5 Common Legal Issues When Buying A Home

You are finally ready to buy a new home! You have a down payment, real estate agent, proof of income, a pre-approved mortgage, and the home of your dreams picked out. There is one more important piece missing – an attorney. Your real estate agent can tell you about contracts and the best methods for negotiations – but a real estate attorney knows the ins and outs of the legal system. They will know when you can solve an issue through friendly negotiation and when you are being taken advantage of and should pursue legal action.

What is a Real Estate Attorney?

Real estate attorneys or real estate lawyers are licensed to practice law. They specialize in the real estate field. A real estate attorney isn’t always required when you buy a house – but a homebuyer should at least select a lawyer to call in case a legal dispute occurs. The typical cost for a real estate attorney ranges from $200-$300 an hour. Sometimes real estate attorneys will give a flat rate for the entire closing process.

Using an attorney doesn’t always mean there is legal trouble. Your attorney can simply look over your contracts, mortgage documents, and other legal documents. They will see any vague wording that could cause issues later. They also might catch small clauses that could hurt you as the buyer. Other times, you may need a real estate attorney to help solve a severe legal issue you encounter when buying a home.

5 Common Legal Issues to Prepare for When Buying a Home

Here are five common legal issues you might encounter when you buy a home.

1. The Buyer or Seller Doesn’t Fulfill a Contract

When you are ready to buy a house, you will sign a real estate contract. A real estate contract usually includes the following items:

• The buyer’s financing details
• The seller’s portion of the costs
• Home inspection information
• Appliances and fixtures included
• Date for closing on a house
• Contingencies (like the sale of a previous home)

When the contract is signed, both parties are legally required to fulfill their end of the contract. Sometimes the unexpected happens. When this happens, the buyer or seller might not follow through with the contract. Maybe your financing fell through – or you won’t get the money by the closing date. Perhaps the seller wasn’t able to sell their previous home – or they didn’t leave all the appliances they said they would. Your real estate attorney can help. They will know how best to re-negotiate the contract. Or they may need to resolve the issue in court.

2. The Real Estate Agent Doesn’t Act in Your Best Interest

Over 88% of home buyers use a real estate agent to buy their home. A real estate agent agrees to help the buyer find the best deal. Some buyers use the seller’s agent – but this can lead to a conflict of interest. Under the law, real estate agents need to act in the best interest of their clients, disclose all relevant information, and keep the client’s information confidential. If your real estate agent fails to do one of these things, you can pursue legal action. If you suspect your real estate agent of breaching their contract with you, consult your attorney. They will know the best course of action to follow.

3. The Seller Fails to Disclose a Property Defect

When you close on your house, you still may run into legal problems. One common issue is undisclosed property defects. When a seller enters into a contract with you, they have to let you know of all the known significant issues with the home that would affect its value. Sellers fill out a disclosure form that legally needs to list all defects. The only issues they will list are those that are reasonably obvious. Hidden problems that surface later don’t count as grounds for legal action.

If you want to pursue legal action, you need to prove the seller rated a feature in better condition than it was, failed to mention an issue, or outright lied about a problem. Next, ask if the issue is expensive enough to warrant legal action versus filing an insurance claim. For the case to count as a failure to disclose, the seller had to know about the issue beforehand. Sometimes sellers honestly didn’t know about a problem.  The buyer can’t claim nondisclosure for visually apparent defects or problems they knew about before closing.

4. Unmet Expectations between the Buyer and Seller

Even with a contract, both parties aren’t always on the same page. Miscommunications occur because of vague wording, unwritten expectations, and assumed responsibilities. You can avoid miscommunication by hiring a real estate attorney to go over the contract beforehand to look for potential problems. They can also let you know when you have grounds to pursue unmet expectations – and when the seller has more support for their actions. When writing up a contract, always add more than you think you do to avoid frustrations later when you aren’t on the same page as the seller.

5. Boundary Disputes Between the Seller and Buyer

Boundary disputes occur when there are discrepancies in the property boundary. Sometimes these happen because the seller is unaware of their legal property line. Other times a seller willfully misrepresents the property. The county can confirm property lines before you close on a house. You will want to compare the property lines listed in the contract with its legal boundaries to avoid property disputes.

3 Ways to Solve Real Estate Disputes

You might never run into any legal issues when buying your home. That is everyone’s hope! But, often, there will be at least some type of miscommunication or dispute. When that occurs, here are three ways you can resolve the issue.

• Talk it out. Lawsuits are long and expensive. You can save considerable time and money by simply renegotiating the contract so that both parties are happy.
• Use mediation. If you want more accountability in the process, involve a third party. The third party should be impartial. They help both parties come to a mutually beneficial agreement.
• Involve the law. Sometimes you won’t be able to avoid real estate litigation. If you can’t negotiate the issue with the seller or there is a large sum of money involved – a real estate attorney will be your best option for avoiding further legal problems down the road.

Time to Buy Your Home

Now that you know common legal issues and how to avoid them, you can go out and buy your home with more confidence. Ask your friends – or fabulous online grandma – for advice on reliable real estate attorneys that will support you every step of the way. That is one less thing for you to worry about in the homebuying process.