q: THE LISTING REAL ESTATE AGENT
The listing real estate agent (or seller's agent) is a licensed real estate salesperson who, acting on behalf of a real estate brokerage company for which he or she works enters into a Listing Agreement with the owner of a house. In a Listing Agreement, the listing agent agrees to assist the owner in selling the house and the owner agrees to pay the listing agent for his or her efforts. Compensation to the agent usually takes the form of a commission which is paid if and when the sale of the house closes, and it is calculated as a percentage of the purchase price of the home. Generally, although a seller will deal with an individual agent, the agent is acting on behalf of a real estate brokerage company, and the Seller's agreement is with the company, not the individual. The listing agent's role is to assist the seller in marketing the house, showing the house to possible buyers, finding a buyer at a price and terms acceptable to the seller, and facilitating the closing of the sale and the transfer of possession and occupancy from seller to buyer. The listing agent may participate in the negotiation of sale price and terms between buyer and seller, and may prepare a purchase agreement and related documents from standard forms. The listing agent is not allowed to provide legal advice to any party, unless the agent is also a licensed lawyer. The listing agent, and the brokerage company for whom he or she works, owe the following duties to the seller:

(i) Loyalty - to at all times act only in the best interest of the seller;
(ii) Obedience - to carry out all of the seller's lawful instructions;
(iii) Disclosure - to tell the seller all material facts which might affect the seller's decisions;
(iv) Reasonable Care and Skill - to use reasonable care and skill in representing the seller; and
(v) Accounting - to account to seller for all money and property he or she receives as the seller's agent.

The listing agent and his or her brokerage company may not also represent the interest of a buyer unless the agent obtains a written agreement from the buyer and has obtained the buyer's and seller's written consent after making a full written disclosure to seller of the conflicts of interest involved in representing both parties, and the resulting limitations on the agent's ability to represent the seller's interests. At times, a listing agent may assist a buyer in limited ways as necessary to finalize a sale, but that does not make the listing agent the buyer's representative or advocate; the listing agent still represents only the seller unless a specific agreement for dual agency has been entered into.

q: THE BUYER'S REAL ESTATE AGENT
The buyer's real estate agent is a licensed real estate salesperson who, acting on behalf of a real estate brokerage company, enters into an agreement with a person seeking to buy a house under which the agent agrees to assist the buyer in finding and purchasing a house. The buyer's agent may be compensated by the buyer directly or may agree to share in the commission paid by the seller to the listing agent at closing. As is the case with the listing agent, the contract for the services of a buyer's agent is generally with the brokerage firm for whom the agent works. The buyer's agent and his or her brokerage firm owe the buyer the same duties of loyalty, obedience, disclosure, reasonable care and accounting as the listing agent owes the seller. As with the listing agent, the buyer's agent may assist in the negotiation and preparation of a purchase agreement and related documents from standard forms, but may not give legal advice unless he or she is a licensed lawyer. The buyer's agent and his or her brokerage firm may not also represent the interests of a seller unless the agent first obtains a written agreement from the seller, and also obtains the buyer's written consent after making a full disclosure to the buyer of the conflicts of interest involved in representing both a buyer and a seller, and the resulting limitations on the agent's ability to represent buyer's interests.

q: THE LAWYER FOR THE BUYER/SELLER
Either the buyer or the seller, or both, may hire a lawyer to represent their interests in the purchase or sale of a house. In some cases, the terms of a lawyer's representation, including the scope of his or her work and the fee for that work, are set forth in a written agreement between the lawyer and the client; in others it is not. A lawyer's role can be as broad as his or her client wishes it to be, and can include review and/or preparation of the client's agreement with the real estate agent and the purchase agreement and closing documents, as well as a review of the abstract of title, commitment for title insurance, or other evidence of title to ascertain that title to the property is acceptable. At closing, a lawyer can assist in making sure that all necessary documents are properly executed and delivered and that the sale proceeds are properly paid out and accounted for. With telephone and fax technology, lawyers can often "participate" in a closing without being physically present. If a transaction fails to close, a lawyer can advise his or her client as to the client's rights and remedies.

