable to their project or undertaking regardless of the type of project. However, every project is different, and parties should consider the specific circumstances of a project when deciding whether to use a standard form contract and which form contract to use. One size does not fit all projects.