When purchasing your first home, you viewed the home, submitted a
contract, obtained financing, and attended closing. Four steps and you
completed the most significant single acquisition of your life. Would
you follow those same steps to acquire another home? With the
second-and third-time buyer market consisting of $500,000-$700,000 (and
greater) homes, I hope your answer is “No.” Like it or not, with such
value, you are now in the “business” of real estate, and residential
transactions should be completed with the same thoroughness as the
acquisition of commercial property.

Residential buyers should proceed with a list of due diligence items.
For example, in addition to assuring, where applicable, satisfactory
well water yield and quality, I encourage a thorough title review,
survey, structural evaluation, and environmental testing. Of course,
market conditions will dictate how much a buyer can do and over what
period of time.

At the closing on your first home, you were asked, “Do you want to
purchase title insurance?” You probably responded in the affirmative,
without examining the condition of title reflected in the title policy.
The policy lists instruments that impact the property you are
purchasing, such as easements (the right of a party to use part of the

Critical to evaluating property issues is examining homeowners\’
association documents, which often mandate association approval for
uses of the home, painting, fencing, landscaping, roofing, and other
external modifications. Your review of these documents must anticipate
future needs, such as an in-law or nanny apartment, or in-home
business. Moving forward with modifications in violation of the
documents could subject you to legal action requiring dismantling of
the improvements.

While the title company discloses instruments that impact the property,
you and your attorney must evaluate whether such instruments adversely
impact the property. Often, the evaluation of title cannot be
accurately completed without a survey. A survey will plot property
lines, the placement of improvements, and show the location of
easements. A survey can reveal missteps by a prior owner. For example,
where part of the pool covers the easement area granted to the utility
company to run underground lines.

Depending upon the age of the home or the use of prior raw land, you
should consider certain environmental testing, such as mold, lead
paint, radon, and other soil tests (particularly if a prior use
included farming activities involving pesticides).

If your contract has been carefully drafted, unsatisfactory conditions
revealed by the title review, survey, and environmental assessments
should give you the right to back out of the contract, perhaps reduce
the purchase price, or obligate the seller to remedy the situation.
There you are—an unintentional real estate investor. Real estate
counsel can help you find title companies, surveyors and engineers, and
help you understand the reports they generate. Although market
conditions will dictate how demanding you can be, you owe it to
yourself and your family to consider how to wisely make this most
important purchase.

Ms. Lambert rose to national prominence as a litigator with a focus on insurance law in an age when there were few women litigators, particularly in the area of insurance law. Ms. Lambert has spent the last twenty years developing what is now recognized as one of the largest insurance practices in the state of Maryland. She lectures nationally, has received a gubernatorial appointment in the field of insurance, and is sought for her advice by Fortune 500 companies.