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Buying A Home: How To Protect Yourself

Buying a home is likely the biggest and most complicated transaction you will ever make. Though most home sales work out well, some do not and result in costly and time consuming legal disputes. Fortunately, there are easy ways to avoid problems when buying a home. Here are tips.

The Contract

When you find the home you want, you will submit a written offer. If accepted, it becomes the contract. Although the offer will likely be on a pre-printed form with much small type, it’s vital to read and understand it before signing, as it covers all aspects of the purchase, including the sale price, deposit amount, a description of the property, inspection and repair requirements, who will pay for closing costs, and how disputes are resolved.

Even though the offer is on a pre-printed form, remember that all terms are still negotiable.  Terms can be changed and new terms can be added.  It's important to have a lawyer review the contract before you sign it.  A lawyer can help make sure there are provisions to protect you, including:

• A financing clause. The contract should have a financing clause unless you are paying all cash for the house or specify that there's no loan contingency.  A financing clause gives you important rights if you are unable to get the loan you want.  The financing clause will describe the terms of the loan and give you a time limit in which to obtain it.  If you cannot get the loan, you have the right to cancel the deal or remove the financing contingency and proceed with the transaction.

• A home inspection clause. This gives you certain rights if an inspection of the house reveals serious defects.  Once you receive the inspector's report, you must approve of the home's condition or ask the seller to make repairs or take other action, like lowering the sale price.  If the seller is willing to make the repairs, the transaction goes ahead.  If the seller is unwilling to make the repairs, you have the right to either proceed with the transaction or cancel the deal.

• A “sale of other home” clause. In many cases, before a buyer completes the purchase of a home, he or she needs to close the sale of an existing home. Having a "sale of other home" clause lets you cancel the deal if you are unable to sell your existing home.

• A list of items included in the sale. When you buy real property, you’re buying the land and everything attached to it. But problems can result if the seller takes things from the house that you thought belonged to you, such as light fixtures and appliances. To avoid disputes, be sure the contract states all items that are included in the sale.

Another vital thing to remember about the contract is to make sure all oral promises made to you are put in the written contract, including anything the agent or seller tells you will be done. This is important because verbal agreements related to the sale of real property are not legally enforceable. In the event of a dispute between you and the seller, the terms of the written contract will prevail.

Real Estate Brokers

Many buyers are not aware that the seller's broker only has legal duties and responsibilities to the seller.  To make sure your interests are properly represented and you are getting the best deal, consider hiring your own broker.

It is important to remember that your real estate agent gets a commission only if you buy. To many agents, getting a deal done is more important than protecting you. Watch out for an agent’s advice aimed only to finish a deal, especially if the suggestion is not best for you.  Our law firm can properly protect your interests when buying a house, and our loyalty is to you alone.

Property Insurance

Make sure the house can be insured at reasonable cost. Check if it's in an earthquake, flood, hurricane, fire or landslide zone, which can mean higher insurance costs. Ask an insurance company to confirm they will provide insurance.

Title Insurance

“Title” is your ownership, and your right to use the property without other people saying they have rights in the property. Before you buy a home, seek legal help to make sure you’re getting clear title so you can use the home without interference and later sell it without problems. You should also buy a title insurance policy. This protects you from problems in the chain of title, such as liens or forged deeds. It pays your losses if someone makes a claim.

Inspections

A leading cause of disputes involving the sale of homes is over problems the buyer discovers soon after moving into the house, such as leaks, foundation cracks, termites, mold or other serious and potentially expensive problems. To help reduce the chance of disputes, have the home inspected by professionals. The inspection should cover several key areas, including the home's structure, environmental hazards (like mold or asbestos), pest control and soil (especially for hillside homes). Although many states now require sellers to make full disclosure about the property, sellers are usually not liable for defects if they really were unaware of them. Also, sellers may not think some problems are serious enough to warrant disclosure.

Many home buyers are tempted to rush into things without paying attention to details. But if you take steps at the start — by making sure the contract has provisions to protect you in case of problems, using your own real estate broker, ensuring you are getting clear title, having the home professionally inspected, and having the contract and other key documents reviewed by your lawyer — you can likely avoid future problems.

Call Us For Help

Please call us for all your legal needs.  We offer a full range of legal services to individuals, families and businesses, including personal injury, estate planning, real estate, family law and business matters. We are dedicated to providing the highest quality legal services at a reasonable cost.

(123) 555-1212

The information contained in this article and throughout this Information Center is of a general nature. Due to constant changes in the law, exceptions to general rules of law, and variations of state laws, seek professional legal assistance before acting on any matter.

© 2009 ANSI