When buying or selling real estate, it’s important to understand the common legal pitfalls that can occur. This way, you can avoid these mistakes and ensure a smooth real estate transaction.
These pitfalls include contract disputes, misrepresentation, and property issues. To help you avoid these issues, the Indianapolis real estate lawyers at Hocker Law, LLC have compiled a list of 8 Common Real Estate Legal Mistakes to Avoid.
Not Having a Contract in Place
Residential real estate transactions are complicated affairs, and even seemingly small legal issues can become major problems if not handled properly. From zoning laws to home insurance, understanding important legal issues can help you avoid costly mistakes that may derail your real estate deal or leave you exposed to lawsuits.
A common mistake real estate agents make is ignoring contracts. Unless you’re an attorney, it is illegal to alter contracts or create your own, so be sure to use pre-approved documents. This prevents any confusion or misunderstandings, and it ensures that your clients’ best interests are protected.
Another common mistake is not disclosing property defects. Sellers have a legal obligation to disclose any known defects or issues with the property. Failure to do so could result in litigation and financial loss for both the buyer and seller.
In addition, it’s crucial to be sure all contracts are legible and complete. Incomplete or illegible contracts are often the result of laziness or improper scanning, but they can also cause delays and potential legal problems.
Not Obtaining Legal Advice
Real estate legal issues can be complex, so it’s important to seek professional guidance throughout the buying and selling process. This can help ensure that all relevant documentation and contracts are in place, and that all legal requirements have been met. It can also help avoid costly mistakes such as a breach of contract, misrepresentation, or not adhering to deed restrictions, according to one top real estate agency in Cyprus.
One common mistake that real estate investors make is not obtaining legal advice before signing any contracts or agreements. This can lead to misunderstandings, disputes, and even litigation. A reputable real estate attorney can help review any contracts and agreements before they are signed, and ensure that they are properly worded to protect the investor’s interests.
Another common mistake that real estate investors make is failing to disclose any known property defects or issues. This can also lead to costly litigation. It’s important for real estate agents and investors to always carefully inspect properties and thoroughly disclose any problems, no matter how minor. This is a crucial part of the legal process and protects both buyers and sellers from liability.
Not Obtaining a Home Inspection
Home inspections are important for both buyers and sellers. They examine a property for safety and condition and provide an opportunity for both parties to negotiate or walk away from the sale. It’s best to have a home inspection before listing the property, as it will highlight any problems that need fixing and give the buyer a chance to request a lower price or credit for repairs.
Real estate professionals should be aware of the legal issues related to home inspections, such as negligence and fraudulent misrepresentation. Negligence occurs when a professional breaches their duty to a client, which causes tangible harm. It can be as minor as failing to mention that the home’s septic system is only capable of supporting two bedrooms, or as serious as falsely stating that a school district has excellent educational standards.
The home inspector will check the structure of the property, including evaluating electrical systems, light switches and outlets, and checking for rotted wood and cracks. It’s helpful to have the home cleaned before the inspection so the inspector can easily access the areas they need to.
Not Obtaining a Title Report
A property’s title is its legal ownership, and a preliminary title report offers a thorough investigation of this. This can reveal liens or restrictions that could impact the buyer’s ability to use and enjoy the property. For example, an easement may give a previous owner the right to access the property anytime for a particular reason. This might include utilities or a shared driveway.
A good title report will also list any standard exceptions that don’t pertain to the specifics of the property but are based on laws in certain geographical regions or municipalities. For instance, you might not be allowed to extend your garage in certain locations.
Taking the time to obtain a title report is one of the best ways to minimize risk and protect you from a potential lawsuit. These reports are easy to read and provide a snapshot of a property’s legal ownership and status. This includes a description of the land, names of titleholders and the manner in which the property is held (joint tenancy, etc.), encumbrances (mortgages, unpaid liens and judgments) and real property taxes due.
Not Obtaining a Home Warranty
A home warranty can be a valuable tool for buyers and sellers alike. However, some people do not understand the ins and outs of these contracts and may rely on inaccurate information, leading to costly mistakes.
It is also important for people to make sure that all of their real estate transactions are done properly. This can include ensuring that all proper disclosures are made and that all parties involved are aware of their roles and obligations. A reputable real estate professional can assist with these matters, preventing potential legal issues from arising.
For example, a real estate agent should be familiar with the Fair Housing Act and not discriminate against any clients or customers based on their race, religion, gender, or sexual orientation. If this happens, it could lead to hefty fines and other penalties. This is why it is crucial to work with a professional, well-trained real estate agent. Additionally, it is vital to review contracts carefully before signing them. This includes examining all terms and conditions, such as the specific deadlines, legal descriptions, contingencies, seller concessions, items to convey, and more.
Not Obtaining a Building Inspection
Real estate investments are complex and require a thorough approach. Investors must understand contracts, conduct due diligence, comply with all laws and regulations, seek out legal guidance, and avoid common mistakes. Failure to do so can result in costly legal disputes. One such mistake is not obtaining a building inspection before buying or selling a property. This can be a major mistake as it is against the law for sellers to conceal any defects in their properties. This includes hiding structural or foundational issues that may be visible to a home inspector. Additionally, it is important for sellers to disclose any issues that were discovered during their inspections.
There are a number of different types of inspections required for a property including, but not limited to, backflow valves, petroleum bulk storage units, elevator inspections, facade condition, energy benchmarking, and sprinkler/standpipe status. Many of these inspections are required to ensure compliance with local laws and/or environmental requirements. It is also important for owners to file the proper registrations on a regular basis.
Not Obtaining a Land Survey
A land survey is a legal document that defines the property lines of a piece of real estate. It can help prevent encroachments, boundary disputes and easement issues. It can also be helpful for resolving disputes with neighbors or for complying with local building codes and regulations.
Many people assume that they know where their property line is, but this is not always true. For example, a home may sit near a stream that shifts slightly over time due to erosion. Without a survey, this change could cause the homeowner to inadvertently encroach on the neighbor’s property. With a survey, the issue can be resolved before it becomes an expensive legal battle.
It is important to hire a qualified and experienced surveyor for any property survey. Not all surveyors are licensed or certified in their jurisdiction and may not follow the proper standards or methodologies. It is also important to obtain references and previous work samples before hiring a surveyor. A good surveyor will take the time to accurately determine property boundaries and provide a detailed and accurate survey report and map.
Not Obtaining a Zoning Permit
Zoning laws are important to real estate because they dictate what can be done with a piece of property. They also regulate things like where fences, signs, pools and driveways can be placed. Additionally, they often dictate whether or not commercial and residential land uses can co-exist in the same area.
In order to avoid breaking zoning laws, it is important to always obtain a permit before making any changes to your property. In some cases, this is as simple as submitting an application form. However, in other cases it may involve meeting with city officials to discuss the details of your plan.
Regardless of the process, it is important to always be prepared and bring any blueprints, photos, designs or other relevant documentation with you. Additionally, it is also a good idea to bring extra copies of your application because some towns require multiple submissions. Lastly, it is a good idea to hire a permit expediter in order to avoid lengthy delays. They have the knowledge, experience and track record to ensure that your project meets all regulatory requirements.