Are you looking to sell your home? Be prepared. Without proper documentation to back it up, selling a home can quickly become a legal nightmare.
The truth is, there’s a lot more paperwork to selling a home than most people think. Even tiny errors in documentation can delay or even derail a home sale.
With over 4 million homes expected to be sold in 2024, you would think that the process of buying and selling a home would be flawless by now. But home sales come with a lot of legal red tape, and even the smallest issue can jeopardize everything you’ve worked hard for.
In this ultimate checklist, we’re going to give you all the details on the legal documentation you need to be aware of when selling your home. So, whether you’re a first-time home seller or a seasoned real estate veteran, read on to make sure you have everything you need to keep your home sale from falling through at the last minute.
You’ll learn:
- The key legal documents every home seller should have
- The title issues that can scuttle your sale
- Expert tips for protecting yourself from legal issues
- The hidden costs of improper documentation
The State of Legal Documentation for Home Sales
Selling your home is a major financial transaction. It’s not something you want to try to do without professional help.
And for good reason.
Selling a home is one of the most important decisions you’ll make, and the potential legal headaches can be staggering if you don’t know what you’re doing. The issue is, most homeowners have no idea what documentation they actually need until they are well into the home-selling process.
That’s why working with a professional real estate agent at Two Rivers Properties can be so important when you need expert advice. They can help guide you through the home-selling process and make sure you have all the legal information you need when selling or buying a house.
The Legal Documents You Need to Know About
There’s a lot of legal information to be learned when selling a home. But to keep your sale from falling through, there are several key documents you need to know about. Let’s break them down.
Property Deed
Your property deed is your home’s birth certificate. The deed proves you legally own the property and have the right to sell it.
The issue is, small errors in the deed can cause huge problems. From misspelled names to incorrect property descriptions to missing signatures, problems with the deed can lead to big legal issues and unexpected expenses.
Title Search and Title Insurance
Did you know the average title insurance claim between 2012 and 2016 was $427,650? I’ll say it again: the average claim paid out by title insurance companies was $427,650.
A title search is a review of public records dating back decades. The goal of a title search is to make sure there aren’t any unexpected surprises lurking in your property’s history. Title insurance protects you and the buyer if any issues come up after the sale.
Property Survey
A property survey shows the exact location of the property lines. Simple, right?
Wrong.
Boundary disputes between neighbors can lead to expensive legal battles that can kill your home sale.
Disclosure Documents
Disclosure documents are another thing most people have no idea about until it’s too late.
In most states, sellers are legally required to disclose any known issues with the property. Failure to disclose known defects can lead to lawsuits from buyers even years after the sale has gone through.
Title Issues That Can Kill Your Sale
Listen up.
Title issues are the most common reason home sales fall through. In fact, fraud and forgery make up 21% of the total amount spent by title insurance companies on claims.
Here are some of the most common title problems that can torpedo your home sale:
- Liens you don’t know about. Previous owners may have had unpaid debts that are now attached to your property. Tax liens, contractor liens, even unpaid HOA fees can all prevent a sale.
- Ownership disputes. Unknown heirs might surface who claim they have some right to the property. Or, previous transfers weren’t properly recorded.
- Documentation errors. Something as simple as a missing signature or incorrect legal description can invalidate your deed.
The worst part? These issues often don’t come to light until you are deep into the selling process, which causes major delays and sometimes forces the sale to fall through completely.
Protect Yourself From Legal Disasters
Want to prevent these problems? Follow these three steps:
Start early.
Don’t wait until you have a buyer to start gathering legal documentation. Start at least 30-60 days before listing.
Get professional help.
An experienced real estate attorney can often spot potential problems long before they become a deal killer. It costs money to hire a real estate lawyer, but it’s nothing compared to the cost of a failed sale.
Order a title search as soon as possible.
Doing this early in the process will give you time to work on fixing any issues that come up. Some problems may take weeks to resolve.
Hidden Costs of Inadequate Documentation
Want a shocking statistic?
Homes sold “For Sale By Owner” (FSBO) stay on the market 19 days longer and sell for 19% less than homes sold through real estate professionals on average.
Think about it.
Because FSBO sellers are so much more likely to run into legal problems during or after the sale. And in real estate, as in most things, the math doesn’t lie.
On a $400,000 home, that 19% difference means $76,000. That’s a lot more than any commission you’re “saving” by selling the home yourself.
When to Hire a Real Estate Attorney
Look, selling a home is one of the biggest financial transactions you’ll ever make.
It’s not the time to gamble and figure it out for yourself
So when should you get professional help with the legal side of home selling? Here are a few situations when an experienced real estate attorney can be a game-changer:
- Your property has changed hands multiple times
- Major renovations or additions have been made
- Boundary disputes with neighbors exist
- You inherited the property
Expect to pay an attorney anywhere from $200-$400 to handle a basic residential transaction. When you consider the average title insurance claim is $427,650, it’s a no-brainer which option makes more sense.
Do You Have the Documentation for Selling Your Home?
There you have it. Everything you need to know about legal documentation and selling your home. Remember, just because you’ve never run into these problems doesn’t mean they aren’t coming. The reality is, poor documentation for home selling is the number one reason sales fall through at the last minute.
Home sellers working with experienced real estate agents at Two Rivers Properties benefit from expert advice on all things legal information about selling a house. And when your home is worth everything to you, don’t you think it’s worth it to get professional help?
If you’re thinking about selling your home and want to avoid all the legal pitfalls that can catch you unaware, give Two Rivers Properties a call. We’re experts in helping homeowners make sure they have the legal ducks in a row from day one, and we’d be happy to help you.
Final Thoughts on The Legal Documentation Checklist for Selling Your Home
Legal paperwork is boring, but it’s also the most important part of selling your home. Here are the three takeaways to remember:
- Start gathering all the necessary legal documentation at least 30-60 days before listing your home for sale.
- If you’re at all unsure about legal issues, don’t be afraid to get professional help. It could save you a ton of money and heartache in the long run.
- Title insurance is well worth the investment to protect you and the buyer from any title issues that might pop up.
These few hundred dollars in up-front legal costs are nothing compared to the tens of thousands you could lose (and the headaches you’ll face) if something goes wrong later on.
A home sale isn’t just about finding the right buyer. It’s about making sure you have all the legal information in place from day one.
William Gall is a seasoned attorney specializing in civil litigation and family law. With a legal career spanning over two decades, William has built a reputation for his meticulous attention to detail and his unwavering commitment to justice. In addition to practicing law, he is a prolific writer, contributing regularly to various legal blogs where he shares his insights on current legal trends, case law, and best practices. His articles are well-regarded in the legal community for their thorough research and practical advice, making complex legal concepts accessible to both legal professionals and the general public.