Legal Liability for Construction Defects

The typical construction defect cases is based on the contracts between the homeowner and developer and the contracts between the contractor and subcontractors, including suppliers, architects and engineers, involved in building the home. The goal is to require the party who is responsible for the defect to remedy the situation. The complaint against the defendants typically alleges negligence, breach of contract or warranty, strict liability, and in some instances fraud or negligent misrepresentation may be alleged.
Negligence
The law imposes the obligation upon the developer/general contractor/ subcontractor to exercise the reasonable degree of care, skill and knowledge that is ordinarily employed by such building professionals. The duty of care is extended to all who may foreseeably be injured by the construction defect, including subsequent purchasers. Developers and general contractors are responsible for the negligence of their subcontractor.
Breach of Contract
Homeowners can sue the builder/developer, under theories based upon privity of contract, for breach of any obligation set forth in the purchase and sale documentation, and/or the escrow instructions. Typically, this is something that goes beyond a failure of the builder to build the project in accordance with the plans and specifications.
When such claims are made, courts often invoke the doctrine of substantial performance, which typically requires the builder to pay the contract price with the deduction for the reduced market value of the home/unit caused by the failure of the builder to strictly comply with the plans and specifications.
Breach of Warranty
Similar to breach of contract theories, the purchase documentation between the developer and the homeowner often sets forth warranties regarding the condition of the property. If there is an issue as to breach of an express warranty, the principles of contract apply.
Courts have held that builders and sellers of new construction should be held to what is implied, that the completed structure was designed and constructed in a reasonable workmanlike manner. A builder/vendor is subject to the theory that a home was built for sale to the public to be used for a specific purpose. Privity of contract is not always required under this particular theory of liability.
In some states, homebuyers may waive or builders may disclaim implied warranties. If disclaimers are involved, they are strictly construed against the seller/developer. Typically, waivers are difficult to enforce.
Strict Liability Claims
In most jurisdictions, the implied warranty of habitability imposes strict liability on the general contractor. The theory of strict liability against a general contractor evolved from products liability law. In a strict liability case the plaintiff does not have to prove the general contractor or developer was negligent in the construction of the home. They do have to prove the defendant was involved in the mass production of housing, a defect in the house exists, damages were proximately caused by the defect, and the defendant caused or created the defect.
Fraud and Negligent Misrepresentation
Fraud is alleged on the grounds that the developer intentionally misrepresented the quality of construction in false statements or advertisements. It must be shown the developer had not intention of following the design plans and specifications as promised.
Negligent misrepresentation is based on proving the developer asserted something as factual, but had not reasonable basis for believing the information to be true.

Read more ...

Selling Your Home -- Do You Need a Real Estate Agent?

A major consideration for home sellers is whether they can sell their home on their own or whether they need a real estate agent to oversee the sale.
There are pros and cons for either option. Benefits of selling your home by yourself include, for example, being able to recoup more of the sale from your home because you will not have any commissions to pay. The drawback is that selling a home on your own makes you responsible for knowing and following all of the steps and requirements involved in selling a property.
This article outlines the basics of what a seller needs to do to prepare a home for sale. Review the topics below to help you decide whether or not you need a real estate agent.

Do I need a real estate agent by law?

Although many people think that they need a real estate agent in order to sell their home, there is actually no requirement or law that mandates that you hire on to help you sell your home. However, there are some states that require you to have a real estate agent in order to handle the paperwork that is associated with the closing of the home sale. If you do not know the laws that apply in your state, you should check with your state department to see if you need the help of a real estate agent to close your home sale.

Selling your home by yourself

If you decide to sell your home by yourself, you will be engaging in a process known as "For Sale By Owner." This can be a great way for you to get the full sale price of your home without having to pay commission fees, but along the way you will probably develop a better understanding of why real estate agents charge the commissions they do. You should be prepared for putting in more time, energy and effort that you think you reasonably should.
However, before you put up your For Sale By Owner sign, consider checking out the market in your area. If it is a buyer's market, you will probably have a hard time unloading your home by yourself. This is because you will be up against real estate agents whose sole job is to sell homes, whereas you will have to balance your life and work against putting in time to sell your home. The best time to sell your home by yourself is when there is a seller's market.

Legal considerations for selling your own home

In order to properly sell your home by yourself, you will need to learn about the laws of your state that govern real estate transfers. These laws will indicate what kinds of paperwork you will need to prepare as well as who will need to sign what. In addition, you will need to find out what to do if you find that there are any encumbrances that are on your home and how to handle them. Lastly, some states have mandatory disclosure laws that you will need to follow where you will need to disclose certain physical characteristics of your home.

