There are certain legal issues all homeowners should know of regarding the sale of a house. Sellers are often faced with multiple legal issues and risks when selling a house to a potential homebuyer. You may lose an opportunity to sell because of payment delays or failed commitment from the buyer or sometimes end up getting sued for damages if you have violated the terms of the contract. A strong real estate litigation attorney can make sure you avoid the myriad pitfalls related to selling a house.
Home Sellers Need to Disclose All Facts About the Property
California law states that home sellers are required to disclose any fact that may potentially impact the desirability of a property. As per California Civil Code § 1102, any details that may affect a potential buyer’s willingness to pay or desire to purchase the property should be intimated in writing.
These important facts are known as “material facts.” Any seller that fails in disclosing these facts can face severe consequences. As a rule, you should disclose any item that you are unsure of. Your real estate attorney will ask you to complete a Transfer Disclosure Statement to disclose these material facts.
Deliver a Clear Title at Closing
If you paid off your mortgage or satisfied a judgment without filing the necessary documents with the county clerk, their office will not reflect it. When a title search will be conducted by the buyer before closing, it will show the mortgage as a lien. Any judgment on the property will also come up. Clearing this may delay the closing or take time.
You should provide all necessary documents to the attorney you hire for handling the sale of your house. This includes copies of the title and deed you receive when you acquired it. Your attorney will identify and address any potential title issues before they delay the closing.
Home Sellers May Need to Pay for Buyer’s Title Insurance
In California, home sellers are usually required to use a title company. The company will perform a title search and provide a Preliminary Title Report or PTR. The title company will consider the PTR to provide title insurance to the buyer. Lenders usually require title insurance for funding the buyer’s loan.
The title company and insurance provider are usually selected by both sellers and buyers. In most cases, the company is suggested by the house buyer in the initial offer. The real Estate Settlement Procedures Act (RESPA) is a federal act that prohibits a house seller from making the buyer use a particular title insurance company. You cannot make this a condition of the transaction.
Stemming from this, you can negotiate with the buyer about who pays for the title insurance. In most cases, the seller is required to pay for the title insurance in Southern California. Furthermore, in Northern California, local custom suggests that the buyer pay for the title insurance. Your real estate agent will help you negotiate a fair deal.
Payment of Transfer Tax
Before real estate gets transferred to the buyer, it needs to be informed to the county recorder’s office. This document shows that the property has changed ownership. Transfer tax gets imposed at the time the document is recorded. The payment of transfer tax is negotiable. As per industry standards, the buyer pays this tax in Northern California while the seller foots the bill in Southern California.
Attorneys Can Ensure the Sales Agreement Protects You
You should never sign a sales agreement with a buyer before having your attorney review it. Sales agreements that are prepared by brokers and real estate agents are legally enforceable contracts. You should not sign one until it has been explained and reviewed by your lawyer.
These are a few terms of the sales agreement that you should be careful about:
- Sellers should make sure the time agreed to obtain a mortgage is listed within the sales agreement. This is if the sale relies on the buyer obtaining a mortgage. You may want to word the document to encourage the buyer to apply for a loan promptly and cooperate with lender requests for documentation.
- Make sure the closing date is as per your needs. This can be important for sellers that are looking to replace the house by buying a new one. The closing dates of the transactions may need to be coordinated to complete the purchase on time.
- In many cases, a buyer needs to sell their existing house to complete the purchase with a seller. You should have your attorney review the sales agreement to avoid any language that makes the sale contingent on the buyer being able to sell their property.
Talk to a Skilled and Knowledgeable Real Estate Litigation Attorney – Book a Consultation Today
The experienced attorneys at Peterson, Martin & Reynolds LLP can help you resolve disputes related to real estate sales and purchases. Our attorneys have decades of experience in helping clients obtain the most favorable outcomes in residential and commercial property disputes.
Schedule your confidential case review with our lawyers today. Call us at (415) 399-2900 or contact us online.