1.   I've done the research and know what I am willing to pay for a particular property I like. The property is offered at a higher price, but I don't think it's worth that much.  What's next?

    Contact the property's owner or the agent representing the owner to see how much the owner is willing to negotiate.  If you were the owner, you'd want to make as much as possible to sell it, so your price would start out higher than you would really expect to sell it for.  As the buyer, you want the opposite: to purchase it for less than you expect it's worth.  Finding the middle ground (if there is one) can be a very tricky and frustrating exercise.

    Many people (including myself) get irritated with this "haggling" process.  If you're dealing with professionals or a corporate owner, the haggling will likely be kept to a minimum.  If you know what the property is worth to you and you are willing to pay that amount, tell the owner or the agent that amount, and be done with it.  If they take the offer, you have a deal.  If they refuse, you can move on and find other property.

    If they don't accept your offer but want to continue "negotiating," then the owner may have unreasonable expectations, and you're better off having given a firm amount and sticking to it.  Those who want to "string you along" are not behaving like professionals and are simply exploiting you and your efforts; they have probably decided they will not sell to you regardless.  They may be:

2.    Ok, we've agreed verbally on a price and some other essential terms.  Now what?

    Now you must reduce the agreement to writing.  That means drafting and signing a contract with all the important terms included.  Once you sign the contract, it will be extremely difficult to prove something that was "agreed upon," but not included in the contract, was ever "agreed." For this reason, you may want to draft the contract and present it, signed, to the other party.  That way, you can be sure that everything offered and accepted verbally is reflected in the contract. The risk in this approach is that the other party may not be willing to sign "your" contract; they may only sign contracts drafted by them.

    One alternative is to use standard, neutral contracts such as those promulgated by the Texas Real Estate Commission (TREC, pronounced trek).  The TREC forms are drafted by attorneys that include most standard terms but are written in such a way that they do not favor either side in a transaction.  If the terms you have agreed upon are relatively simple (price, closing date, few modifications to the property), then the TREC forms will likely work fine.  If the terms are more complicated, or the other party won't use anything but their own contracts, then have an attorney review the terms of the contract to make sure you are comfortable signing it.  If no TREC form exists for the transaction you are contemplating, contact an attorney familiar with real estate transactions to draft an appropriate document.

3.    The Closing Date is approaching, and I just found out there is a lien on the property.

       a.    What exactly is a lien?
       b.    Is this my problem?
       c.    What can or should be done about it?
       d.    What are the consequences if nothing is done about it?

       a.    What exactly is a lien?
    Generally, a lien is a claim on property for the payment of a debt.  Liens can have numerous sources, but only a few are typical on real estate.  Most common is the mortgage lien, the mechanism that secures the monthly mortgage payment.  Another common lien is a mechanic's or materialmen's lien, which can  arise if a contractor or subcontractor performs work or provides materials for a building, but doesn't get paid what is due.  Another common lien is the tax lien: if the property taxes are not paid or the owner's income taxes are not paid, a lien may be placed on the property to secure payment.  There are some other types, such as judgment liens, vendor's liens, etc., but they are less common.  Nonetheless, any lien can cause serious problems for the current owner.

       b.    Is this my problem?
    It's not your problem if you are not the owner, of course.  Buying any property subject to a lien could make you or your investment liable for the amount owed.   Essentially, a lien is only a problem for the current owner of the property, but the debt may also be a personal obligation of the debtor, not just a claim against a specific piece of property.  If the debt is a personal obligation, the creditor can also follow the debtor in seeking payment, as well as seizing/foreclosing the property.

       c.    What can or should be done about it?
    Liens, in and of themselves, are not terrible nor are they reason to panic.  The danger is that a lien gives the lienholder some control over the property.  If the lienholder takes the necessary steps, the property can be foreclosed and sold to the highest bidder to pay the debt secured by the lien.  Alternatively, the lienholder can wait until the owner attempts to sell the property, and then demand payment.  With a lien on the property, the seller's title is not "good," and title insurance companies will not usually write title insurance for such property. Consequently, the owner is forced to pay the lienholder to get the lien released.  Most Americans have a lien on their home right now: their mortgage.  If you don't pay your monthly mortgage payment, you can expect the property to be foreclosed and lose perhaps all of your rights and equity in the property.

    If you are considering buying property that has a lien on it, insist the seller pay off the lien before  closing, or check with the title company that the lien will be paid off at closing without additional cost to you.  The lien amount represents a debt owed by the owner, but the property's inherent value remains unchanged.  So, the sales price agreed to in the purchase contract should include paying off the lienholder and leaving the balance for the seller.  The situation is similar to a homeowner (with a mortgage lien) selling his house and paying off the mortgage at that time.  Here's an example: I own a $100,000 house and you agree to buy it from me for that amount.  If I have $30,000 mortgage balance on the house, then at closing, the $100,000 you pay will be divided between the mortgage company ($30,000) and me ($70,000).  A sale of property with any kind of lien on it will probably be treated similarly.

       d.    What are the consequences if nothing is done about it?
    If nothing is done about the lien, then the title company will probably not write title insurance on the property, thus giving the buyer a valid reason to cancel most sale contracts.  Even if you are considering purchasing without a title company (a very great risk), a lien on the property should raise a big "red flag."  Potentially, the lienholder could foreclose the lien the day after you close, leaving you holding the bag and your seller with all your money.

