If you’re selling a property in the USA, there are a few legal things you need to be aware of. From the legal steps you need to take as a matter of course, to some unexpected legal situations that might come up during the process, here are some of the key legal things you need to know about selling a property.
People buy and sell their homes every day. In fact, the average number of times someone moves home in their lifetime is 11. So if you own your home rather than renting, selling property might be something you’ll become quite familiar with over time. Selling a home requires a lot of logistical planning and paperwork, which is already a lot to get your head around. But there are also a number of legal matters you need to take care of when selling a property.
Here are eight legal facts you need to know about the world of selling homes.
1. Title Deed
In order to sell your property, you’ll need what’s called a ‘title deed’. This is a document that proves you own the property and have the right to sell it. If you don’t have a title deed, or if it’s not up to date, you won’t be able to sell your property. To get a title deed, you’ll need to go to your local land registry office and request one. Title deeds are also sometimes called ‘deeds of conveyance’.
2. Leasehold Arrangements
If you’re selling a property that’s leasehold rather than freehold, things are slightly different. You’ll still need a title deed, but you might also need permission from the landlord before you can sell. It’s always a good idea to check with your lawyer or conveyancer to make sure you have everything you need before putting your property on the market.
3. Partition Action
Related to ownership of the property, if you are the co-owner of a property, there can sometimes be disputes about whether or not you want to sell the property. It is common to have one person who wants to sell, and the other person who does not want to sell. A real estate dispute between partners is something you’ll need legal support with, and a partition action helps the person who wants to sell gain a court order to help them do so.
4. Material Facts
In many states, it is the law that you must disclose any details about the property you are selling, that might affect the buyer’s desire to buy it. These are commonly referred to as material facts. The material facts you should disclose include things about the condition of the property, and there is often a specific form you can fill out (sometimes called a Transfer Disclosure Document). On this form you will need to disclose anything that could affect the value or desirability of the property, and you can face severe fines and penalties if you fail to do this adequately.
5. Escrow Agent
When you sell a property, the money from the sale is usually not paid directly to you. Instead, it goes into what’s called an escrow account. This is a type of bank account that is used to hold funds during a real estate transaction. The buyer pays their deposit into this account, and once all of the conditions of the sale have been met, the money is released to you. An escrow agent is usually a lawyer or conveyancer, and they are responsible for managing the funds in the account and making sure everything is done according to the law. To protect yourself and your money if you are buying and selling a home, you should always ensure you have a reputable Escrow Agent in place.
6. Transfer Tax
Depending on which state you are in, there might be a tax to pay when you transfer the ownership of your property to the buyer. This is called a transfer tax, and it’s usually paid by the buyer rather than the seller. However, it’s always worth checking with your conveyancer or lawyer to see if this is something you need to pay, as it can vary from state to state. Be aware that if you are told the onus is on you to pay any form of transfer tax, you will be legally required to do so in order to proceed with your sale.
7. Sales Contract
Once you’ve found a buyer for your property, you’ll need to draw up a sales contract. This is a legal document that sets out the terms of the sale, and it needs to be signed by both you and the buyer. The sales contract will include things like the price of the property, the date of settlement (when ownership will be transferred), and any special conditions of the sale. It’s very important to make sure you understand everything that is in the sales contract before you sign it, as it will be legally binding. You should also keep hold of the sales contract you had when you originally bought the house. Buyers will usually want to see the paper trail of ownership for peace of mind.
8. Zoning Laws
When you sell a property, the new owners will need to be aware of any zoning laws that might restrict what they can do with the property. Zoning laws are put in place by local governments and dictate how land can be used. For example, a residential area might be zoned ‘single family homes only’, which means the new owners would not be able to run a business from the property. If you are unsure about the zoning of your property, you can check with your local planning department. While you do not necessarily need to supply this information to your buyer, knowing the status of the zoning laws can actually become a selling point for the sale process.