Buying a home is generally the biggest purchase of a person’s life. First-time buyers typically go on an emotional roller coaster from the time they first enter a real estate agent’s door to the day of closing. While you’re excited about fulfilling a dream, you realize you don’t even know what questions you need to ask.

There are a number of issues you will face in purchasing a home: How much house can I afford? Should I buy a re-sale or a new home? What features do I need to look for? Where is the best available location? You will also encounter a number of legal issues. This article will focus on identifying and discussing legal issues to help you make informed decisions.

The agent. After you decide on a real estate agent, you will be asked to sign an agency agreement. You have a number of choices: buyer’s agent, seller’s agent or dual agent. Unless you know what you’re doing and have a really good reason otherwise, you should consider a buyer’s agency agreement. (You want them working for you, right?) As your agent, this person owes you certain fiduciary duties such as honesty and loyalty. Make sure communication lines are always open to avoid any dispute with your agent. Finally, whatever agreement you choose, read it before signing and get any questions answered.

The contract. Most all agent’s use a standard form contract titled “Offer to Purchase and Contract.” Once you have decided on a home and want to make an offer, you should sit down with your agent and fill out an offer. Be careful what you put in it! If the seller signs it, you may be legally bound to buy the property. What to look for in the contract:

1. Is everything you want in the offer specifically included? Don’t assume the seller will leave those ceiling fans or window treatments. List every fixture or appliance that you want to be part of the deal. Assume that if it’s not in the contract, it’s not part of the deal.

2. Is your offer conditional? Again, don’t assume the seller will know that your offer is conditional on the sale of your current home or on you obtaining financing. If a condition is not met, you should not lose your earnest money. It’s not enough that you talked about these conditions, they must be in your offer.

3. What about the condition of the home? Whether new or old, you should have the house inspected by a qualified and licensed inspector. Most lenders require this anyway. The condition of the home and property should always be a condition of your offer. Be sure and review the disclosure statement. It is difficult to close on a home and later come back and complain about conditions/ defects. Do a proper inspection before closing.

4. What about timing issues? If you want the offer to expire after 10 days, say it. If you need the closing to take place before 60 days, say it. Timing is always an issue in real estate transactions, so put any deadlines in your offer. Note: unless your contract sets a closing date and states “time is of the essence,” you probably cannot recover damages for a delay of the closing.

There is an Additional Provisions Addendum which allows for you to address many of these issues. Agents are pretty good about raising these issues, but you should also be aware of them so that your offer is the best it can be. Finally, read and understand each paragraph of your offer before signing it. Although the language may be “the standard legal stuff,” the standard wording is not necessarily be to your benefit.

The earnest money. When you make an offer you obviously intend on following through with it. But what happens if the deal goes south? Then you start to think about that earnest money. Here’s the law in general terms: If the offer is signed, a contract is formed and the only ways for you to get your money back are if: 1) the seller breaches the contract or 2) a condition is not met. If you just want to back out of the deal, you forfeit the earnest money. It’s best to work out earnest money disputes with the seller because real estate agents will not turn over earnest money until everyone agrees on a resolution. If things start to get nasty, consider contacting an attorney.

The closing. Everything is falling into place and you want to sign the papers so you can move in and get on with your life. Not so fast. It is not uncommon for people to be scurrying around at the last minute putting out fires and pulling out hair. Do everything possible to give yourself plenty of time in and around the closing to deal with delays and surprises. You are only adding more stress to your life if the moving truck is to arrive 1 hour after the closing is scheduled. Don’t be rushed into signing unless you understand the details of the transaction and are comfortable that the paperwork properly reflects the true deal. Review carefully the settlement statement. Ask if you are a named insured on the title policy and about exclusions on the title insurance.

You may feel pressure to close even though there are some loose ends, such as a repair that has not yet occurred. At closing, make sure any loose ends are covered by a written, signed agreement.

If you still can’t sleep at night because you feel you’re in over your head, you might consider buying an hour of an attorney’s time. You’re probably spending well over $100,000 on the house. Spending a $200 or so to obtain a level of comfort about your decision is not only reasonable, it makes sense. But remember, if you’ve already made your offer, the lawyer is basically limited to advising you of your rights and obligations.

This article is meant as general knowledge and not meant to substitute for legal advice on specific issues. If you have a question, please call Doug McClanahan at 861-0693.