4.    The Title Report indicates a number of easements and other things on the property.
        a.    What is the Title Report?
        b.    What are easements?
        c.    Should I be concerned about the contents of the Title Report?

        a.    What is the Title Report?
    The Title Report or Commitment is the document that tells you what your title insurance will and will not cover.  The most important page(s) is Schedule B, Exceptions from Coverage, because that schedule discloses (hopefully) all the interests, which have been recorded in the county deed records, that other people have in any portion of your property.  Your title insurance (theoretically) protects you from anyone else's claim to any interest in your property, but does not cover those specific interests excepted from coverage, among other things.  It is similar to, but not the same as, a medical insurance policy's exclusions for "pre-existing conditions."  Typical exceptions from coverage are utility easements, building setback lines, access easements, mineral interests, existing leases, and others.

    The title company only searches the public deed records because interests or rights that are not recorded are usually not valid against any other than the buyer and seller.  For example, say you and your neighbor agree that he'll pay you $100 each year if you let him cut across part of your property; you shake on the deal, and that arrangement works great for 4 years.  Then you move away, and your old neighbor assumes he can still cut across the new owner's yard for $100 a year.  The new owner decides that he wants his garden in that part of the yard.  The old neighbor cannot force the new owner to honor your old handshake agreement, regardless of how much or how timely the $100 payment, because that agreement was only between you and he.  That agreement had nothing to do with the new owner, and he probably never knew about it.

       b.    What are easements?
     An easement is a permanent right to use someone else's property for a specified purpose, but not the right to possess the property. In contrast to the handshake agreement above, if your old neighbor wanted to have a permanent right of access over your property, he should have had the agreement in writing, signed, notarized and filed in the property records.  That documented and recorded agreement would be an easement.  It would have been enforceable against you, your heirs, and anyone who later owned your property, until a release was signed and recorded by the old neighbor, his heirs, or later owners of his property.  Because it would have been part of the public deed records, the easement would have been available to anyone who searched for the records on your property (most importantly, to the new owner).  The title company that provided the title insurance should have found that easement and included the neighbor's right to access as an exception to coverage.  If the title company failed to find that easement, the new owner would be entitled to compensation for the loss of value attributable to that easement.

    As mentioned above, the title company will "except" certain encumbrances from coverage under the title insurance, including such things as utility easements, building setback lines, access easements, mineral interests and existing leases:

• During property development, utility companies (gas, electric, cable, etc.) typically have part of nearly every lot dedicated as an easement so they can provide their various services without having to negotiate those rights individually later on.  
• For a variety of reasons, cities impose building restrictions such as setback lines to protect property values and limit the manner of development of property within the city.  As an extreme example, a house built only six inches from the street would look strange and unattractive in modern neighborhoods, so cities pass ordinances requiring a minimum setback to prevent that kind of design.
• Access easements often become useful or necessary when property uses change, such as when a farmer wants to convert his farm acreage into residential lots, but realizes the nearest road is inconvenient or in poor condition.  The farmer may offer to pay for access across his neighbor's property to reach the more convenient or better-maintained road on the other side.
• Similarly, mineral interests (oil and gas rights) and existing leases (of one year or more) held by other parties are usually recorded so as to protect what they have paid for.  Like an easement holder, those parties have certain rights under the recorded agreements, and those rights usually remain effective despite sale or transfer of the property.

       c.    Should I be concerned about the contents of the Title Report?
    It is imperative that you read and understand exactly what is excepted from the title insurance, because the title company will not help, defend, or compensate you later for what was excepted when you closed.  Most contracts for sale explicitly or implicitly require the seller to deliver "marketable" or "good and indefeasible" title at closing.  Both of the those phrases are a fuzzy legal terms without a universally clear definition, but the general rule is that title is marketable if it is reasonably free from doubt and will not expose the buyer to a reasonable probability of litigation.  If you do not understand precisely what is being excepted, you may be getting much less than what you bargained for.  Contact an attorney soon after discovering any problems with the property you thought you bought because failing to promptly deal with "adverse possessors" may lead to a total loss of your interest in the property.

5.    The survey of the property indicates the neighbor's fence is 10 feet inside my property.  Which is the boundary of the property: the fence or the survey's property line?

   A professional survey is produced by state-licensed surveyors who may or may not do their job properly. While many surveyors are very exacting in their work, others have been known to be somewhat sloppy and rely too heavily on an unofficial drawing of the property, such as a builder's site plan.

   Assuming that the survey is done properly, encroachments such as a fence or structure that crosses the property line are almost never intentional.  Regardless of the intent in locating the structure, however, anything on your side of the property line is your property, no matter who paid for it.  Unless there is some agreement between the owners of the neighboring properties (or their predecessors), anything placed on the neighbor's side of the property line becomes property of the neighbor, just like a gift.  Moreover, a structure built over the property line almost certainly violates local setback laws and zoning regulations.

    The only exception to this rule is if the structure has been in that location long enough to qualify under the adverse possession ("title by limitation" in Texas) laws.  Adverse possession is a complicated situation in which someone other than the true owner claims ownership of particular property (or treats it as his own) for a number of years.  Unless the proper owner of the property removes the trespasser or gives the trespasser "permission" to use the property, the trespasser can become the owner of the property without paying for it because the law assumes that the trespasser is putting the land to better use than the legal owner would since the legal owner didn't bother to protect his interest in the land.

    Boundary disputes and adverse possession can be a very complex and uncertain area of law.  Getting advice from a qualified attorney is the only way to find out what the legal aspects of your particular situation are. Because there is an absolute time limit involved, you may be sitting on a "time bomb" if you do not resolve the situation promptly.

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