The Key Stages of Buying a Home in Texas

Even if you’ve bought a home in the past, it’s always wise to hire an experienced lawyer and real estate agent to help you buy a house in Texas. Contract clauses often change and you’re likely to need special provisions added to your formal offer and purchase agreement to fully protect your interests.

After contacting your Houston real estate lawyer, you’ll need to select a qualified real estate agent. When searching for one, ask close friends for recommendations if they’ve recently bought a home in one of your target areas. You can also search for an agent by visiting the Texas Real Estate Commission website —  and Trulia.com and realtor.com.

What follows is a general overview of the key stages of finding and purchasing a home in Texas when you’ve hired qualified professionals to help you.

Determining if it’s the right time to buy – what your needs are — and what you can afford

Always take time to decide if it’s really the right moment for you to purchase a home. You must be able to afford a monthly mortgage, homeowner’s (and title) insurance and the other expenses that go with buying a home and making repairs. Once you’re sure you want to buy now and know what you can afford to pay, contact several highly recommended real estate agents (who have brokered properties in your preferred area) and interview them over the phone or in person.

After checking each candidate’s references and hiring the most knowledgeable and pleasant one, you’ll be ready to start conducting your search for the right home.

You’ll first need to discuss your preferred price range and the preferred parts of town where you would like to buy a home. Be sure to note the property features that are “must haves” or “deal breakers” for you. Of course, remaining flexible is important so you can avoid missing the chance to buy one of the best homes available.

Where will you and your agent find the listings that you’ll want to see?

In addition to visiting publicly advertised “open house” events in your target areas, you and your agent can also view many available properties online. Savvy sellers often offer online visual tours of their homes to help attract prospective buyers — who can then request showings.

You can also visit the Multiple Listing Service (MLS) online and then discuss the properties that you like most with your agent. If your agent is well established in the area, you may even become privy to some private listings before others learn about them. Websites like trulia.com and realtor.com should also provide lists of many homes still on the market.

What other initial tasks can a realtor help you handle?

After you’ve met with a mortgage broker and located several properties that meet your needs, your realtor can prepare a written offer for the seller. Prior to making an offer, be sure to ask your agent if the seller has any recent home inspection reports to share with you. If none are available and you still want to make an offer on a house, your agent can make obtaining an acceptable home inspection report one of the contingencies in the home purchase agreement that must be met before you’ll purchase the house.

You’re now ready to go over the legally required disclosures that Texas requires property owners to make to parties offering to buy a home. Repairs currently needed must be detailed – along with notes about all recently completed ones. If you haven’t already received a thorough (recent) home inspection report, you really should obtain one now — so you won’t be suddenly surprised by major plumbing or other serious home repairs in the future.

Should certain repairs be needed – and you’re still willing to buy the house – your real estate agent can negotiate these matters with the buyer on your behalf. Also, you must have a title search run on the house. You don’t want to buy property with any troubling liens, easements or other encumbrances that can greatly limit your ability to fully enjoy the use of your new home.

At this point (if not already done), you should purchase title insurance so that if any future claims are made against the property by third parties, you’ll be able to properly protect all your legal interests.

Once all these matters have been fully negotiated between your agent and the seller, you’re ready to move forward into escrow.

What basic, final tasks should be handled right before — or during — escrow?

Your lawyer will make sure that the home purchase agreement contains all the necessary clauses required to protect your interests before escrow closes. If it hasn’t already been done, you should also have the home appraised to make sure your offered purchase price is reasonable and fair.

Next, all new home inspection reports should be carefully analyzed, and all financial arrangements finalized. On closing day, you’ll go to the title agent’s office to sign all the documents and pick up the keys to your new home. As the buyer, you’re not responsible for paying your real estate agent’s fees – they are covered by the seller.

After closing day, your Houston real estate attorney can check to be sure that the title to your new home has been properly recorded in the correct local government offices – and then provide you with official copies of the newly recorded title deed for your records.

Please contact Murray Lobb so we can provide you with the clear advice you’ll need while buying your new home. Since we have the necessary experience to address any problems that may arise, we should be able to minimize any stress for you. Your lawyer will remain available to answer all your questions as you prepare to move into your new home.

