Troubleshooting Your Home Purchase

Posted March 1, 2011 in Uncategorized by

In Thursday’s blog, we demystified the process of purchasing your first home. But what happens when things don’t go smoothly?

     
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Before buying your first home, take some time to ask your friends and family, "If you had to do it over again, what would you do differently?" It’s a great opportunity to learn from other people’s mistakes.

Personally, I was so excited to buy my first home that I put too much trust in the developer. When I did my final walkthrough prior to closing, there was a list of items that hadn’t been finished. My lawyer asked me if I’d like to delay closing until they were complete, but I had faith in the seller and wanted to finalize the purchase. The lesson I learned? Sellers are much more motivated to fix problems before they have your money. Once they’ve been paid, don’t expect much from them.

Let’s look at some other common problems.

Problem: The home inspection turns up big problems.

Solution: When you make an offer on a home, it should be contingent on a home inspection. If the inspection turns up problems, you then have three options:

  • Ask the seller to fix the problems before closing
  • Ask the seller to reduce the home’s price so you can make repairs after closing
  • Walk away from the purchase

Problem: You’re having second thoughts about going forward with the purchase.

Solution: You need to figure out why you have cold feet. Have you had life changes – such as a new pregnancy or job loss – since you made the offer on the home? Or are you worried that you’re buying the wrong home?

Talk to your real estate agent, financial planner and real estate attorney to help figure out if your fears are well-founded. You also want to understand the legal ramifications if you decide to walk away from the home. You may lose your deposit, but could the seller also sue you for other costs?

Problem: The seller wants to stay in the home for a few days after closing.

Solution: When a seller stays in a home after the sale, there are a host of potential problems it can cause. One of the worst-case scenarios: You have no residence and you have to forcibly evict the seller who will not leave.

There are a few things you and your real estate lawyer can do to prevent problems.

  • Refuse to close on the home until after the seller has moved out.
  • Add a rider to the contract that forces the sellers to pay a daily fee if they remain in the home after the sale has closed
  • Ask the sellers to deposit money into an escrow account, where it will remain until the sellers move out

Problem: There are problems with the home’s title.

Solution: Having a clear title means that the property’s chain of ownership can be documented over the years. If you purchase a home that doesn’t have a clear title, you run the risk that someone else could – at a later date – claim they actually own the home.

Your contract to purchase the home should be contingent on the seller proving there is a clear title to the home. Additionally, a title insurance company provides title insurance, which is a guarantee of the home’s clear title.

The seller may be able to establish ownership of the property through a quiet title lawsuit, which establishes rightful ownership of the property. If the seller cannot provide proof of a clear title and the title insurance company will not offer title insurance, you should cancel your contract to purchase the home.

Problem: When you do your final walkthrough, you discover the seller has removed items you thought were included with the home.

Solution: If, during the final walkthrough, you discover things are missing from the home, there are a couple things you should do.

  • Review the contract to ensure that the seller didn’t specifically exclude them from the home purchase.
  • Have your real estate agent or lawyer contact the seller or his representatives. Did the movers accidentally remove the items? Can you negotiate their return or some other solution?
Related Resources on Lawyers.comsm

- Contact an real estate lawyer in your area for specific legal advice, and read about Selecting a Lawyer
- Access more information about residential real estate law
- Visit the real estate law forum
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