The purchase of residential real estate usually involves three parties: the buyer, the seller, and the lender. This can make things complex. Plus, the law that governs real estate transactions is different from the law governing other kinds of purchases.
When problems arise, it might be wise to hire an attorney to help you through the process and look out for your interests.
Read the Purchase Agreement Carefully
Before you purchase a home, you must sign a real estate purchase agreement with the seller. The agreement will set a "closing date." The closing date is the date on which the seller transfers title to the house into your name.
If the section of the agreement that sets the closing date contains the words "time is of the essence" be careful. This means that if you delay the closing by even one day, the seller can cancel the transaction and keep your earnest money.
You May Not Have Financing Options
Getting a home purchase loan from a bank requires you to meet strict conditions and complete a lot of paperwork. If your credit isn't good enough to qualify for a regular home purchase loan, you might be able to convince the seller to enter into a land contract with you. Under a land contract, you pay the seller in installments and the seller transfers title to the house to you when you make the last payment.
The Property May Contain Latent Defects
A home might contain "latent defects." These are hidden problems you probably won't notice even if you conduct a reasonable inspection of conditions at just one time. An example of a latent defect might be a leaky roof, termites, or a high crime rate in the neighborhood.
The seller of a home is obliged to reveal any latent defects that he knows about. Many states publish fill-in-the-blank disclosure forms for listing defects that the seller must sign and give to you. If the seller knowingly conceals a defect and you buy the property, you can sue the seller.
A Title Defect May Leave You Without a Home
Residential property is said to contain a "title defect" if there's a dispute as to who actually owns the property or if a mortgage or lien exists on the property. If the property has a mortgage, for example, the seller must pay it off before selling the property to you.
If the seller fails to do so, the bank can foreclose on the property if you don't make the mortgage payments. Most home purchasers deal with this risk by purchasing title insurance.
A Real Estate Lawyer Can Help
The law surrounding problems that can arise during the purchase of residential real estate is complicated. Plus, the facts of each case are unique. This article provides a brief, general introduction to the topic. For more detailed, specific information, please contact a real estate lawyer.