Buying or selling a home is one of the biggest and most important financial transactions of your life. There are many complex issues involved in real estate transactions. There are also many parties involved with different roles and different interests – buyers, sellers, real estate agents, a lender, an appraiser, an inspector, and a title insurance company. One thing is certain, you need an experienced real estate attorney looking out for you.

When Should I Hire An Attorney?

If you are a buyer, you should hire an attorney as soon as you have a contract to purchase real estate. You may even want to identify an attorney to understand their services and fee structure before you make an offer on a home. Once you have an accepted contract, your attorney will help you understand the terms and contingencies of the real estate contract. Your attorney can negotiate inspection issues and the terms of the contract to better protect you. If you wait too late to hire an attorney, you are restricting your attorney’s ability to best protect your interests. In addition to these initial tasks, your attorney will also monitor contract contingencies, make sure clear title is properly transferred to you, and explain the voluminous lender documents at closing.

If you are a seller, it is best to hire an attorney before you list your house for sale. Your attorney can review the listing agreement with you if you are using a real estate agent. Your attorney can also advise you on how to complete the real estate disclosures to the prospective buyer. Once you accept on offer to purchase your house, your attorney will explain the terms and contingencies of the real estate contract with you and negotiate contract modifications and inspection issues. Your attorney can also assist you with ordering title insurance, ordering a survey, making sure municipal requirements are met, preparing closing documents, and monitoring contract contingencies.

Buying or selling a home is a complex financial transaction. Your attorney has a duty of loyalty to you and your best interests. Contact Campbell Sanuw Law to set up a consultation 708-485-4500

In Cook County Real Estate Taxes are paid in arrears. This means that each year we are paying the previous year’s real estate taxes (i.e. 2021 taxes are paid in 2022.) In real estate transactions, the seller of the property is responsible for real estate taxes for every day that the seller owns the property. However, the buyer of the property will be responsible for making the real estate tax payments when they come do after the closing. The seller provides the buyer with a credit at closing, commonly referred to as the “real estate tax proration,” to pay the tax bill when it comes due. The real estate tax bill is delivered in two installments, traditionally the first installment is due March 1, and the second installment is due August 1.

The real estate tax proration is based on an estimate, because we do not know what the real estate taxes will be until they come out the following year. To calculate an estimate, we usually the most recent ascertainable full year tax bill and multiply it by 105%, because we anticipate that the taxes will go up every year. We then prorate that amount for each day that the seller owned the property without having paid taxes yet through the closing date. This usually works out great, except when properties are reassessed and their values have increased drastically. In Cook County, properties are re-assessed every three years.

When the assessed value has of the property has increased, the 105% proration may not provide the buyer with enough funds to pay the bill. For instance, the assessed value may be 130% of the prior year’s assessed value. If this happens, we know the real estate taxes are going up more than 105%. Additionally, the actual tax bill may be more than a 130% increase from the year prior, because we do not know the tax rate for the current bill until the 2nd installment is released.

This is one of the many reasons why you want to have an experienced and trusted real estate attorney represent you during your real estate closing. Your attorney can evaluate the real estate taxes of the property and suggest a better course of action than the 105% proration that could leave you stuck paying more than your fair share during a reassessment year. One option is establishing an escrow holdback of a portion of the seller’s proceeds from the sale so that the proration can occur after closing when the actual tax bill comes out. Another option is choosing a different way to calculate the proration that will take into account the increased assessed value and the possible increases in the tax rate and state equalizer. The difference can be thousands of dollars. Contact Campbell Sanuw Law to help you with your real estate closing questions.

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