A lawyer's fee is not dependent upon the successful closing of the transaction. A lawyer is ethically bound to competently and thoroughly represent the interests of his or her client only, and is also obligated to keep confidential all communications with his or her client relating to the purchase or sale. It is rarely appropriate or advisable for the same lawyer to represent both the buyer and seller of a house. In such a case, the lawyer must obtain written consents from both parties, after making a full disclosure of the conflict of interest involved in representing both parties, and the resulting limitations on the lawyer's ability to fully represent either side's interest. The written waiver should include an acknowledgement that if a dispute arises between the buyer and seller, the lawyer must withdraw from representing either of them.

q: THE TITLE INSURANCE COMPANY
In almost all cases where the buyer is obtaining financing by a mortgage loan from an entity other than the seller, the buyer's lender will require that it be provided with a policy of title insurance from a title insurance company. The policy insures that the lender's mortgage interest called a "lien", is valid and not subject to title defects. In many cases, whether or not a mortgage lender is involved, the buyer may also wish to have a title insurance company provide buyer with a policy of title insurance which insures buyer's ownership interest against defects in title. In some cases, both a lender's and an owner's policy of title insurance are purchased; in some cases only one or the other. The title insurance company collects separate premiums for the owner's and lender's policy. The buyer is generally required by the lender to pay the premium and other costs involved in issuing title insurance to the lender. However, the buyer does not receive title insurance for its ownership interest unless buyer also pays an additional (usually discounted) premium for owner's coverage.

The title company will issue a document called a "Commitment for Title Insurance" which indicates (a) what requirements must be complied with at or prior to closing as a condition to issuing its insurance and (b) the matters affecting title which will not be insured against if they are not taken care of at or prior to closing. Frequently, a representative of the title insurance company will administer the closing of the sale and see to it that the requirements for the issuance of the insurance are satisfied and that matters affecting title are dealt with. The title company will not necessarily address all matters affecting title unless its customer -- i.e. the party whom it is insuring, requires that it do so. The title company representatives do not represent you and are not allowed to give you legal advice - including advice regarding which matters affecting title should be addressed and eliminated, and which can remain as exceptions to the insurance being provided.

q: THE CLOSERS
A closer is a person, generally an employee of a title company or brokerage firm, who administers some element of the closing in exchange for a fee. There may be more than one closer at a closing. When a lender is involved, its closer (usually a representative of the title insurance company) will see that all the mortgage loan documents are properly signed and that the documents transferring title to the buyer are properly signed and delivered. The buyer will usually pay the fee for this service. The seller may also have a closer act on seller's behalf at closing. Typically, a seller's closer will assist with obtaining information necessary to pay off existing liens and mortgages, preparing a warranty deed and bill of sale to transfer title to the house and personal property, and accounting for the payment and application of the sale proceeds. The seller's closer will be paid a fee for this assistance. Lawyers for buyer and seller can perform the tasks of a closer, but closers are generally not licensed attorneys and therefore should not be relied upon to provide legal advice to either party.

q: THE MORTGAGE LENDER
Mortgage lenders provide buyers with financing for the purchase of a home.

q: THE MORTGAGE BROKERS
Mortgage brokers work on behalf of mortgage lending companies and borrowers. They line up people seeking loans with companies making loans. They generally get paid by lending companies on a commission basis, and by borrowers based on written fee agreements. Mortgage brokers are similar in many respects to insurance brokers, except that the "product" they sell is mortgage financing, not insurance. A mortgage broker may work only for one lending institution, or it may be independent and offer financing options from many different lenders.

q: WHEN AND HOW DO I HIRE A REAL ESTATE LAWYER?
A lawyer should be the first real estate professional you hire. Talk with several lawyers before choosing one. Ask friends for names of real estate lawyers they have used and whose services they have been happy with. Be sure to discuss fees up front. If you need help finding a lawyer, you can contact the state or local bar associations for assistance.

q: HOW DO I SELECT A REAL ESTATE AGENT?
In such a significant and complex thing as a real estate transaction, it is important that you carefully select your real estate agent. You should talk to several agents before choosing one and ask them about the following items:

certifications held by the agent, such as Certified Real Estate Specialist (CRS) or a Certified Residential Broker (CRB);
knowledge about and sales experience within your neighborhood;
references from other clients;
knowledge about available home financing;
property marketing plans;
and any other issues that you feel are important in your particular case.

