Legal Mistakes To Avoid When Selling A House

Americans appear to be on the move with demand for homes and limited inventory causing prices to rise. If you have been waiting for the type of seller’s market that exists in many parts of the country, a report by Reuters says this may be the time to put your home on the market.

Before calling a real estate broker to list your house for sale, take a few minutes to learn about some of the common legal mistakes sellers make that could have dire consequences. The following is a list of some of the legal pitfalls awaiting you as the seller of a house along with ways to avoid them.

Failing to retain legal representation

Real estate brokers in many parts of the country prepare the contract or sales agreement for buyers and sellers to sign when an offer is made and accepted. Do not sign the agreement without first having it reviewed by a real estate attorney hired to look out for your interests.

A review of the contract by your attorney ensures that it protects you. For example, if you are selling a home and simultaneously purchasing a new one, your attorney will make certain the closing or settlement dates for the two transactions allow you to use the funds from the sale of your current home to complete the purchase of your new one. The lawyer may even be able to negotiate terms in the contract of sale to add contingencies in the event the transaction to purchase a new home falls through.

Accepting the highest offer

You want to get the most money for your home, so accepting the buyer making the highest offer may seem like a no-brainer. Unfortunately, the buyer bidding the most for your home may not be the best buyer.

Before accepting any offer, you need to take other terms of the transaction into consideration, including:

·         If the buyer needs to finance the transaction, will they qualify for the loan? Asking for a pre-approval letter from a bank or lending institution gives you a measure of assurance that your buyer can obtain financing.

·         Does the closing date of the sale match the closing for your purchase? Do not assume that your buyer or seller will be flexible and let you change the closing date written into the contract.

·         Does your buyer have a home to sell? Accepting the highest offer may seem like a good decision until your buyers make the contract contingent on the sale of their home. By the time you find this out, other potential buyers may have moved on to other properties.

Do not allow yourself to be blinded by the amount of the offer. Make certain all of the terms of the deal meet your requirements before accepting the highest offer.

Failing to be truthful when disclosing the condition of the house

Thanks to state and federal disclosure laws, sellers may no longer remain silent about physical defects and other problems with a home that may affect its value and the ability of buyers to fully enjoy its use. Most states have laws requiring disclosure by a seller of known defects or problems with the property being sold.

For example, some states have a disclosure form that sellers must fill out and give to buyers about the known condition of the roof and plumbing, heating, electrical and other systems of the house. The disclosure usually must be presented to the buyers at the time of contract. Some states, such as New York, allow sellers to opt out of the disclosure form by agreeing to give buyers a $500 credit at closing.

California has taken disclosures to another level with its Natural Hazard Disclosure Statement that sellers must complete and give to a buyer. The form discloses potential hazards from flooding, earthquakes, fires, and other natural or environmental hazards that a seller has knowledge of when selling a home.

Federal law requires sellers of homes built prior to 1978 to disclose the presence of lead-based paint to buyers. The law gives buyers 10 days to have the house tested to determine the extent of any hazard posed by the presence of lead-based paint.

Failing to be truthful about their knowledge of potential hazards may subject sellers to a lawsuit by the buyer of their home for damages. Some statutes include the amount of damages that buyers who prevail in a lawsuit may collect from a seller. For example, the failure to disclose the presence of a lead-paid hazard may subject a seller to payment of three times the amount of damages suffered by a buyer.

The issues with the condition of the house may not be the only information a seller may need to disclose to potential buyers. Buyers concerned about utility rates may ask a seller for copies of recent gas, electric, water and other utility bills to get an idea of what they may anticipate paying. 

Disclosing utility costs may not be required by law, but refusing to do so could raise red flags and cause a buyer to refuse to sign a sales contract. Providing false or misleading information could result in a seller being sued for fraud.

Discuss disclosure requirements in your state with a real estate attorney before completing any forms presented to you by real estate agents or other parties. Be guided by the advice given by your attorney about whether or not completion of a disclosure form is required. If it is, be honest and truthful.

Failing to be specific about items excluded from the sale

A seller who decides to take the refrigerator with them may be in breach of contract unless the item was specifically excluded from the transaction. Plumbing, heating, electrical fixtures and appliances that a buyer saw when viewing the home prior to making an offer to purchase are included in the sale unless the contract excludes them.

If you plan to take the antique lighting fixture hanging in the dining room with you, let your attorney know. Unless it is noted in the contract as being excluded, the buyer has the right to expect it to be there when title transfers from the seller.

Conclusion

 Selling your home need not be a stressful ordeal or leave you open to a lawsuit by a disgruntled buyer. Seek and follow the advice and guidance of a real estate attorney to avoid contract issues or legal mistakes. It also helps to be proactive by preparing your home to go on the market by performing maintenance and repairs to correct problems that could affect a potential sale.

One thing to keep in mind about repairs in order to avoid running afoul of disclosure requirements is you need to correct a problem and not merely cover it up. Instead of doing them yourself, use Billy to find and hire top-rated home improvement contractors in your area.