TL;DR
Real estate transactions are among the largest financial decisions most people make. Understanding the legal aspects of buying and selling property can protect you from costly mistakes.
Real Estate Law: A Guide to Buying and Selling Property
Buying or selling a home is one of the most significant financial transactions most people will ever make. Real estate law governs these transactions and protects the interests of buyers, sellers, and lenders.
The Purchase Agreement
The purchase agreement (also called a sales contract) is the foundation of any real estate transaction. It should clearly specify:
- Purchase price and financing terms
- Earnest money deposit amount
- Closing date
- Contingencies (inspection, financing, appraisal)
- What is included in the sale (appliances, fixtures)
- Seller disclosures
Title and Title Insurance
Before closing, a title company or attorney will search public records to ensure the seller has clear title to the property — meaning no outstanding liens, judgments, or ownership disputes.
Title insurance protects against defects in title that were not discovered during the title search. Lenders require lender's title insurance; buyer's title insurance is optional but highly recommended.
The Closing Process
At closing, ownership of the property is formally transferred from seller to buyer. You will:
- Sign numerous documents
- Pay closing costs (typically 2-5% of the purchase price)
- Receive the keys
Common Closing Costs
Buyer's costs:
- Loan origination fees
- Appraisal fee
- Title insurance
- Property taxes (prorated)
- Homeowner's insurance
- Recording fees
Seller's costs:
- Real estate agent commissions (typically 5-6%)
- Transfer taxes
- Prorated property taxes
- Any outstanding liens
Seller Disclosure Requirements
Most states require sellers to disclose known material defects in the property. Common required disclosures include:
- Structural defects
- Water damage or flooding history
- Presence of lead paint (required for pre-1978 homes)
- Environmental hazards
- HOA information
Failing to disclose known defects can expose sellers to legal liability.
When You Need a Real Estate Attorney
While not required in all states, a real estate attorney is invaluable when:
- The transaction is complex
- There are title issues
- You are buying a foreclosure or short sale
- There are disputes between buyer and seller
- You are dealing with commercial property
Find a real estate attorney near you on NinjaLawyers.