Every year over 600,000 house sales take place nationally. But if this is your first time navigating the ins and outs of a house sale, you may be wondering about the legal process. Specifically, what legal documents are necessary. Home selling is one of the most important financial decisions, and the paperwork can be overwhelming. Knowing the legal documents required to complete a sale is paramount to a successful transaction. This article will provide a complete overview of the legal documents required to sell a house.
And some tips on making the process run smoothly.
The Purchase Agreement
The Purchase Agreement is an essential, legally-binding contract between a buyer and seller. It outlines all the conditions and rules when selling a house.
It provides both parties with a record of the details covered, and it’s also mandated for every house sale, safeguarding the transaction and holding both parties accountable.
The Purchase Agreement details the terms of a property sale. That includes the following:
- The purchase price
- The closing date
- The earnest money deposit
- Inspection periods
- Financing terms
- Any other specific contingencies
- Contact information for the buyer
- Contact information for the seller
- A legal description of the property
- Any additional relevant information about the property or the sale
The purchase agreement is a crucial document when buying a property. To ensure your successful transaction, always carefully read through the document and ensure you understand the detail.
The Buyer and Seller must work together to draft a legally-binding Purchase Agreement, which must be signed by both parties to be valid. Failure to do so can leave either party vulnerable to potential legal issues.
A real estate attorney is responsible for drafting the purchase agreement in any real estate sale. The timeframe for completion and signing depends on the complexity of the deal.
It can range from several days to a few weeks. Experienced attorneys can handle the process efficiently. They will ensure you have the proper contract and can proceed with the sale.
Earnest Money Agreement
A real estate transaction requires a contract between a buyer and seller to spell out the conditions of the sale. That is known as an earnest money agreement. This legally binding document is crucial in securing a smooth and successful sale.
An Earnest Money Agreement is essential for buyers to demonstrate they are ready to purchase the property. And that they have the backing of a deposit to secure the deal.
It ensures the seller is protected and the buyer is serious about the transaction.
This agreement details all aspects of the sale, including the purchase price, closing date, and any contingencies that must be met before finalizing the deal.
An Earnest Money Agreement (EMA) is a legally binding document but differs from a purchase agreement.
An EMA states how much money will be exchanged up-front, the date of the closing, and any contingencies that must be satisfied before completing the sale.
In contrast, the EMA is less detailed than a purchase agreement; it provides helpful protection for both parties.
Title Deed and Deed Transfer
A title deed is more than just a legal document that establishes a person’s ownership of a piece of real estate. For many, it is a significant investment and a cause for celebration.
Unfortunately, with the rise of fraudulent documents and attempted property theft, title deeds must be protected with added diligence to prevent financial losses and feelings of helplessness.
To ensure your title deed is well-protected, take the necessary steps: search to verify someone’s claim of ownership, use the services of a real estate lawyer, and keep detailed records of all transactions.
Doing so will protect your investment and minimize risks when purchasing real estate.
Amid the excitement of a new property, being vigilant and prepared to secure ownership and protect your investments is essential.
Title deeds indicate a significant life decision and serve as a contract between buyer and seller—a reminder of the importance of security and protection.
Transferring property ownership from one person or entity to another is known as a title deed transfer.
Completing the process requires a deed of transfer. This legal document outlines ownership transfer details, including the parties’ names, the property address, and the date of transfer.
The deed must be registered with the relevant local authority to finalize the transfer. And the title deed must be updated to reflect the new owner.
Property Disclosure Statement
A Property Disclosure Statement is essential for those buying and selling property. It gives buyers information about the condition of the property they are buying.
It also protects the seller by showing that they are being honest.
A Property Disclosure Statement should include details like significant repairs, remodeling done in the last ten years, and any known issues with plumbing, electrical wiring, the roof, and the foundation.
Here’s the most common information you’ll find in a property disclosure statement:
- Property boundaries
- Property improvements
- Zoning and land use restrictions
- Environmental hazards
- Utility services
- Homeowner’s association information
- Homeowner’s Insurance
- Property taxes
- Pest infestations
- Building code violations
This document offers buyers more confidence when making their decision.
However, it should not be used instead of getting a professional inspection. An inspector can provide more specific details so the buyer can make an educated purchase.
Sellers are responsible for writing a Property Disclosure Statement, usually required by the buyer before closing the sale.
This document helps everyone involved in the transaction accurately understand the property’s condition. Correct filing is critical to ensuring a smooth sale.
Homeowner’s Insurance Policy
A homeowner’s insurance policy protects a person’s most significant investment—their home—and their belongings, against losses and damages.
It is designed to provide financial security against natural disasters like fires, storms, theft, and other events outlined in the policy.
A homeowners insurance policy document is required to progress a real estate sale. That is because the lender will require proof of insurance to provide the loan for the purchase.
The lender wants to ensure that the property has adequate insurance in case of a covered event, such as a fire or storm.
Before finalizing any real estate sale, reviewing the homeowner’s insurance policy with the buyer and seller before finalizing any real estate sale is vital.
For optimal protection, the buyer should be given a copy of the policy and reviewed to guarantee that all their needs are met. Reviewing the policy from the seller’s end ensures they’re not liable for any claims after the sale.
To stay safe, both parties should confer with their respective insurance agents to ensure the policy is current and that all coverage limits are suitable.
Mortgage Inspection Report
A Mortgage Inspection Report is a must-have document for potential home buyers and sellers; it verifies the property’s condition before a mortgage loan is approved.
Produced by a qualified inspector, it ensures the lenders that the property is safe and in good condition.
The report evaluates the property’s structure, safety, and other related aspects. It is pivotal in helping buyers and sellers identify potential issues before finalizing the purchase.
A property disclosure statement and a mortgage inspection report may sound similar, but they are very different.
A professional inspector carries out a mortgage inspection report to assess the condition and worth of the property to obtain a mortgage loan. It will include examining the property’s structure, systems, and components.
On the other hand, the seller provides the property disclosure statement to the buyer. It outlines any known issues that could affect the property’s value, like structural problems, environmental hazards, and more.
It is not a comprehensive assessment but a disclosure of known issues.
Certificate of Compliance
A Certificate of Compliance is essential for real estate sales in the United States.
This document verifies that properties meet local zoning laws and building requirements.
It ensures buyers and sellers are protected during the transaction. Compliance is required to close the sale and guarantee a successful investment. In other words, it’s essential when selling a property.
This certificate shows that the seller complies with local, state, and federal laws and regulations. Buyers can rest assured that the home they’re purchasing is up to code, with no hidden liabilities. It offers a guarantee.
A certificate includes essential information such as:
- The property address
- Sale date
- The seller’s name
- The buyer’s name
- Assurance that the transaction complies with all applicable laws and regulations
It’s up to the seller to create this certificate and hand it over to the buyer before the transaction is officially completed. Failing to do that could have serious consequences.
The Legal Documents Required to Sell a House
Now that you know the legal documents required to sell a house, you should have a clearer picture of the home-selling process. It has plenty of challenges, but selling or buying a home can be a rewarding life step.
You also have the option to make the transaction easier and hassle-free. And that’s to choose a cash sale instead. Do you want to find out how much your home is worth? Fill out this form to get your cash offer.