In today’s real estate market, putting your house up for sale is a big move, but knowing the legal ins and outs can bring the deal home. Before you decide to jump into the real estate market, take time to interview brokers. When you hire a broker you are entering into a contract that will most likely give them the exclusive right to sell your house – so you want to make sure they are qualified, have experience with your type of property, and are cutting you a competitive deal. Shop around, ask questions and don’t be afraid to negotiate. There are different types of representation a broker can provide so make sure you get a disclosure in writing.
When it comes to signing on the dotted line make sure you understand when and how much commission the broker will be paid. Most broker agreements state that a commission is due when the broker presents you with a ready, willing and able Buyer. To protect yourself though, you should make it clear in the broker agreement that you will pay a commission only once the property actually transfers to the Buyer at the time of closing and you’ve gotten your money! You also want to make sure your agreement clearly states how long the contract is for and what happens if you sell the property to someone the broker introduced you to after the contract runs out! Make sure you ask your attorney if you have any questions about any of the terms on the broker agreement.
If you’re working with a good real estate broker you may not need to involve your attorney until you get an Offer you are considering accepting. Remember, a signed Offer is a binding contract so you can’t treat signing it lightly! If you want to sell your house “as is” write that into the Offer. Make sure there aren’t unreasonable contingencies the Buyer is trying to slide by. Also, take a careful look at how much the Buyer intends to get for financing. The less the Buyer has to borrow the more likely they will get the mortgage. And that means the better chances you have of the deal going through!
With regards to the Purchase and Sale Agreement (P&S), there are several standard forms out there. Some of them are geared more towards the Seller, others more towards the Buyer. This is where you really need your attorney to step in! For example, you need to make sure you are protected in case the Buyer defaults on the deal. Typically, if the Buyer reneges on the deal, the Seller gets to keep the Buyer’s deposit – but that has to be explicitly written into the Purchase and Sale Agreement. There a many other issues your attorney will want to address such as guaranteeing you an extension of time if there is a defect in your title and limiting what you need to spend if there are defects. Another key issue is what happens to the deposit if there is a dispute as to why the deal didn’t go through. And of course, your attorney will advise you on what warranties you should give and what you are legally obliged to provide
In Massachusetts, septic systems and cesspools must be inspected within two years prior to a sale or within 6 months after the sale if weather conditions make it impossible to do so before. If a system fails, it generally needs to be upgraded or replaced within two years – and most buyers will want that to be the Seller’s responsibility! As to lead paint, if your Massachusetts house was built before 1978, you as the Seller have the legal obligation to provide any prospective buyer with a lead paint notification form that explicitly spells out the lead paint laws in the Commonwealth. Sellers have to give prospective buyers the opportunity to test for lead paint and back out of the deal if it’s found on the property. By law, prospective Buyers have ten days from the date they receive the notification to have the lead paint inspection. There are a lot of rules about lead paint and you could be subject to big fines if you don’t follow them, so make sure your broker and/or attorney are on top of this for you! Here in Massachusetts, Sellers also must follow the State’s rules regarding having enough working smoke detectors and carbon monoxide detectors in the house before it can be sold. Check in with your local fire department for details and make sure you schedule them to come in and inspect in advance of the closing. At the closing, you’re going to need to provide the Buyer with proof of compliance!
Your attorney will draft a new deed transferring the property from you to the Buyer. Ask your broker about when to get a final reading on your utilities, what to do about getting a credit for any oil left in the tank, and other routine matters. At the time of the closing, carefully review the settlement statement (also referred to as a Hud Statement) the bank’s attorney gives you. This is where all the financial aspects of the transactions are listed. Double check any fees being charged to you and make sure the commission rate for the broker is accurate. You also want to make sure the closing attorney is cutting a check out of the proceeds to pay the “tax stamps” due. Tax stamps are a mandatory Massachusetts tax you need to pay when you sell your house. It’s all pretty straight forward, so don’t be overwhelmed. A good broker and real estate attorney will help you bring the deal home!