How much does an attorney's fee cost in a home purchase transaction?

The customary professional fee is 0.5% of the property value + VAT. If several transactions are involved, the attorney can offer a discount. Make sure the service includes contract drafting, reviewing the collateral documents of the mortgage, and carrying out all the required registrations.

Which mortgage-related clauses are important to include in the purchase agreement?

It's worth including: the seller's commitment to sign the mortgage documents within a set period, backed by a financial penalty; the buyer's right to advance payments; the seller's commitment to provide a valid letter of intent; and a clause covering delays by third parties in signing.

Legal Issues in Taking Out a Mortgage

Q: What are the standard payment milestones in a home purchase transaction?

Typically the first payment is 10% of the property value against registration of a legal note (caveat), the second payment covers the rest of the down payment, and then come the mortgage installments — paying off the seller's mortgage (if any) and transferring the remaining funds against the transfer of ownership.

Managementsamenvatting

Push the payment milestones later — your money is working for you
Every month the money stays in your account is a month you earn from it. Show the seller only the minimum down payment, open with modest offers, and improve them only in return for concessions from the seller.
Your attorney — make sure they are truly working for you
Customary professional fee: 0.5% + VAT. Don't assume the attorney is negotiating the payment schedule on your behalf — that is your job. Confirm that the scope of service includes contract drafting, reviewing the mortgage documents, registrations, and transfer of ownership.
Contract clauses that will save you a headache
Demand financial penalties for the seller's delays in signing documents, reserve your right to advance payments, and tailor the clauses to the type of transaction: a letter of intent for a second-hand purchase, a home inspection and surveying companies for a new-build purchase.

Legal Issues in Taking Out a Mortgage - How to Navigate the Legal Side

Buying a home isn't only a financial matter — it has a legal side that's important to understand. In this article we'll explain how to negotiate with the seller over the payment milestones, what the standard sequence of installments looks like, how to choose a real estate attorney who'll genuinely guide you, and which critical clauses must go into the purchase agreement — so the mortgage process runs smoothly and without surprises.

The information presented in this article is for general explanatory purposes only and does not constitute legal advice. These contents should not be considered a substitute for professional legal advice. Before making legal decisions or signing documents, consult a real estate attorney.

How to negotiate with the seller of the home

In a deal on the open market between a willing buyer and a willing seller, the payment milestones and their amounts are set by negotiation. In a sellers' market (high demand and low supply), the payment terms will tilt toward the seller's demands; and the reverse — if the housing market is frozen and you're the seller's only option, the seller will have to bend to your demands and terms.

One of the make-or-break issues in the purchase agreement is the payment milestones. Each side gets economic value out of the money it holds. Every extra month your funds sit in your bank account is a month you can invest and earn from them (in a low-risk investment vehicle!). For the seller, on the other hand, your money can pay off their mortgage or complete payment for their next property.

So your goal is to push the payment milestones as late as possible and keep your first installments as small as possible. The seller, on the other hand, wants your money as fast and as early as possible.

Important tips for managing the negotiation

Remember — the seller wants to sell just as much as you want to buy. In this negotiation, each side needs to feel they gave something and got something in return.

The intelligence you need to gather before the negotiation begins

A good negotiation starts long before your first conversation with the seller. The more you show up knowing about the seller and your own financial situation, the stronger the position you'll negotiate from.

Find out whether the seller has a mortgage on the property and how large it is. As you'll see below, a mortgage on the property affects the payment milestones in the deal. The mortgage amount also tells you whether the seller can finance their next steps with a loan (in case they pressure you to pay quickly).
Understand the seller's next steps. Before you even discuss the payment milestones, find out whether the seller has bought another property. Are they in a rush to get paid? These can be useful levers during the negotiation.
Map out your down payment. Look at how much down payment you have and where it comes from. How readily available is the money, and how much tax will you have to pay to free it up?

Keep in mind that the capital gains tax / wealth surtax you'll have to pay to finance the home purchase is part of the cost of the home too.

Tips for effective negotiation

Once you've gathered the information, it's time to sit across from the seller. Your approach at the negotiation table will shape the terms of the deal just as much as the numbers themselves.

Don't reveal your down payment. Present the minimum: you have the minimum down payment for the deal (25% for a sole dwelling, 30% of the property value for a substitute dwelling) and nothing more. If you let on that you have more, the seller may ask for those funds as early as the first payment.
Don't lean on the attorney by default. Don't automatically let the attorney run the payment-milestone negotiation with the seller — are you sure they're actually good at negotiating?
Plan ahead. Before you talk terms with the seller, think it through yourself: what do you most want to achieve? What can you give away easily? For example: a higher or lower down payment up front, smaller or larger gaps between installments, or a cap on a particular installment.
Don't finance the seller. If the seller or their representative pushes for a larger payment for whatever reason, suggest the seller take a bridge loan against their property — which hasn't been transferred to you yet. It's not your job to finance the seller.

