Legal Mistakes to Avoid When Buying or Selling Your Home

Buying or selling a home is an exciting milestone, but it’s also a process that comes with many important legal considerations. Navigating residential real estate transactions can be complex, and even small details can lead to big problems if not handled properly. By staying informed and working with the right professionals, you can avoid costly mistakes and protect yourself throughout the process.

In this guide, we’ll highlight three common legal issues that could cost you thousands if overlooked. Taking the time to understand these pitfalls—and how to avoid them—can save you stress, time, and money.

Start with the Right Professionals

Your first step is to assemble a reliable team to guide you. Choose a real estate agent who has extensive experience and knowledge of the buying or selling process. A great agent will also connect you with a reputable real estate lawyer who can ensure your interests are safeguarded at every stage.

3 Common Legal Issues to Watch Out For:

1. Financing Clause

The financing clause is an essential part of any real estate contract, but it can create challenges if not carefully crafted. This clause allows buyers to back out of the purchase if they cannot secure financing within a specified time frame. While this protects the buyer, it can leave sellers vulnerable to delays and potential financial loss.

For example, if a buyer fails to obtain financing, the seller’s home remains off the market during the financing period, which could lead to missed opportunities with other potential buyers. Additionally, if the clause is too broad or lacks clear deadlines, it may be used unfairly to delay the process or allow buyers to back out without genuine effort to secure financing.

To protect yourself as a seller, ensure the financing clause is clearly defined. It should include:

• A specific timeline for the buyer to secure financing approval.
• A requirement for the buyer to provide proof of financing attempts, such as a pre-approval letter or communication with lenders.
• A stipulation that the buyer must inform the seller promptly if financing is denied.

As a buyer, this clause is a safety net, but it’s important to act in good faith and follow the terms. Sellers should consult their lawyer to ensure the clause is fair and balanced, preventing unnecessary risks while accommodating legitimate buyer concerns.

By paying close attention to the wording of the financing clause, both parties can minimize risks and keep the transaction on track.

2. Home Inspection Clause

The home inspection clause can be a dealbreaker if not worded carefully. In the past, some buyers used vague wording to back out of deals over minor issues flagged during an inspection, leaving sellers in a tough spot. Sellers could miss out on other offers, face delays, and even see their home unfairly labeled as a “problem property.”

To protect both parties, this clause should specify that sellers have the option to address any repair items identified in the inspection. This ensures the buyer gets a home that meets proper standards while preventing the seller from losing out due to a buyer’s change of heart. Always have a lawyer review your contract to ensure fair wording.

3. Swimming Pool Clause

If the home has a swimming pool, a clear and specific clause regarding its condition is essential. Some contracts include broad warranties that protect buyers but can leave sellers exposed to unnecessary liability. Instead, sellers may want the clause to state that, at closing, they believe the pool to be in good working condition.

Whether you’re the buyer or seller, it’s crucial to work with a real estate professional and lawyer to ensure the pool clause is fair and protects your interests.

Protect Yourself

By understanding these common legal issues and seeking advice from experienced professionals, you can navigate the real estate process with confidence. Don’t hesitate to ask questions, review contracts thoroughly, and rely on your team for guidance.

Not intended to solicit properties currently listed for sale.