In today’s tight economy, many homeowners try to sell a house without listing it through a realtor. This For-Sale-By-Owner (or “FSBO”) sale can save you thousands in commissions if you can find a buyer on your own. However, important legal issues arise when you sell your home.
In order for an agreement to sell real estate to be binding, it must be in writing. The purchase agreement should contain the specifics of the transaction, such as the sales price, the closing date, the financing terms for the buyer, and any special contingencies, such as seller-paid closing costs or the sale of the buyer’s home. The purchase agreement should also spell out the rights and remedies of the parties and under what conditions the transaction can be canceled.
Iowa law requires that the seller provide a written disclosure statement to a purchaser. The seller’s disclosure statement is required even if a property is being sold in “as-is” condition. For homes built prior to 1978, a lead-based paint disclosure statement is required by Federal law. New legislation requires that a seller inform a buyer about radon testing.
Once you have a buyer, you should locate your original abstract to your property. This is a key item that will cause delays if not processed quickly. The abstract of title must be brought up to date and the buyers and sellers must be searched to identify any adverse liens and judgments. The abstract will then be examined by an attorney on behalf of the buyer. There may be title issues to address, such as the death of a titleholder or judgments against a person of a similar name.
Once a title opinion has been generated, you will need to execute a deed and other supporting documents to transfer title to the new buyer. The recording statutes have very specific requirements for the format of the deed and is it vital to correctly vest title. The deed must be accompanied by a declaration of value, which is delivered to the local Assessor’s Office. A groundwater hazard statement is required on all properties to disclose potential groundwater contamination. If the home has a septic system, a new law requires that the system be inspected prior to sale.
Selling a home involves more than shaking hands on a price. Finding a buyer is only the first step through the legal process.