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There’s a lot at stake, financially and legally, when you’re buying or selling a home. Being a homeowner also creates certain obligations. The Justia Home Ownership Center highlights some key issues and concerns to keep in mind.
Becoming a homeowner is exciting, but paying off the mortgage is not. One lucky Arizona resident got some unexpected help with his mortgage payments earlier this year. Spyro Malaspinas netted a staggering $500,000 for renting his home in Paradise Valley for one week in February. His “tenant” was the award-winning singer Rihanna, who performed at the halftime show of the Super Bowl in nearby Glendale. Malaspinas said that the rent would pay off two years of his mortgage on the five-bedroom home. He also received offers to buy the house in the aftermath of the Super Bowl.
Most people will not get help from Rihanna in paying off a big chunk of their mortgage, but some homeowners try to get rid of this obligation ahead of schedule. Paying off a mortgage early might involve formally restructuring the loan into a shorter term with a larger monthly payment. Or a homeowner simply might make larger payments than what the mortgage requires, or an extra payment each year. If they do not officially adjust the loan terms, they should make sure that the company handling the mortgage correctly processes and records the extra payments.
This is just one of many issues that can arise for homeowners, who should understand their rights and options. To help them, the Justia Home Ownership Center aims to identify some of these issues and offer suggestions for resolving them. The Home Ownership Center at Justia also discusses common concerns that can arise from the process of buying or selling a home.
Buying a Home
Someone considering buying a home should make sure that they can afford to take this step. Homeownership involves various costs beyond the price of the home, such as property taxes and insurance. A prospective homeowner also should take their time finding the home that is right for them, considering issues such as safety, convenience, and zoning rules. Working with a real estate agent can help simplify this process.
The home buying process starts once a prospective buyer has found a home that suits their needs and priorities. Some of the main steps include making an offer to the seller, negotiating the price and other terms, finalizing the purchase and sale agreement, and going through the closing. A buyer also will want to have the home inspected by a professional to identify any issues that they may not have found when they walked through the home. If an inspection identifies major issues that the buyer did not find, they may want to reconsider buying the home, or they may want to ask the seller to handle the repairs or lower the price of the home.
The purchase and sale agreement sometimes combines a standardized form with more specific provisions that the buyer and seller determine. It will identify the parties, the property, the price, and the closing date. The agreement will describe financial components of the transaction like the down payment, the earnest money deposit, the loan, and various fees related to the closing. It also will provide for contingencies, which are conditions that must be met before the deal can go through as planned. For example, contingencies often involve the home inspection discussed above.
Owning a Home
Getting through the closing can be a big relief, but owning a home involves significant obligations as well. Among the most important is keeping up with mortgage payments, which are usually due in monthly installments until the mortgage is paid off. If a homeowner fails to make these payments, they could risk losing their home through foreclosure unless they can work out a loan modification or another solution with the lender.
A homeowner also will need to pay taxes to the local government based on the value of their property. If they disagree with the valuation of their property by the taxing authority, they can challenge the assessment. Another obligation consists of paying homeowners’ insurance premiums. A homeowner should understand what their policy covers and consider whether they may want to buy additional policies for other risks. For example, they might want special coverage for flood damage if floods often occur in their area.
Most homeowners will need to coexist with neighbors. Problems can arise when neighbors have different lifestyles or purposes for using their properties. A homeowner often can resolve a dispute informally, but they may need to report the neighbor to the authorities or take legal action if the neighbor ignores their concerns. If the neighbor is doing something that unreasonably interferes with the use and enjoyment of the property, such as failing to control excessive barking by their dog, a homeowner might use a legal theory called “nuisance” to get a remedy from a court.
Selling a Home
A homeowner may decide to sell their home if they relocate, change their job, or go through another life change. Some sellers handle the process on their own, while others prefer to work with a real estate agent who can handle the logistics. A seller should make sure that a prospective buyer has a good first impression of the home. They might use staging techniques that call attention to its most appealing features. They also might retain an inspector (separate from the buyer’s inspector) to identify issues that they may want to repair before prospective buyers visit.
A seller will need to carefully calibrate the price at which they will list their home. This involves estimating the market value of the home and analyzing whether the market in the area currently favors buyers or sellers. Sometimes a seller sets the listing price slightly below the market value of the home in an effort to attract multiple prospective buyers, who then might bid up the price as they compete for the home. However, the price is not the only factor to consider when a seller receives an offer for their home. They also should consider issues such as the contingencies that would need to be met before the deal goes through.
Many states require a seller to make certain disclosures to a buyer, and this may be wise even if it is not required. Disclosures are more detailed in some states than others, but often a seller will need to report on the condition of safety features, utilities, and any improvements to the property. Sometimes they may even need to provide information about the surroundings more generally, such as crimes in the area. If a seller fails to disclose a material defect, even if they unintentionally forgot, they may be liable to the buyer for substantial damages.
For many people, buying or selling a home is the most significant transaction in which they will ever be involved. Meanwhile, problems that come up while owning a home can have a significant impact on emotional and financial wellbeing. To make sure that their interests are fully protected, a buyer, seller, or homeowner may want to consult a real estate attorney who can provide them with advice tailored to their specific situation. More generally, the Home Ownership Center provides an overview of some key legal, financial, and practical concerns that can arise in this area. Like the other Justia Legal Guides, it aims to make the law transparent and accessible to all.Related Posts
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