Liens

North Carolina law allows contractors on private projects certain lien rights. Liens are not allowed on public property.

Effective April 1, 2013 the Legislature amended the lien law.

For projects over $30,000 excluding residential projects by the homeowner, the owner must designate a Lien Agent, typically a title insurance company. The Lien Agent’s contact information must be posted on or near the permit. Although a permit is not supposed to be issued without this information, an owner is also required to provide such information upon written request.

The statute requires contractors who deal with material suppliers (ie. folks who do not show up on the job site to see the permit), within 3 days of contracting, they must provide the Lien Agent’s information. The statute says this can be accomplished by putting the information in the contract/ PO.

If a contractor or subcontractor who works on a project wants to keep his lien rights, within 15 days of starting on the project, he needs to provide the Lien Agent with his contract information. The statute provides a form to use and the form must be sent by some method where you can get a receipt including hand delivery, fax, email or certified mail. To be effective against a transfer, a contractor must also either A) give the notice OR B) record a claim of lien before a transfer deed is recorded.

After the initial notice, a contractor’s lien rights depend on whether or not it dealt with the owner of the property.

A contractor who dealt directly with the owner is entitled to a lien on the property. To receive these lien rights a contractor must: 1) file a Claim of Lien within 120 days of the date it last worked on the project or supplied materials and 2) file a lawsuit to perfect the lien within 180 days of the date it last worked on the project or supplied materials. Both the lien and the lawsuit should be filed with the clerk’s office in the county where the property is located.

The lien rights of a subcontractor, or one who did not deal directly with the owner, include a lien on funds and a subrogated lien. To receive a lien on funds, a subcontractor must prepare a Notice of Claim of Lien and send it by certified mail to anyone above him in the contract chain. Upon receipt of the notice, parties are obligated to retain funds in the amount stated. If a party fails to retain these funds, it becomes personally liable to the subcontractor. If the owner pays in violation of the notice and the subcontractor also filed a proper claim of lien at the courthouse, the subcontractor has a lien on the property to the extent of the wrongful payment.

A subcontractor also has subrogated lien rights. By filing the proper papers, a subcontractor can obtain a lien on the property through the lien of the contractor and any higher tier subcontractors. Since a subcontractor’s subrogated lien rights depend on other parties, an owner may defend a subrogated lien with the defenses of the higher tier subcontractors and the contractor. Contractors can cut off the rights of second or third tier subcontractors by posting and filing a Notice of Contract within 30 days following the issuance of the building permit. Subcontractors, however, can renew their rights by responding to the contractor with a Notice of Subcontract.

Bonds

Bond claims may be available on private jobs. Bond rights are stated in the bond itself. It is essential to obtain a copy of the bond from the owner to determine your bond rights. Often private bond claim rights expire after 90 days of last working or providing materials on the job site (as opposed to the 120 days on a public project). If your job has a bond, know its terms before you have a problem or you may lose your bond rights before you know what they are.

State and federal bond rights vary. Generally speaking, public projects valued at over $300,000 must have performance and payment bonds. The purpose of a performance bond is to ensure the owner that the project gets completed and subcontractors/ suppliers paid. The purpose of the payment bond is to protect contractors and subcontractors who provide labor and materials to a public job. Upon proper request by a subcontractor, contractors are required to provide a copy of the bond within 7 days. Notices required:

     - Contractors are required to give the subcontractors they deal with a notice containing various information (project name, project address, etc). Subcontractors & suppliers who receive this information are required to pass it on to their subcontractors and suppliers.

     - If you deal with the general contractor (person who contracted with government agency), then notice may not be required. If you did not deal with the general contractor, then notice by certified mail is required to be sent to the general contractor (usually within 120 days of last supplying material or labor to project). It is a good idea to send a copy (certified mail) to the surety, owner/government agency and other affected parties.

     - The statute also provides a form for subcontractors and suppliers to send to contractors within the first 75 days on a project.

Failure to send proper notice may result in your claim being limited to $20,000 or labor/ materials provided within 75 days service of notice.

Bond claims must be perfected by filing a lawsuit within one year of last providing labor or materials to the debtor for the job site.

For lien and bond claims, the law provides for the recovery of attorney fees if the other party unreasonably refused to resolve the dispute.

