Buying Your First Home? 3 Ways To Avoid Legal Trouble Later
Spring home-buying season is in full swing. In fact, in comparison with 2017, home sales were up in May by 8%. With summer in sight, many are expected to purchase their first home. Last year property disputes in Federal Courts rose by 35%. If those who are planning on purchasing a home aren’t smart, they can end up among the homeowners facing legal disputes over home purchases. Make sure you follow these steps to keep yourself out of hot water.
1. Don’t Place A Purchaser Offer Lightly
Make sure when you place an offer, you understand the consequences of doing so.
When you make an offer, you enter into a binding contractual agreement (if the seller accepts and agrees). While it is possible to get out of, it can be extremely difficult and expensive to do so. By submitting an offer, you’re essentially saying you are willing to enter a contract if the seller accepts your price, terms and conditions.
A real estate agent can help you fill out a purchase offer form and a qualified real estate attorney can advise you about the legal consequences of submitting a purchase offer. It’s imperative to know that you may be bound to the offer you make.
2. Don’t Skip The Inspection Period
This is the most important step in a real estate transaction. This stage happens once the seller has accepted your offer, but prior to the home purchase. A seller must legally disclose the home’s present and known “defects” to a buyer. The buyer must also complete an investigation of the house to discover any conditions that may decrease the value of the home.
Make sure to hire a qualified home inspector. The inspection may reveal certain defects about the house that can potentially change the entire deal that you entered into.
All too often a buyer is eager to purchase the home or fears he/she will lose out to another bidder if he/she asks for too many contingencies and skips this process. The buyer later finds out that the home has some type of defect that substantially lowers the price. This can result in expensive litigation or expenses, depending upon the type of defect. Common conditions found through a home inspection include mold, termites and similar defects. The buyer must then either pay to have those defects fixed, or sue in court to have those costs paid for by the seller.
3. Don’t Neglect To Purchase Title Insurance
Over $908 million dollars have been paid out on title insurance premiums as of 2012. This insurance protects the buyer from financial loss resulting from defects in the title of the property. Two different policies exist: i) a lender’s policy and ii) an owner’s policy. These policies require a one time, flat fee that will be paid upon closing.
Title insurance companies will research the “title” to the property that is being purchased. The best type of title is a “clear title,” which is free from encumbrances, liens and defects. The title insurance company will then issue a title policy insuring that it will compensate the insured if an undiscovered defect, lien or encumbrance arises. Don’t risk losing your property, be protected and purchase title insurance.