Apr 29

Lawyer assistance in real estate deals

  More and more often, parties in real estate deals resort to the assistance of a lawyer to consult them and protect their interest from the moment of the initial contact between the dealing parties to the actual conclusion of the deal before a notary.

  However, there are uncertainties among the users of this type of legal services concerning the specific dimensions of the legal assistance and the role of the lawyer in a deal connected with the transfer of rights over real estate.

  Generally speaking, by consulting real estate deals the lawyer should conduct various types of legal research activities and analyze their results. The ultimate goal of this is to ensure the interest of the client in connection with the transaction.

  When the lawyer has been engaged by the buyer in the transaction, the lawyer should first examine the title of the transferor (seller) over the real estate subject of the deal - whether it has been acquired with primary remedy (title acquired by means of acquisitive prescription) or with relaying effect acquisition remedies (deals). The lawyer should also check for defects in real estate title documentation of the seller that could jeopardize the interests of his/her client. For this purpose, the simple check in the Property Register at the Registry Agency is not enough. It is necessary to further review and analyze the documents (contract with notarized signatures, deed, etc.) with which the seller verifies his/her rights over the real estate. If the seller is a merchant within the meaning of the Commercial Code, it is necessary to additionally examine all entries in his/her account in the Commercial Register to the Registry Agency - whether there is any evidence of pending insolvency proceedings or entry of pledge over the whole or part of the business of the respective merchant. Only after it has been established beyond reasonable doubt that the seller actually owns the property, there are no client opposing encumbrances and that the property is not subject to pending litigation could it be safely proceeded with the conclusion of the preliminary/ final sale contract/ transfer of the relevant property right over the real estate.

  Attorney assistance could be also needed in transactions in which although the subject matter does not have to do anything with transfer of property rights over real estate, the counterparty provides collateral to its obligations under the transaction, consisting of real estate mortgage or pledge over the whole of part of the business of that party, including one or more pieces of real estate. In these cases it is necessary for the lawyer to examine both the company owning the collateral, and the collateral itself - whether it is actually owned by the person/entity claiming to be the owner, if it is not encumbered, etc. When special pledge over the whole or parts of the business of the guarantor has been proposed it is necessary to further carry out a comprehensive study of the state of that business - whether its scope includes hidden liabilities that could reduce the obvious assets, thus eroding the collateral. It should be examined whether the business, in its entirety or in part, has already become subject to pledge in favour of another creditor. It is also the lawyer who should inspect whether separate property assets included in the proposed business collateral have already become subject to special pledge, thus automatically compelling the subsequent pledgee to bear the privilege of the preceding pledge over a certain tangible asset from that business.

  In conclusion, attorney assistance in real estate deals and commercial deals of significant financial interest should not only come down to formal checks on various publicly accessible registers, but should have the characteristics of a thorough legal analysis and study of the parties involved, the object and the collateral in the deal.