This area of the law can be very complex and you are encouraged to seek competent legal advice. The deadlines, notices and amounts are statutory and subject to change from time to time.

This article is meant as general knowledge and not meant to substitute for legal advice on specific issues. If you have a question, please call Doug McClanahan at 861-0693.

_Before beginning a job, it is important that you carefully read the requirements of the contract governing payment for extra work and/or extra materials provided to the project. Contracts often have specific notice requirements regarding claims for extra work along with a requirement that you obtain a written order from the other contracting party prior to starting any extra work. North Carolina courts will enforce both the notice requirement and the requirement of a written change order. This means that if you did not provide the required notice or failed to obtain a written change order, the courts may not require payment for the additional work even though all of the parties may have been aware of the claim for extra work from the moment the claim arose.

In sum, to get paid for extra work you have to comply with the contract. If the contract requires written notice, verbal notice of a claim for extra work does not comply with the contract’s requirements. If the contract requires a signed change order before you start the additional work, wait until you have a signed change order.

But what if the contract is silent? Then the issue becomes a matter of proof. With the ease of email in mobile phones, if someone tells you to do something extra on a job, shoot them an email and ask them to just reply and confirm. Be sure to include the material information as to scope of work and payment. This type of proof can avoid people forgetting verbal agreements to pay. This practice may keep you out of court, but if you end up in a dispute, this kind of proof can help you win.

Finally, in order to limit disputes over the value of the additional work, keep detailed records of all of your expenses (labor, equipment and materials). It is also a good idea to keep the other party well advised as to the cost of the extra work. Your chances of payment without a dispute are greater if the other party isn’t surprised by the cost of the extra work.

This article is meant as general knowledge and not meant to substitute for legal advice on specific issues. If you have a question, please call Doug McClanahan at 861-0693.

_ If a contractor works on a project and discovers a dangerous or defective condition, he should definitely tell the owner of the condition. But what if the homeowner can’t afford or just doesn’t want to repair or remove the condition? Or what if a homeowner specifically directs a contractor to do something that the contractor knows won't work?

If the contractor follows the homeowner’s instructions, can the contractor be held liable simply because he worked on the project? For instance, a contractor discovers a crack forming in a furnace. He tells the owner and the owner promises to get it fixed. A month passes and the homeowner doesn’t fix the problem. The furnace explodes and the homeowner is dead. The homeowner’s estate sues you because you worked on part of the furnace. You explain what happened but your only proof is your recollection of a conversation with a dead person. Do you want to be put in this situation? How could the contractor have protect himself? The best step is to have the homeowner sign a waiver and release before leaving the job. A possible release is set forth below:

    FULL WAIVER AND RELEASE OF LIABILITY

    I, [owner], have been duly warned by [contractor], on [date], that [problem] exists on my property located at [address]. [Contractor] has advised me of a problem involving [problem] which has a potential for causing [danger]. [Contractor] has advised me that if this problem is not fixed, it could result in death or harmful injury to myself and others. At this point, I do not wish [contractor] to perform the necessary repairs. My signature below acknowledges that I have been advised of the problem described above, that I understand the risks involved, that I release [contractor] from any possible liability, and I take responsibility to warn and protect other persons who may be affected by the danger.

    [Date]

    [Signature of owner]

The above waiver should be presented to the owner as soon as he declines to fix the problem.

This article is meant as general knowledge and not meant to substitute for legal advice on specific issues. If you have a question, please call Doug McClanahan at 861-0693.

You have places to go and people to see. Catching red lights is getting on your nerves. You decide to speed up. Somebody pulls out in front of you and SLAM! you didn’t have enough time to stop. Now you’re really going to be late.

This is an unfortunate scene played out on the streets of every city every day. It does not matter whether you are totally at fault, partially at fault, or totally innocent- you have to deal with the accident. Below are some tips that, if followed, should guide you through the aftermath of an accident with the least cost and stress.

•  Stop. North Carolina law requires that drivers involved in an accident stop at the scene of an accident.
•  Call for help. If someone is injured, call an ambulance. Rendering reasonable assistance will not expose you to liability, but it is generally not a good idea to attempt to provide medical assistance unless you have training. You may leave the scene to get assistance, but you must return as soon as possible. Also, notify the police if the accident involved an unattended car or caused property damage over $500.
• Remove obstructions from traffic. If cars can be moved and doing so will not destroy evidence, clear the road. If you cannot move cars due to damage or if you feel the officer needs to view the scene before it is changed, do what you can to alert oncoming traffic.
  
