Mooers Realty Maine Real Estate Blog
Title Problems In Real Estate Sales.
What's lurking out there for title problems that affects the enjoyment, value of the land under all the improvements? Legal issues with real estate start when the property is listed for sale. If the seller is aware of them. Often they are there hidden and not always known about in the discussion around the kitchen table during the listing of what's for sale.
If the agent or broker takes the time to look into the deed with the seller's copy or from the registry of deeds.
That talk with the owner about right of ways or easements right up front, whatever the title issue is best handled early on.
We talked earlier about the importance to secure the letter, to get pre-approved for a bank home mortgage loan.
And moved on to what happens when you find the house of your dreams and start down the home ownership pathway. The appraisal process buying a Maine home was discussed in an earlier blog post on this channel too. But this time up is the legal hurdle, the last leg of the home buying routine. Approached once the buyer is approved to buy, the property is appraised and good to go. If the title to the real estate is squeaky clean or can be made that way with checks written and passed out at the property closing.
Legal issues are lots harder to wrestle with then a few credit issues that can often be fixed with an explanation letter, few phone calls and a little check in the mail to make them go away.
Bad FICA scores, high debt ratios, a new job or no credit can impact the getting ready to buy a home in Maine. The house appraisal can come in low and a new valuation can be sought out if the mortgage bank allows for flawed ones.
But the legal issues in a real estate sale don't go away so easily. Unless it is a garden variety property tax lien stuck on the title like a burdock. From years before when someone was slow to pay the taxes on time and a lien was placed against the property after eighteen months passed. And the yearly taxes went in arrears and someones name ended up in the town report.
A discharge of a property tax lien on the real estate for sale is an easy title issue. Getting a release deed for taxes owed that needed payment or that were paid but never released. With the tax lien removed with a simple release deed from the municipality where the property is located.
A title with a minor is a bigger deal for a title issue on the real estate listing for sale. Someone has to be appointed to represent and look out for the minor's interest. Just being a mom and a dad or relative of the title with a minor on it does not allow just stepping in to sign transfer deeds for the real estate sale. A judge has to appoint a representative, a guardian ad litem (GAL). Unless the gift to the minor finds the child over eighteen and able to run his or her own affairs.
What else for legal issues crops up in a real estate sale? Shared wells and driveways or first rights of refusals for a sale.
Life estate for use of the premises or some form of rights to what is being sold. If the owner retains the right to use one portion of the shed or an apartment in a complex rent control locked at a fixed rate as long as they are alive. Or no rent at all as part of the real estate deals happens and the final price for the property reflects the concession.
The legal description in the deed to the real estate reveals a lot. Or very little. Nothing beats a survey plat map and legal description with metes and bounds description. The clearly defined property lines and no shortage of acreage quantity help the real estate sale move along better than anything fuzzy or missing in the the boundaries. The description to the real estate having all the right calls, and closing leaves out the need for negotiation with the neighboring property owner.
Or hunting down the heirs to a property title to sign off or to go through the expensive, slow process to quiet the real estate title.
You know that small print in the Sunday edition of the newspaper that no one reads but that shows up week after week?
That claim to quiet the title searching for heirs you hope you don't find so a judge will waive the magic wand to say you tried your best. To clear the way for a clean title and a property closing. Will your buyer hang around waiting? Usually no if the real estate house sale deal drags as the legal bills increase and the hour glass sand drain rapidly wasting precious time. Everyone ones to get on with their life and housing needs. Couch surfing, sleeping in their car is not an option.
Banks for home loans want to close in six to eight weeks and if more time is chewed up trying to fix title problems to the real estate, then updates to paperwork are needed to lock in more time.
Mortgage rates can climb in the mean time and there goes the house that the buyer wanted to buy that he could afford when the interest was lower for the cost of money to purchase the home.
What other legal issues can mess up the real estate sale?
When the fixtures of a place start disappearing.
The dishwasher was attached, built in and like the trash compactor tucked into the kitchen the same way. Those are not suppose to develop legs and leave. Unless their removal and the hole left behind was part of what was worked out in the real estate sale. Or an allowance for replacement of the items was in the fine print of the real estate purchase and sale agreement.
Spelling out what personal property stays in a real estate sale is a very good practice to avoid misunderstandings later. What is a real estate fixture again?