q: HOW CAN A LAWYER HELP ME NEGOTIATE AN AGENCY AGREEMENT (OR LISTING CONTRACT) WITH MY REAL ESTATE AGENT?
Both the buyer agency agreement and the seller's listing contract that your real estate agent may ask you to sign have a significant impact on your rights and should be negotiated or at least reviewed by a lawyer. While the contracts are usually presented to consumers as standard forms, many terms can be negotiated. Real estate agents compete for your business and may often be willing to accept concessions in negotiations (consider that a 1% reduction in commission on the sale of a $100,000.00 home is a $1,000.00 savings). Terms you and your lawyer can negotiate include:

a) the duration of the agency agreement or listing contract;
b) duties that your agent will owe you (e.g., loyalty, full disclosure and obedience);
c) the amount you will pay to your broker;
d) the amount that cooperating brokers should be paid;
e) disclosure of any referral fees being paid by your broker;
f) when the broker's commission is and is not earned (e.g., earned upon successful closing or when the broker finds a suitable buyer or not earned if the sale is to one of your relatives or neighbors); and
g) whether you have a right to use other brokers' services.

q: WHO DOES A REAL ESTATE AGENT REPRESENT?
A real estate agent can represent buyers and sellers in several different ways and you need to be very cautious in choosing the level of representation that your agent will provide to you. The choice is yours. An agent can represent either a buyer or seller exclusively, or he or she can represent both parties in the same sales transaction (called "dual agency" since the broker acts as the agent for both buyer and seller). Your lawyer can assist you in determining how to assess the benefits and dangers of the different levels of representation, including the lowest level of service, and the one to be most cautious about - dual agency. Dual agency is really no agency at all. Although most people contract with a real estate agent for their expertise and assistance, a dual agent must legally withhold his or her expertise and assistance to a large extent because the agent is actually representing two competing sides of a transaction at one time (the buyer and the seller) and is not supposed to promote the interests of one party to the detriment of the other. Because you want your real estate agent to provide you with the best and most complete service possible, and because real estate agents do not always fully explain their role in your home transaction, you should consult a lawyer before agreeing to any agency relationship so that your lawyer can help you understand and negotiate the terms of your relationship with a real estate agent.

q: I HAD AN INSPECTION DONE WHEN I PURCHASED MY HOUSE BUT AFTER MOVING IN I DISCOVERED A PROBLEM. CAN I MAKE A CLAIM AGAINST THE FORMER OWNER, THE INSPECTOR OR THE REAL ESTATE AGENT?
Whether you can make a claim and against whom will depend on the nature of the problem, the terms of your purchase agreement, the house inspection report, other documentation and verbal representations made to you. If any of the parties knew or should have know about a defect in the property and failed to disclose the information to you, you may have a claim against them. Because your time to bring an action is limited, you should contact a lawyer to determine the appropriate action to be taken.

q: DO I HAVE TO CAP AND SEAL A WELL ON MY PROPERTY THAT I USE TO WATER MY GRASS? IF I NO LONGER USE MY WELL, WHAT ARE MY RESPONSIBILITIES AND WHAT DO THEY COST?
Under Minnesota law, any well that is contaminated or dangerous to the public must be sealed. A well that is not contaminated or dangerous to the public which is used on a daily, regular or cyclical basis need not be sealed. If, however, your well is no longer in use, you must either have it sealed by a licensed well contractor or obtain a Maintenance Permit from the Minnesota Department of Health and pay an annual maintenance fee of $100.00 (the fee is subject to change by state law). Because a maintenance permit is not transferrable, a new buyer will have to obtain his or her own permit. Costs for capping a well can vary between $200.00 to $600.00 or more depending on the nature of the well, and you should contact a number of well contractors before making your choice.

q: THE OFFER AND ACCEPTANCE
1. IF AN AGENT BRINGS ME A PROSPECTIVE BUYER FOR MY HOME, DO I HAVE TO AGREE TO SELL MY HOME? DO I HAVE TO PAY A COMMISSION TO THE AGENT AND HOW MUCH OF A COMMISSION MUST I PAY?
You are not bound to sell your home to anyone until you sign a purchase agreement. Each purchase agreement presented to you is only an offer to buy your house on specific terms. You have no obligation to accept any offer. If, however, you have signed a listing agreement with a real estate agent and you refuse to sell your home to a "ready, willing, and able" buyer on the terms that you specified in your listing agreement, you could be breaching that agreement by refusing the sale.