Try not to open with an offer that lays out all of your financial firepower and assets. Don't offer the full down payment or tighter payment installments. Start modest and sweeten the offer (from the seller's perspective) only in return for counter-offers they make in your favor.

In his book "Thinking, Fast and Slow" (Kinneret Zmora Publishing, p. 136), the late Daniel Kahneman described the anchoring bias — drawing on his joint work with Amos Tversky — a cognitive bias in which the first number put on the table "anchors" the entire negotiation around it. So the opening offer you present to the seller sets the boundaries of the whole negotiation. If you start with a low, well-grounded offer, the seller ends up negotiating within the range you defined — not the other way around.

The standard payment milestones in a home purchase transaction

1. The first payment: 10% of the property value

The first payment is typically 10% of the property value — against the registration of a legal note (caveat) in the buyer's favor.

A legal note (caveat) is a registration in the Land Registry (Tabu) that protects the buyer. Once it's registered, no registration action can be carried out on the property without your express written approval.

It's not customary to require the seller to do anything at the first payment — for example, paying off the mortgage.

2. The second payment: the remainder of the down payment

The second payment can be made right after the legal note is registered (but as noted, it's in our interest to make it as late as possible). The second payment is typically the rest of your down payment.

You can require that the second payment go toward reducing the seller's mortgage.

3. The subsequent payment installments

The subsequent payment installments depend on whether the seller has a mortgage.

Third installment: a payment from your mortgagee bank toward paying off the seller's mortgage — 60 days from signing. Your mortgagee bank transfers to the seller's bank an amount equal to the seller's mortgage balance, and the seller's mortgagee bank discharges their mortgage.

Fourth installment: 30 days after the previous one — transfer of the remaining funds to the seller, against the transfer of ownership of the property to you.

Banks are required to discharge the legal note within 30 days (they can do it faster, too).

Paying off the seller's mortgage delays your receiving ownership of the property. If you want to take possession sooner and/or the seller wants the funds faster, they have to agree to use the first payment both to register the legal note and to pay off the mortgage.

Tips for choosing a real estate attorney

While the scope and contents of the service are well defined when you work with a mortgage broker, with attorneys it's much fuzzier. Here's our take on what the attorney should be doing in the transaction:

Professional fee: should be 0.5% + VAT of the property value. If several transactions are involved (buying a new home and selling your substitute dwelling), the attorney can give you a discount.
Drafting the purchase agreement with the seller.
Reviewing the collateral documents (mortgage documents) upon receiving them from the bank.
Reviewing the collateral documents (mortgage documents) upon receiving them back from the seller - verifying they were filled out properly.
Carrying out all required registrations and handling the transfer of ownership.

Important points for the purchase agreement - mortgage-related

The purchase agreement is the central legal document in the deal, and its clauses set out your rights and obligations throughout the whole process. Clauses left out of the agreement can lead to delays in getting the mortgage and to extra costs you didn't plan for. Here are several clauses worth considering for the agreement:

Signing the mortgage documents: the seller undertakes to sign the mortgage documents within X days of your delivering them. Back this up with a financial penalty for any delay on the seller's part.
Right to advance payments: the buyer keeps the right to advance payments. This doesn't mean you get any special rights in return for paying early — only that the right to do so is reserved for you.

Of course, advancing payments without getting something in return from the seller is neither desirable nor recommended. Still, there may be situations where the mortgage market is about to turn for the worse, and it's worth drawing down your mortgage funds early to lock in good terms now.

Documents required for the mortgage: the seller undertakes to provide every document you need to get the mortgage within X days of your request. Back this up with a financial penalty for any delay on the seller's part.
Third-party signature: if a third party has to sign the mortgage documents (for example, a developer on a TAMA project, a law firm for a property under construction, a local authority, and so on), then:
- The seller, as the property owner, is responsible for that third party and for making sure they sign the mortgage documents.
- A third party's delay in signing (beyond a reasonable period) automatically pushes back the payment milestones.
Additional clauses depending on the type of transaction:

If the seller has a mortgage, they must provide you with a letter of intent that's valid at the time the mortgage funds are transferred, or earlier, as you instruct. Back this up with a financial penalty for any delay on the seller's part.

Good luck!