Six Important Things You Need To Know About Real Estate Law
You’d think that conveying ownership of real estate would be straightforward and easy to do. There’s an offer to buy and an acceptance by seller. Buyer pays the money, seller gives buyer a deed, and everybody walks away happy. If it was that easy, there wouldn’t be a need for real estate attorneys. Any number of significant legal issues can arise. Some come up with surprising frequency.
Statute of Frauds
Any agreement to transfer an interest in real property is required to be in writing. An oral agreement to transfer that interest isn’t enforceable. This issue is usually seen when parties try to privately sell real estate without using a realtor or lawyers. Neither party will be able to enforce an alleged unwritten real estate contract. Even if not represented by an attorney at time of entering into a written real estate contract, each party should seek their own qualified and experienced real estate attorney to represent them through closing. That’s why most standard real estate contracts contain a provision allowing the respective attorney for each party to approve the contract. If there are gaps to be filled, the attorneys will see them and fill them. It’s a far less expensive proposition than having a judge determine the intent of the parties after a lawsuit.
Authority to sell
All individuals or entities having an ownership interest in the property must sign off on the contract to purchase the deed whether they’re husband and wife, distant relatives or unrelated. Title isn’t passed if seller doesn’t have the legal authority to pass it. You simply can’t sell something that you don’t own.
Property description
The property to be purchased and sold must be adequately described in both the contract and the deed. Dimensions as per survey don’t protect buyers in the contract. Buyers can contemplate dimensions of 300 feet by 300 feet, but the actual survey might be 300 feet by 200 feet. Buyers are stuck with getting less than they they’re paying for. The deed must provide an accurate legal description of the property. A street address is wholly insufficient.
Earnest money
Payment of earnest money at time of entering into a real estate contract demonstrates good faith. If not paid by a certain time or paid with a bad check, there’s a breach of contract. Sellers must protect themselves by requiring strict performance of timely payment of earnest money, particularly if there’s a likelihood of other immediate offers on the property.
Contingencies
Standard real estate contracts usually contain contingencies for things like professional inspections, when buyers will apply for their loan, the loan type and interest amount and when loan commitment will be issued by their lender. Because the parties usually want to close on the transaction as soon as possible, ambitious and premature performance dates often appear that make performance by buyers difficult. Upon realizing this, buyers might exercise a right of rescission of the contract rather than risk failure to perform, possible loss of their earnest money and being exposed to any other remedies that sellers might have under the contract. Reasonable times should be set for performance.
Deed
At time of contract and closing, buyers should insist on a warranty deed and not a quitclaim deed. A quitclaim deed doesn’t even guarantee that seller owns the property. A warranty deed gives a guarantee of merchantable title with no conflicting claims to the ownership of the property. An accurate legal description of exactly what real estate buyers are getting must appear on the deed.
There’s nothing simple about buying and selling real estate. Errors or omissions can be very costly. It’s important to work with professionals to avoid any major problems, say the experts at Doré Law in Houston, Texas.