Buying or selling a home is not just a significant financial endeavor but also a complex legal transaction. Mistakes or oversights in the legal details can lead to costly consequences. Therefore, understanding the critical legal issues involved is essential for protecting your interests throughout this process. Here are three common legal issues you should be aware of and how to navigate them effectively.
1. Understanding the Survey Clause
What It Is: The survey clause in a real estate contract allows the buyer to obtain an updated survey of the property. This survey confirms the current state of the property and any changes that have occurred, such as new constructions or additions.
Potential Costs: If the existing survey is outdated—perhaps due to recent modifications like a new pool or an extension—the seller might be required to obtain a new survey, costing anywhere from $700 to $1,000. This expense decreases the net profit from the sale.
How to Handle It: Sellers should have a recent survey available, and buyers should review it early in the purchasing process. If you’re selling and your survey isn’t up-to-date, discuss with your real estate agent whether updating it preemptively makes sense. Always consult a real estate lawyer if there are any concerns about how this clause is worded in your contract.
2. Navigating the Home Inspection Clause
What It Is: This clause allows the buyer to rescind their offer based on the home inspection results. Improper wording can leave room for the buyer to withdraw from the deal due to minor issues, potentially costing the seller time, money, and other offers.
Potential Issues: If not carefully worded, a home inspection clause can lead to the deal falling through over trivial repair needs, stigmatizing the property as problematic and extending its time on the market.
How to Handle It: The clause should be structured so that the seller has the option to rectify any issues the inspection identifies. This arrangement reassures the buyer of the home’s condition while protecting the seller from a buyer’s change of heart. Ensure your contract is reviewed by a lawyer with real estate expertise to confirm that the wording protects both parties adequately.
3. Dealing with the Swimming Pool Clause
What It Is: In homes with swimming pools, this clause addresses the condition and warranty of the pool at the time of sale.
Potential Risks: The standard wording may overly protect the buyer by providing a broad warranty that survives the closing. This can be unfavorable for the seller if post-closing issues arise.
How to Handle It: Sellers should aim for a clause that verifies the pool is in good working condition at the time of closing, without extending a long-term warranty. This wording supports the seller’s interests while still offering assurance to the buyer about the pool’s condition.
Protecting Your Interests
Whether buying or selling, always work with a qualified real estate agent and seek legal advice from an attorney who specializes in real estate law. These professionals can help you navigate these clauses and others, ensuring your contracts are fair and protect your interests.
By being informed and proactive about these legal issues, you can avoid unnecessary costs and ensure a smoother, more secure real estate transaction.
