Real Estate Law: Questions to Ask When Buying a Home
Buying a home is an exciting event that can quickly turn into a stressful and complicated situation. Asking the right questions and obtaining good information are the keys to a successful home purchase. This article provides you with answers to common questions asked by home buyers.
I made an offer on a house, but have since found a home that I like better. I no longer want to purchase the house that I made an offer on. What are the consequences if I cancel my offer?
Your options and resulting consequences are based on the status of your offer. A buyer may withdraw an offer at any time without penalty until the seller accepts the offer. However, you have a legally binding contract if the seller has accepted your offer and the terms of the contract will dictate the consequences you will face for terminating the contract. The contract may require that you forfeit your earnest money deposit and reimburse the seller for the broker commissions and other expenses that the seller incurred as a result of your contract termination. The seller may have the right to specific performance. In other words, the seller may have the ability to force you to abide by the contract and close on the house. Ultimately, the specific terms of the contract will determine the resulting consequences of a terminated offer.
We have heard that financial institutions require the home buyer to pay 10% of the purchase price as a down payment. However, we can only afford a down payment of 5% of the price of the home we want to buy. Will we be able to buy it?
Perhaps. Talk with your financial institution as they may be able to get you into a program that will work, especially if you are a first time buyer. It is recommended you talk with your lender BEFORE you sign the offer if you are able to afford a down payment of less than 10% of the price. You may also consider placing a financing contingency in your offer. A financing contingency allows the buyer to get out of the purchase contract if the buyer is not able to obtain the necessary financing to purchase the home.
My fiancé and I are purchasing a home together. What can we do to protect ourselves if we break-up and the wedding does not occur?
You and your fiancé should agree to the handling of the house in the event of a pre-wedding break-up BEFORE making an offer on a home. You may agree to sell the home and equally share the expenses and profits of the sale. Alternatively, one person may remain in the house and reimburse the other party for his or her share of any equity. The person remaining in the house should also agree to release the other party from the mortgage. Whatever the agreement, remember to place the terms of the agreement in writing.
What are deed restrictions?
Deed restrictions are limitations on the utilization of your property. For example, a deed restriction may regulate the type of lighting that you may have on your house. The use of backyard sheds and fences are also commonly addressed in deed restrictions. Review the deed restrictions to confirm that they are compatible with your lifestyle and the intended use of your home. Your dreams of a white picket fence may be dashed by a deed restriction against fences.
We plan to close on a house at the end of December. Our home inspection discovered some defects with the driveway. The seller has offered to repair the defects, but cannot act until the weather improves. Do we have to wait until spring to close on our house if we want the seller to repair the driveway defects?
You have many options in handling this matter without waiting until spring to close on your house. For example, the seller may agree to credit the buyer an amount equal to the cost of repairing the driveway defects. The drawback of this option is that it will not give the buyer cash in hand to repair the defects. This is the reason why some parties choose to use an escrow account. The seller may place money equal to or sometimes greater than the cost of the repairs into an escrow account. The escrow monies remain in the account earning interest until the seller completes the repairs. If the seller should fail to complete the repairs by an agreed upon date, the buyer is entitled to the escrow monies. It is always a good idea to have a written document signed by both parties that outlines the terms of the agreement.
What is a deed?
A deed is a written document that transfers ownership of real estate. This document states the buyer, seller and the legal description of the real estate. The deed should be recorded with the Register of Deeds to give notice to the world of your ownership in the property.
We closed on a home last week and have now discovered flooding in our basement. Is the seller responsible for fixing this problem even though we already closed the sale?
A seller is obligated to disclose any problems with the home within his or her personal knowledge that could affect the property's value or desirability before the closing. You may have legal recourse against the seller if the seller knew about flooding problems in the basement and failed to disclose them to you prior to the closing.
Copyright 2004, Murphy Desmond S.C., All Rights Reserved