Legal Issues
The Offer
Once a buyer makes an offer and you've accepted it, you have imposed specific contractual responsibilities and obligations on each other. There are two standard contingencies that ensure both parties are covered:
The Purchase Agreement
The purchase agreement also includes the seller's responsibilities, such as passing clear title, maintaining the property in its present or better condition until closing, and making the agreed upon repairs to the property prior to the buyer's assuming possession.
Most sellers prefer to make necessary minor repairs prior to putting their house on the market, which can help justify their asking price. Most purchase agreements include the buyer inspection contingency, whereby a buyer can back out if there are numerous and/or unacceptable defects found. It can be in a seller's best interest to make the repairs before listing the house because buyers frequently use “needed repairs” situations to negotiate a lower price.
The Contract
All of the documents involved in the transaction collectively represent the terms of a “contract”, legally binding on all involved/named parties (principals).
Together, with the Real Estate Purchase Contract (the primary “offer” and “acceptance” document), all required Disclosures, various Addenda, possible “counter-offers” and their attachments, and other related supporting documents, a “contract” can exceed 25 pages of fine print and boilerplate legalese language, with your initials and/or signature required in many places throughout.
Although it's all designed to protect the interests of all principals, most people are not equipped to cope with its complexity, and it's possible that important details can be overlooked, resulting in costly mistakes or legal liability. Your EXIT Realtor® is trained to deal with all of it, and is insured against errors and omissions (which you are not). This consideration alone is sufficient cause to regard sales commissions as being “the best insurance you can buy”!
We've all heard the old saying, “Buyer beware.” But in today's litigious climate, sellers can't afford to take a purely passive approach to real estate defects. Even an “as-is” contract won't protect you if you knowingly conceal information from a potential buyer. If you're aware of a problem with your property, you have an obligation to disclose it, or face the possibility of costly legal claims, months or even years down the road!
Disclosures
What kinds of problems should be disclosed? Anything that's “material”… that is, anything that might make a difference to the buyer, with respect to their “buy” decision, value determination, or intended use of the property, to name just a few. Be sure to disclose in writing such items as:
The Offer
Once a buyer makes an offer and you've accepted it, you have imposed specific contractual responsibilities and obligations on each other. There are two standard contingencies that ensure both parties are covered:
Financing – This makes the sale dependent upon the buyer's ability to obtain a loan. If they cannot, the buyer can be released from the contract, and the seller is free to consider & accept offers from other buyers.
Inspection – This entitles the buyer to conduct independent, professional inspections and evaluations of the property to their satisfaction. During the agreed inspection period, the buyer may back out of the deal without penalty based on certain inspection findings, but once this period elapses, the buyer may forfeit any earnest deposit if they back out of the deal for any reason not stipulated/permitted in the contract.
Inspection – This entitles the buyer to conduct independent, professional inspections and evaluations of the property to their satisfaction. During the agreed inspection period, the buyer may back out of the deal without penalty based on certain inspection findings, but once this period elapses, the buyer may forfeit any earnest deposit if they back out of the deal for any reason not stipulated/permitted in the contract.
The Purchase Agreement
The purchase agreement also includes the seller's responsibilities, such as passing clear title, maintaining the property in its present or better condition until closing, and making the agreed upon repairs to the property prior to the buyer's assuming possession.
Most sellers prefer to make necessary minor repairs prior to putting their house on the market, which can help justify their asking price. Most purchase agreements include the buyer inspection contingency, whereby a buyer can back out if there are numerous and/or unacceptable defects found. It can be in a seller's best interest to make the repairs before listing the house because buyers frequently use “needed repairs” situations to negotiate a lower price.
The Contract
All of the documents involved in the transaction collectively represent the terms of a “contract”, legally binding on all involved/named parties (principals).
Together, with the Real Estate Purchase Contract (the primary “offer” and “acceptance” document), all required Disclosures, various Addenda, possible “counter-offers” and their attachments, and other related supporting documents, a “contract” can exceed 25 pages of fine print and boilerplate legalese language, with your initials and/or signature required in many places throughout.
Although it's all designed to protect the interests of all principals, most people are not equipped to cope with its complexity, and it's possible that important details can be overlooked, resulting in costly mistakes or legal liability. Your EXIT Realtor® is trained to deal with all of it, and is insured against errors and omissions (which you are not). This consideration alone is sufficient cause to regard sales commissions as being “the best insurance you can buy”!
We've all heard the old saying, “Buyer beware.” But in today's litigious climate, sellers can't afford to take a purely passive approach to real estate defects. Even an “as-is” contract won't protect you if you knowingly conceal information from a potential buyer. If you're aware of a problem with your property, you have an obligation to disclose it, or face the possibility of costly legal claims, months or even years down the road!
Disclosures
What kinds of problems should be disclosed? Anything that's “material”… that is, anything that might make a difference to the buyer, with respect to their “buy” decision, value determination, or intended use of the property, to name just a few. Be sure to disclose in writing such items as:
- Plumbing, electrical or other “systems” defects
- Safety concerns or potentially hazardous conditions, such as abandoned wells, lead-based paint, aluminum wiring, asbestos insulation or ceilings, mold or mildew, etc
- Additions, renovations, or alterations made without building permits
- Encroachments, walls, fences, structures, and other items not within property boundaries or within required setbacks
- Structural issues, such as foundation/slab cracking, settling, sagging, etc
- Water/moisture issues, such as roof leaks, basement flooding, faulty grading/drainage, etc