Whether or not you pay a commission to the real estate agent presenting you with an offer depends on the circumstances of your situation. If you have listed your house with a real estate agent for sale, your only fee obligation is to pay a commission to that person upon the sale of your home in the amount specified in your listing agreement. If you are selling your home in a "For Sale By Owner" situation, you will only have to pay a commission to the presenting real estate agent if a commission agreement is made a part of the sale transaction (typically, real estate agents expect this to occur). Despite what anyone may try to tell you, the commission percentage to any real estate agent is always negotiable and a lawyer could help you through this issue.

q: IF I THINK I AM GOING TO GET TWO PURCHASE OFFERS AT ABOUT THE SAME TIME, CAN I WAIT TO ACT ON THE FIRST ONE UNTIL I RECEIVE THE SECOND ONE?
Yes, but if the first offer has an "acceptance deadline," the offer could expire before you act. Many factors affect simultaneous ("contemporaneous") offers. A lawyer can assist, whether the sale is by an agent listing or is a "For Sale By Owner".

q: EVERYONE SAYS THAT I HAVE TO SIGN THE PURCHASE AGREEMENT IMMEDIATELY. CAN I WAIT AND CONSIDER THE OFFER FOR A FEW DAYS?
You do not have to sign a purchase agreement immediately. Take the necessary time to talk with your lawyer and become comfortable with your decision. Remember, however, that the other party may withdraw the offer or accept a different one. The purchase agreement might also include an acceptance deadline which requires you to make a decision by a certain time. If that deadline passes, the offer expires. If you do decide to take more time, it is important that you move promptly to resolve any concerns you may have.

q: I AM GOING TO SELL MY HOUSE BUT IF I SELL WITH A CONTRACT FOR DEED I DO NOT WANT TO SELL TO PEOPLE WITH LOTS OF CHILDREN (BECAUSE THEY MIGHT WRECK THE PLACE) OR TO PEOPLE ON WELFARE BECAUSE THEY MIGHT NOT BE ABLE TO MAKE THE PAYMENTS DOWN THE ROAD). CAN I REFUSE TO SELL TO THOSE PEOPLE OR TO ANYONE?
You may not discriminate against any person because of race, religion, gender, national origin, familiar status, mental or physical disability, public assistance, sexual orientation, color, or creed. However, on a sale by contract for deed, a seller may require evidence that the buyer is creditworthy and can make the payments. If the buyer's apparent intended usage of the property whether rental, commercial, vehicular, or residential, is a source of legitimate concern to seller, then, prior to signing the purchase agreement, an appropriate restriction must be drafted and agreed upon for inclusion in the contract for deed. You should consult a lawyer about such a provision.

q: I WAS TOLD THAT I DO NOT NEED A LAWYER TO DRAFT OR REVIEW A PURCHASE AGREEMENT BECAUSE REAL ESTATE AGENTS USE STANDARD FORMS AND ARE EXPERIENCED IN COMPLETING THESE FORMS AS PART OF THEIR JOB. IS THAT RIGHT?
What you were told was wrong. Most real estate agents are trained to fill in the blanks of standard form agreements, but they have not been trained in the law and cannot advise you on the legal significance or the effect of the terms in a purchase agreement. Remember, the sale or purchase of a home is probably the largest transaction in which you will ever be involved and you should protect your interests.

There are many pre-printed purchase agreement forms used in the real estate industry and, although frequently referred to as "standard," their terms can vary widely. The Minnesota State Bar Association has, however, created a purchase agreement designed to be well-balanced in reciting the respective obligations of buyers and sellers and to highlight issues for negotiation. Remember that when using any pre-printed form, the pre-printed language is for convenience only; all of the terms in the documents are negotiable. As with any contract, you should carefully review its terms and make sure that you understand the legal effect of each of those terms before you sign the agreement. A lawyer can help you with all of this and should be consulted before you sign any form of a purchase agreement.

q: I WAS TOLD THAT LAWYERS ARE EXPENSIVE AND THAT I SHOULD NOT HIRE A LAWYER BECAUSE A REAL ESTATE AGENT CAN HELP ME WITH MY TRANSACTION. IS THAT TRUE?
A real estate agent can prepare a purchase agreement for you but, because real estate agents are not licensed to practice law, they cannot advise you on the legal significance of the terms of your agreement. A lawyer's fees will generally be based on the complexity of the transaction, not the purchase price of the home. Some lawyers are paid by the hour, some offer a flat fee for the job, and some offer a flat fee for a certain amount of work and any additional work is billed to you by the hour. Hiring and paying a lawyer to represent you in buying or selling a house (in which you may have a substantial amount of your net worth at risk) is advisable to ensure that your interests are completely protected.