3 Legal Issues That Could Cost You Thousands
When you’re buying or selling a home, there are many important legal issues, large and small, that you need to be aware of. To begin with, residential real estate is a complicated process. When such a major investment changes hands, even the subtlest legal details need to be addressed. If not, they can turn into major problems for all involved parties if not handled correctly.
Not only is it essential to be as informed as possible in order to properly protect yourself in the process of buying or selling a home, it is your responsibility. There are several issues that will cost you if you are not properly informed. In this report, we identify three of the most common of these issues.
Because there are many legal issues to consider, your first step is to choose reputable and experienced professionals to represent you and your interests. When selecting your real estate agent, do thorough research to ensure that they have extensive experience with the process. Any potential agent will also be able to refer you to a local real estate lawyer to further protect your interests and ensure that the process goes smoothly and that all your bases are covered before any contracts are signed.
The following are three common examples of legal clauses that could derail the transaction and costs you thousands if not worded correctly:
1. Survey Clause
Home buyers have the right to have a survey clause added to the real estate contract on a home they wish to purchase. If you are the seller, keep in mind that your current survey may be rendered out of date or invalid if you installed a swimming pool, or built an addition after the survey was originally drawn up. If your survey is not up-to-date by these standards, the buyer may request an updated survey. The cost for this process typically runs anywhere from $700 to $1,000, which is money out of your net profit on the sale of the house.
An experienced real estate agent should provide you with a survey and it is up to the buyer to decide if the survey is acceptable. They should also be able to advise you when navigating this issue; however, if at any point they are unsure, they should not hesitate to consult with a trustworthy real estate attorney before you sign an offer.
Your agent should be able to advise you appropriately when dealing with this issue, but if you or your agent are unsure, you have the right to consult your lawyer before you sign the offer.
2. Home Inspection Clause
A inspection clause appears in nearly every residential real estate transaction, but countless estate transactions often fall through because of faulty wording of this clause.
This clause previously stated that the buyer retains the right to rescind their offer if they were dissatisfied with the outcome of a home inspection. In some cases, this was used unfairly against the seller when a minor repair issue provided a buyer a legal loophole to change their mind without penalty. Meanwhile, the seller lost both time and money because of this nit picky technicality.
This hurt the seller for numerous reasons, including the possibly permanent loss of any offers that were declined in favor of the one that fell through, as well as the missed opportunity to field offers that might have presented themselves during negotiations. Even worse, the seller’s home may have been unfairly labeled as a “problem house” which could severely limit the profitability of any future offers.
And all of that is to say nothing of the cost of putting the home back on the market, incurring the inconvenience and additional carrying costs of having to market their property for a longer period of time than they anticipated.
To protect yourself, make sure that this clause in your agreement plainly states that the seller has the option to fix any items that the home inspection flags. This wording protects both the buyer and the seller. The buyer is assured that the home they are buying meets objective structural standards, and the seller is protected against the whim of a buyer who would otherwise change their mind with no thought to how it would affect the seller.
Not all contracts will be written with this kind of mutual protection of interests in mind. Make sure you are working with a lawyer experienced in real estate matters to ensure your interests are protected and that both parties are entering a fair arrangement.
3. Swimming Pool Clause
If the home you are buying or selling has a swimming pool, there should be a specific legal clause in your contract that addresses this costly and high-maintenance item and all its accessories, even if the pool is above ground. Some contracts are simply written to provide a warranty to the pool to survive closing.
The broadness of this wording protects buyers but is not necessarily in the best interest of sellers. Sellers who are leaving behind a pool might instead be better served by requesting that the clause be worded to indicate that, at the time of closing, they believe the pool to be in good working condition, and possibly even include a certificate of basic inspection from a reputable pool service.
The existence of a pool in any home negotiation is reason enough to ensure that you seek advice from a real estate professional and obtain legal counsel so that your interests are represented properly.
If at any point you feel unsure about these or any other clauses during the home buying or selling process, do not hesitate to consult a trustworthy real estate attorney. Thousands of dollars, not to mention your investment of time and emotional labor, are well worth it.
By being aware of these and other legal issues, and by seeking advice from experienced real estate professionals and obtaining legal counsel, you can protect yourself against unnecessary cost and potential hardship.