Buying a New Company:  Conducting Due Diligence

Depending on the nature and size of the business you’re interested in buying, the process of completing due diligence can be straightforward or complex. Fortunately, the basic steps you’ll need to follow are rather standard.

After your lawyer has negotiated a Letter of Intent (LOI) with the seller –  covering each party’s duties and responsibilities involving confidentiality, exclusivity and other matters – you’ll be ready to begin the due diligence phase of possibly buying the company.

The Main Reasons for Performing Financial Due Diligence

This process is partially designed to help determine if the initial evaluation placed on the business is fair and if the company is both stable and viable. Time must also be set aside to review all current contracts and potential legal and regulatory liabilities.

Some of the specific aspects of the business you’ll want your Houston business law attorney and personal accountants to carefully review and examine are set forth below.

  • All accounts receivable and payable
  • At least the last three years of the company’s tax filings
  • All current payroll obligations
  • Most or all the major banking transactions for the past year or more
  • The full nature and extent of any outstanding loans on the books

As this initial list of matters indicates, this process can take many months with some businesses. Normally, the parties negotiate the timetable for completing all due diligence examinations in their Letter of Intent (LOI).

Special Inquiries You Must Include Regarding Other Financial Matters

Hopefully, your review of all the financial accounts won’t turn up any troubling questions that can’t be answered. However, since a small percentage of business sellers may be dishonest, your due diligence team must carefully watch out for certain types of “red flags” or irregularities. These can include some of the following concerns.

  • Missing funds
  • References to non-existing accounts
  • Improperly filed tax returns
  • A varying degree of bad debt that’s regularly written off
  • Unstable profit margins

Your lawyer’s due diligence inquiry must also include carefully reviewing all current contracts with other businesses or corporations.

Key Concerns Involving Executory Contracts

  • When are they each due to expire? (This is important since this information can affect the company’s current valuation and other issues). For example, if current supplier contracts are ending soon, you may soon find yourself having to pay far more for critical supplies;
  • What’s the status of all customer contracts? You need to be sure all funds owed to the company are being collected regularly and all goods and services promised are being delivered in a timely manner. Failure to carefully monitor all contract terms can cost you valuable customers and open you up to major legal liabilities;
  • Are all Service contracts being carefully monitored? Nearly every business is dependent on outside service vendors to keep their manufacturing and other equipment working properly. Likewise, contracts are often in place to secure the professional services of lawyers, accountants, computer repair technicians and others. You must make sure the company is properly honoring all these contracts and renegotiating them in a timely and responsible manner;
  • Are all current leases being properly maintained? Companies can’t afford to accidentally let leases lapse on buildings or other property that are essential to their daily operations.
  • Employee Agreements? Do current employees have employment agreements with non-compete clauses? These must be carefully examined because they cannot be assigned if you are only buying the assets.

Due diligence can also extend beyond merely reviewing key financial documents and contracts. It should also include a detailed review of all actual or threatened litigation and regulatory investigations.

Your Lawyers Must Review All Current or Likely Lawsuits & Regulatory Challenges

Each of the following issues must be examined regarding all current or anticipated litigation. They may prove crucial if you decide to still buy a specific company since you’ll probably need to request contractual indemnity for all future liability (and litigation expenses).

  • How costly might each case eventually prove to be? In other words, what potential liabilities are involved?
  • Has the business received formal notice that any of its operations may be operating in conflict with any state or federal statutes or regulations?

You must be willing to sit down with your lawyer and the target company’s current legal counsel to sort through all these legal and regulatory concerns since they directly bear on the business’ current valuation and the wisdom or folly of buying it.

While the due diligence concerns referenced above are not intended to be fully comprehensive, they should help you understand many of the critical matters that must be examined. Once you make it through this due diligence stage, you can then either decline to buy the company or move forward into the “closing” or final transactions phase.

Please feel free to contact our law office so we can help guide you through the various stages of due diligence as you try to decide whether you should buy a specific company.