Common Legal Issues for Home Sellers

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.

One of the problematic areas for home sellers concerns what a seller should disclose about a home’s condition to a potential purchaser if there are defects the purchaser should know about, and nearly every state in this country, including Michigan, has laws that requires 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.

In Michigan, the disclosure laws are actually 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 actually state there is a problem. But a seller usually isn’t required to seek out any problem or problems that they are not even aware of.

However, a seller is required to disclose issues when the seller knows about a problem area or has a reason to know –then a seller is going to have a duty to disclose. So misrepresentations or lies about a homes condition are really never acceptable.

If you have to ask if you should be disclosing something or you should not be disclosing something, you’re really best to disclose.

Another issue that home sellers in Michigan deal with concerns whether the real estate agent acts as a “procuring cause” for a sale. Now 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 the 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 actually who close on a transaction and who had come through and had seen 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 it actually really on a very regular basis these days.

The third issue for sellers, that is very common, concerns, seller credits or money owed. This creates a lot of 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, does the past due payment, if it’s ever paid by the tenant- who does that 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. That’s the purchaser. This situation can be avoided if you have an attorney who can address those issues. Another related issue that is very common, concerns the application of tenant security deposits -this creates a lot of contention.

It’s really important to have an attorney review and draft provisions in the purchase agreement that would address these issues. So I’ve just gone through three of the very common issues that home sellers in Michigan encounter.

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