Real estate is covered by both federal and state laws. State laws differ on a number of issues. As a result, it is important to protect your interests by retaining an experienced attorney for routine as well as complex transactions. This overview will discuss topics that are important in understanding real estate law.

Brokers

Real estate brokers may be employed by sellers to find a buyer for a property, or by a buyer to locate a property for purchase. When a seller employs a broker, they sign a listing agreement which obligates the broker to work to locate a buyer, and the seller to pay the broker a commission upon sale. Brokers are usually held to rigorous standards in order to be licensed. A broker is a legal agent of the person who hired him or her, and thus has duties and obligations to work in their client's interest. The broker is not a party to any agreements about purchase. These agreements are strictly between the seller and the buyer.

Contracts and Transfers

Real estate purchase agreements are governed by contract law. These agreements must therefore:
1. Be in writing.
2. Be marketable (free of encumbrances, liens, or other title defects).

Real estate buyers generally employ an attorney or title insurance company to research the title. This process, called a title search, involves examination of the public records.
The title searcher will go through the county's public records and assemble a chain of title by finding all recorded deeds for the property in question and the current property owners. He or she will also look for encumbrances on the property. Encumbrances include but are not limited to:

Mortgages.
Unpaid taxes.
Legal judgments.
Municipal improvement liens.
Government claims.
Foreclosures.
Easements.
Covenants.
Condemnations.

A title insurance company insures the buyers against losses caused if the title is discovered to be invalid. The seller is required to execute and deliver a deed which includes a legal description of the land. Most states require that this deed be officially recorded to establish ownership and notice of its transfer. The title company will also complete the same searches on the potential buyers that may reveal encumbrances that could be attached to the new title, affecting any mortgages or liens.

Mortgages and Foreclosure

There are a number of methods to finance a real estate transaction. The most common is a mortgage. This is a loan which transfers an interest in the land as collateral for repayment of the debt. The borrower typically pays the mortgage in installments that include both interest and principal payments. If the borrower fails to make payments, the mortgage's owner can and will foreclose on the property. In a foreclosure, the lender declares that the entire debt is due immediately. If this is not repaid, the lender can sell the property to pay the remainder of the debt.
Foreclosure procedure depends on federal and state laws, the terms of the mortgage, and the existence of any other liens on the property. A limited amount of late payments are allowed in many states in order to avoid foreclosure, and most lenders also attempt to work extensively with borrowers in a variety of situations before going through with a foreclosure as a last resort to receive payment. If a foreclosure is threatened, a borrower should consult with an experienced real estate attorney to protect his or her interests and resolve the situation as soon as possible.