Common Legal Issues for Home Sellers

There are so many legal situations that can arise when selling a home. Here’s just a few of the more common issues that Michigan home sellers face.

Seller Disclosure Form

One of the problematic areas for home sellers concerns what a seller should disclose about a home’s condition if there are defects the purchaser should know about. Nearly every state in this country, including Michigan, has laws that require sellers to advise buyers of certain defects in the property. This is done typically by filling out a standard home seller’s disclosure form. The form usually has to be completed before the sale is completed.

Michigan Disclosure Laws

In Michigan, disclosure laws are more comprehensive than other states. Sometimes there’s a feature that isn’t even listed on the home seller disclosure list, yet the seller may still be required to state the problem. A seller is usually not required to seek out any problems they are not aware of.

Duty to Disclose

A seller is required to disclose issues when they know about a problem area or has a reason to know –then a seller has a duty to disclose. Misrepresentations or lies about a home’s condition are never acceptable. If you have to ask if you should or should not be disclosing something, it’s best to disclose.

Commission to Former Agent

Another issue that home sellers in Michigan deal with concerns whether the real estate agent acts as a “procuring cause” for a sale. That’s a pretty common issue these days, especially in a very active real estate market. Sometimes a home will be listed by an agent and there are showings to potential buyers, but then a listing for that agent expires or the seller fires that agent and gets a new agent. The former agent is entitled to a sales commission for those potential purchasers or those purchasers who close on a transaction and who had come through the property. If they’ve gone through the home with the former agent within 180 days on average from the closing date, it can be a really big issue. So whether an agent is the procuring cause for a real estate transaction creates many disputes. I see this on a regular basis.

Late Payments or Money Owed

The third issue for sellers, that is common, concerns seller credits or money owed. This creates disputes, especially when it involves an investment property. For instance, who does a past due rental payment belong to? When we’re dealing with the investment property, and a tenant is not paying the seller, but then the seller conveys the property to a new owner; who does the past due payment belong to? Does it belong to the seller or does it belong to the buyer when the tenant finally pays? Without a provision in a purchase agreement to the contrary, late payments will belong to the new owner.

Tenant Security Deposit

Another issue concerns the application of tenant security deposits. This creates a lot of contention. It’s very important to have an attorney review and draft provisions in the purchase agreement that would address these issues.