Buying or selling a home is complex. Most buyers and sellers have questions about various aspects of the transaction, including how to protect themselves in case something goes wrong. Here are answers to some of the most commonly asked ones.
Q. The contract to sell my home is long and complicated. Since I have a real estate agent, do I really need to read the contract?
A. There are many stories of people whose contracts were bad even though they had a real estate agent. Recently a home seller found out the contract she signed (without reading) made her pay for termite repair, but did not limit how much she had to pay. The contract also made her help pay for the buyer’s loan.
A contract to sell or buy a home is one of the most important documents you will ever sign. It's vital to read it thoroughly even if you have a real estate agent helping you. You should also have your lawyer review the contract before you sign it. Your lawyer can add or correct terms to protect your interests. If you have questions about anything in the contract, ask your lawyer before signing.
Q. If we contract to sell our home but then get a better offer, can we take it?
A. A second offer, received after you have already accepted an offer, can be conditionally accepted as a “back-up offer” in the event the first buyer does not complete the deal. A “back-up offer” usually includes words like “this purchase offer is accepted conditioned on the seller being released from a prior agreement to sell.”
Q. If I contract to buy a house, can I later back out of the deal if I learn the house has major defects?
A. Most contracts to buy a home have “contingency” clauses. These list events that let the buyer out of the deal. An “inspection clause” gives you the right to cancel the deal if a professional inspector finds serious defects with the property and the seller will not fix them.
Q. The seller gave me a written list of problems with the home I am buying. Do I really need to pay for an inspection?
A. There can be many more problems that even the seller does not know about or does not think are problems. Leaky pipes, a cracked foundation, or rotted wood in the roof are examples. The seller may have lived with these a long time and does not think of them as problems, or may not know about them. Home sellers and their real estate agents are usually not liable for defects if they really were unaware of them. Because of this, you should hire a home inspector to look for defects the seller may not have disclosed.
Q. Should I buy a home warranty?
A. The home will likely have appliances like a dishwasher, air conditioner or heater. If anything breaks, you and the seller could fight over who pays for repairs. A home warranty eliminates this fight because the warranty company agrees to repair any appliances during the warranty period (typically one year). Buyers and sellers often split the cost of the warranty.
Q. I am selling my home and want to avoid legal problems. What's the best way to do this?
A. Most legal disputes arise from problems the buyer later discovers with the home. To help prevent this:
• Disclose defects in writing.
• Make repairs before selling. This includes plumbing, electrical and other problems that will need to be fixed in any event.
• Sell the home “as is.” This means you are selling the home in its current condition and won't pay for repairs. In most states, this does not eliminate your duty to disclose defects you know about.
Q. There is a house I want to buy. Will I get sued if I cannot get a loan and am unable to complete the deal?
A. Make sure your contract has terms that let you out of the deal if you cannot get a loan. This will help reduce the risk of a lawsuit if you have to back out of the deal due to a lack of funds.
Q. The person who said he would buy my house will not go through with the deal. Can I make a claim based on his oral promise?
A. Contracts to buy real estate usually must be in writing or they cannot be enforced. But if the person knew his or her oral promise would lead you to take some other action (like buying another house), then a claim may still be possible. Talk to a lawyer about this.
Q. What is title insurance and why is it important?
A. Title insurance is an insurance policy assuring that you received good title from the seller. You will want to be sure you really own the property, rather than finding out later the seller did not have the power to sell, liens are still on the property, or the boundaries differ from what you were told. The title insurer checks the property's history and public records to find out who owned it, its boundaries, and who has liens on it. Later, if any error appears in the title, the insurer must pay for a lawyer to fix it, or to defend your good title, or must pay you.
Q. What is “closing?”
A. Buying and selling a home is complex. Documents must be signed. The seller's home loan and liens must be paid and released. The buyer's new loan must be funded by a bank, and the bank's new lien recorded. Most important, title must be passed from the seller to the buyer. To protect everyone in the process, all these steps need to happen at the same time. "Closing" is the moment when all these things happen. At closing, final agreements are signed, money is transferred, and new ownership is recorded with the appropriate government entity. It’s the meeting where you and the seller complete the sale, and the property becomes yours.
Q. Do I need an advisor, like a lawyer, when I buy or sell a home?
A. With real estate disclosures, loans and long contracts, having a lawyer's help is wise. In some states, a lawyer is required to supervise or handle certain parts of a real estate transaction. Even in states that don't require this, a lawyer is necessary to guide you through the process and reduce the risk of bad surprises. A lawyer can help you in many ways when you buy or sell a home, including:
• writing and/or reviewing the broker's agreement and purchase contract;
• adding or correcting terms to protect your interests;
• advising you of the best way to hold title to the property (in the case of buyers);
• answering legal questions and resolving problems while the transaction is being consummated;
• reviewing closing documents to make sure everything is in order; and
• representing you at the closing to make sure it goes smoothly.
It's important to remember that even if you have a real estate agent, it is still important to also have a lawyer. A real estate agent gets a commission only if you buy and therefore may have more of an interest in getting the deal done than in protecting you. In contrast, a lawyer has no conflict of interest and has loyalty only to you, with the goal of making sure you are protected as best as possible.
These are answers to some of the most often-asked questions about buying or selling a home. If you have questions about a home purchase, please call us. We would be happy to answer them as well as assist you with the purchase or sale of a home or other real property.
Contact an attorney at Triscaro & Associates today. Please call us for all your legal needs. We offer a full range of legal services to individuals, families and businesses, including personal injury, estate planning, real estate, family law and business matters. We are dedicated to providing the highest quality legal services at a reasonable cost.