The property disclosure for the real estate did not mention a heat exchanger in the furnace having a crack in it. That is dangerous, can cause carbon monoxide poisoning. If the seller knew but forgot to mention the material defect in the property disclosure for the real estate, then legal hot water heats up. Is where the home seller is going to end up and maybe court house steps too involved. To seek damages if nothing can be worked out before progressing that far up the legal ladder.
Mediating, not litigating always save money, time, and is less messy because a fair resolution is worked out involving all the parties.
Leaking fuel oil tanks, contaminated private wells for the drinking water, meth labs, etc are not going to help a real estate home sale get to the closing on time or at all. Asbestos wrapped on the heating plant, in floor tiles, siding and elsewhere in a home sale better be disclosed and out in the open.
Never cover up what should be addressed during the home listing and before the real estate closing or worse afterwards. Which is not the time to brooch the delicate subject. Knowing upfront what is wrong with the property is easier to deal with than before not after the sale when tempers get short. And damages are sought in a court of law because someone was not treated fairly.
The septic system that was suppose to be a thousand gallon concrete tank with leach field.
That turns out to be a cesspool 8x8 cedar tie box or a fifty five gallon metal drum. The adding on for more bedrooms that the septic was not expanded to handle. Or no permit for the building was ever written out in the big muncipal book down at town hall.
Negligence comes in three legal flavors in misrepresentation.
Innocent, negligent, and fraudulent. Negligent misrepresentations include failure to disclose significant property flaws out of ignorance; fraudulent misrepresentation is purposefully hiding a property flaw or feature to make the sale.
Legal issues in real estate also involve divorce proceedings that can be underway for sellers who are bloodied, not in the best of moods. When buying, until the divorce decree is hammered out, usually no one is moving forward with another purchase. Same with a sale, because the details of the divorce settlement often are all hinged together.
Especially if one of the parties is in a hurry to make the move and get on with their life.
That urgency will be exploited to gain a better settlement for the one left behind and just coming up to speed with the divorce split developments. Like grade and high school, if makes a difference if you are the dumper or dumpee and if a new mate is in the cards with kids caught in the cross fire of divorce.
Real estate agents, brokers have to be the empathetic guidance to get folks through the divorces that happen to over half of the real estate audience of buyers and sellers.
Estate sales, the fractional interest that is outstanding when a registry of deeds legal search reveals the problems that cloud the title. The legal last hurdle of a real estate sale is a very important one. And the clock is ticking loudly.
Usually the delays caused in getting pre-approved with credit issues and then waiting around for appraisals make everyone a little short by the time the last legal hurdle is approached. Folks that deal with business understand delays. Those that only buy or sell once or twice in a life time do not.
Another legal issue in real estate sales that creeps up deals with splitting land acreage.
If everyone that inherited the property does not want to or can not agree on an equitable split, here comes a delay. The back and forth to suggest how to best make everyone happy on the seller side means dealing with subdivision law restraints and expenses.
One family member could keep a couple acres out of one corner of a hundred acres and the rest of the property transfer can take place.
But if that is not the simple solution, the worse case scenario is petition to partition.
Had four land owners of a 100 acre tract in Maine, kids in a family as adults where three wanted to sell, one did not. The one odd man out thought the family should keep it intact, not sell.
Said their Mom would be disgusted although the other three brothers and sisters did not share the same opinion from the grave.
The court process to get the ruling from a judge to sell for cash, for the highest price available over a set period of marketing time made the sale delayed. But splitting the money was the option arrived at through legal means.
The legal issue with real estate can involve not as much land that is stated in the deed being conveyed on the ground. Maine is a race notice state so if something comes up short, it is the last guy in the dealing out the property deeds who comes up with the runt of the litter for property acreage. If the land is supposed to be 50 acres and 10 acre lots are conveyed to 5 different owners.
If the land is only 42 acres, the last guy getting his deed to record at the registry is going to end up with only 8 acres. Like a bank account, first come first serve is the only fair way to handle the shortage of what is available to convey for land acreage in a real estate sale.
Settling an estate can show liens, undischarged mortgages that need to be settled up with before a closing can take place.
MOOERS REALTY 69 North Street Houlton ME 04730