• Assemble information. As soon as the officer arrives you will have to produce your license, car registration, and insurance information. Have this information handy in your car. If necessary, take notes so you remember important details like your speed and position, the weather, the layout of the road/intersection, the identity of any witnesses, and the name of the officer making the report. The officer will fill out a report, but by making your own notes you insure that information will not be lost. Taking pictures of the scene can greatly help you in a lawsuit. Use a camera-phone if you have it or you can keep a disposable camera in your car or maybe you’re accident will be in front of a supermarket or gas station that sells cameras. If any witnesses stopped to help be sure and get their names and contact information.
• Avoid speaking to the other driver. There are two reasons for this. First, the other driver may be so angry that any contact may create a threat to your safety. Second, it prevents you from making a statement you will later regret. The trauma of an accident may prompt some drivers to say seemingly innocent things like “I’m so sorry” or “I never saw you” and some drivers may feel compelled to offer to pay for damages. These statements are not so innocent sounding when repeated in a courtroom. Don’t make them.
• Before leaving the scene... Make sure you have information regarding the other driver including name and address, passengers’ names and addresses, the number of the police report, and the other driver’s insurance information.
• After the accident... If you have any discomfort or concern, see a doctor. If there’s a chance the other driver might sue you, call your insurance company so they can prepare for the claim. If you think you might want to sue the other driver, contact a lawyer. In all three cases, the sooner these parties get involved, the better.

You can’t avoid all car accidents by safe driving. Therefore knowing how to deal with an accident is vital. Following these tips should navigate you through an accident with the least exposure to liability as well as the greatest protection of your legal rights.

This article is meant as general knowledge and not meant to substitute for legal advice on specific issues. If you have a question, please call Doug McClanahan at 861-0693.

“If you fail to plan, you plan to fail.” Given this common sense and the “certainty” of death and taxes, it is a wonder why so many people put off basic estate planning. If you own property, have any dependants, or have a spouse/significant other, then you should consider some basic estate planning- regardless of your age or health. This type of planning insures the best “transition” when your time on this earth expires. Furthermore, good planning covers the situation where you, while remaining alive, are incapable of making your own decisions. Typical estate planning documents include:

WILL. A will governs the distribution of your property. If you die without a will, you die “intestate.” The law assumes how people who die intestate would want their property divided. However, in many cases, the law will not pass your property according to your wishes. For instance, if you die without a will and leave a spouse and no children, your spouse might only get the first $25,000 plus half of all remaining assets with your parents getting the rest. Most people would want their spouse to get all of their assets. A will can also state special gifts (to relatives, friends, charities or schools) or appoint a guardian for your children.

DURABLE POWER OF ATTORNEY. A power of attorney allows another person to act for you regarding personal or financial matters. A power of attorney is only valid if you could have done the act yourself (still living). A durable power of attorney allows someone to act for you even when you are “incapacitated.”

HEALTH CARE POWER OF ATTORNEY. As the name suggests, this is a type of power of attorney specifically dealing with medical issues. This document allows another person, your health care agent, to make decisions for you regarding your medical treatment when you cannot make the decision for yourself. North Carolina law changed in 2007 incorporating what is commonly referred to as a “LIVING WILL” into a health care power of attorney. A living will states your desires regarding the use of “extraordinary measures” to keep you alive in the event you become incapacitated. In other words, do you want to remain “hooked up to a machine” if that is the only thing keeping you alive? This document should eliminate a family dispute over your medical treatment.

Basic estate planning should give you peace of mind. You know you’ve done the right thing in preparing for your end of life. Remember: in many cases when you need these documents it’s too late to get them. As far as those “Do-it-Yourself” lawyer forms you can get, depending on what you get, they may do the job. Be aware that 1) sometimes you get what you pay for and 2) every state has different laws. Whether you need to review your existing estate documents or whether need to have them drafted, we encourage you to consult an attorney over these important matters.

This article is meant as general knowledge and not meant to substitute for legal advice on specific issues. If you have a question, please call Doug McClanahan at 861-0693.

This article is meant as general knowledge and not meant to substitute for legal advice on specific issues. If you have a question, please call Doug McClanahan at 861-0693.