When most people think of preparing their home for the market, they think of things like selecting the right real estate agent and proper staging. However, there’s more to getting your house in order than esthetics.
Plain and simple, selling your home involves a large amount of money, which means it also involves a sizeable amount of legal regulations that will dictate how the course of your sale will progress. While each seller may have a different reason for marketing their home—divorce, financial troubles, the need for more/less space—protecting yourself from the snares of the selling process is important.
To get you started, here are four steps you can take to avoid some of the common legal missteps of selling a home.
REMEDY ALL DEBTS, ENCUMBRANCES, AND LIENS
Prior to settling with a buyer, you’ll need to make sure that you’ve resolved any debt that your property may have incurred. While the outstanding amount may vary greatly depending upon the homeowner, one thing is for certain: the lienholder will get their money.
Therefore, if you are dealing issues such as a civil court judgement, missed child support payments, unpaid debts, or missed homeowner’s association dues, you’ll need to either pay what you owe or expect that the amount will be deducted from your final sale proceeds on the day of closing.
JOINT TENANTS MUST BE ON THE SAME PAGE
If you’re dealing with a property that has more than one owner—which may be the case if you’ve inherited the property—your options for selling are somewhat narrow. Plain and simple, everyone needs to be on the same page regarding how the proceeds will be split, so you must get consent from all of the owners before the sale. While each state has different regulations regarding how this must be done, suffice it to say that gathering consent can turn into a lengthy and expensive legal process.
Divorce can also be another example of a joint sale of a home, especially if it was owned through joint tenancy. In this instance, both owners will need to sign the transfer deed over to the new owners and must agree to spit the proceeds accordingly.
HOME SALE AGREEMENTS
If you’re in a situation where you’re unmarried and living with a domestic partner, it’s important to understand that, in the U.S., property and ownership rights are not necessarily guaranteed. Therefore, in order to encourage a smooth sale process, it’s important to create a home sale agreement in advance which will clearly set the contract terms for the profit division after the sale.
To accomplish this, make a point to sit down with your partner and establish the current financials of the property, which should include any and all outstanding debt, as well as your asking price and bottom line offer threshold.
While this conversation may feel slightly uncomfortable, taking the time to discuss ownership expectations—including everything from upkeep and improvements to monthly payments and sweat equity—will make the entire selling process go a lot smoother.
From there, it’s important to utilize the services of an experienced attorney (if you haven’t already done so) who can draft a home sale agreement which establishes things like proceed allocations, debt responsibilities, and other terms that require agreement.
GATHER THE NECESSARY PAPERWORK
While this aspect may seem like a bit of a no-brainer, it’s worth stating that gathering any and all important home documents will make sure you’re really ready to sell.
Include things such as:
- Evidence of encumbrances, liens, judgements, etc.
- Repair Documentation
- Real Estate Agreements
At the end of the day, while it would be nice to assume it’s entirely possible for everyone to have a clean debt/legal history before selling their home, that’s simply not reality. Therefore, if you’re dealing with a less than perfect past, make a point to clean up what you can, gather everything in writing, and surround yourself with a team of experts who can help you through the process.
If you’d like some assistance, please contact me. I’d love to help you along the way.
Marie Dinsmore | The Dinsmore Team | www.DinsmoreTeam.com | 770-724-7789