Listing your home

If you are serious about listing your home by yourself, consider posting your listing online. There are a number of websites around that are dedicated to helping you sell your home on your own.
One of the best things that you can do to get your home sale off the ground is to get your home listed on the Multiple Listing Service (MLS). This is a nationwide service that lists homes for sale that are searchable by area, even neighborhood. There are a number of ways that you can get your home listed on the MLS, such as:

• Hiring a real estate agent to list your home
• Listing your home for free by using websites like http://www.iggyshouse.com
• Using certain low-fee services provided by websites devoted to For Sale By Owner

Using a real estate agent

Although you may not need a real estate agent, there may be times when you can use a real estate agent to help you. Many real estate agents are willing to help those who are planning on listing their home as For Sale By Owner with many tasks including:

• Helping you determine the home market
• Determining an appropriate asking price
• Listing your home on MLS, or
• Assisting in some of the more complex paperwork and transactions.

If you can find a real estate agent that is willing to help you with some of the smaller tasks associated with your home sale, you may be able to work out a compensation plan for the agent that is more to your liking. For example, you could negotiate a smaller commission, or even agree to pay the agent an hourly fee for each hour that he or she works on your home.
There are other options besides hiring a real estate agent as well. Websites like http://www.helpusell.com offer services for set fee amounts that can help you sell your home.

When you need a real estate agent

If you come to the conclusion that listing your home as For Sale By Owner is not your cup of tea, you can always go ahead and hire a real estate agent to sell your home for you. Although he or she will probably take a larger cut that you may like, it may save you time and effort in the long run. Agents are experts in listing your home in the right places and setting up your home to be shown to prospective buyers. However, if you are in no rush to sell your home, you can always take a shot at selling by yourself first before you hire a real estate agent.

Read more ...

Questions to Ask When Buying a Home

What questions should I ask about the offer?
Coming up with questions to ask when buying a home before you make an offer, will help you determine if the home for sale is right for you and if the financial situation of the real estate transactions is right for you. Consider the following questions to ask when buying a home:
How much did the seller pay for the home for sale? The answer to this question will help you evaluate how property values have gone up or down. Additionally, homes in foreclosure are harder to secure financing for until after a period of 90 days.
How much does the seller still owe on the home for sale? If this amount is higher than the asking price, it is likely you are facing a short sale. If it is not a short sale, then the seller will need to bring cash to the closing.
How long has the home for sale been on the market? Knowing that a property has been on the market for more than 60 days will give you more room for negotiation on the price.
How much should I offer for a house for sale?
Whatever offer you come up will be very personal to you and your individual needs. Ask yourself the following questions when figuring an offer amount:

• How much is the house listed for?
• What amount can I feasibly afford?
• How does this listing price compare to other listing prices of comparable houses?
• What is the current climate of the local real estate market?
• Is this houses uniqueness valuable to me?
• What amount do I feel comfortable paying for a house?

Knowing the right questions to ask when buying a home can really help you find the best offer price that matches your needs with the real estate climate.
What is the condition of the home?
Knowing the condition of the home will not only help you determine whether or not to buy it, but it will also help you to come to a realistic offer. For example, if you find that the house has structural issues or poor upkeep, you should consider these issues when calculating an offer price. Some of the more common questions to ask are:
How old is the roof? A roof generally lasts between 15 and 50 years, depending on its materials. If you know how old the roof is, and what type is, you will better be able to determine how long it will last, and calculate that into your offer price.
What type of foundation does the house have--raised or slab? Newer homes usually have slab foundations, but raised foundations allow access underneath the house. This can make electrical and plumbing repairs more accessible and less expensive.
Does the house have insulation? Insulated walls and attics increase the value of the property, especially in colder climates.
When were the appliances and systems last replaced or updated? Also consider how old the appliances are, as some cannot be repaired due to the fact that parts are no longer available.
Buyer Beware: Caveat Emptor or "buyer beware" is a long-standing law that puts responsibility on the buyer to learn of any defects of the home, even if such defects render the home unfit. If you wait until after closing, it is too late. Many jurisdictions do require of sellers a standard of quality, but this can be very hard to enforce. This is why when considering what questions to ask when buying a home, asking about the conditions that will have the greatest effect on the homes fitness is important. The only exception to this doctrine is if the seller intentionally tried to conceal the defects. This caveat applies only to homeowner-buyer transactions, and not builder-buyer transactions.
Implied Warranty of Fitness: This doctrine applies to builder-buyer transactions and places responsibility on the builder/seller to ensure that the property is fit for habitability.
What is a house closing?
The house closing is the final transfer of the ownership of a house from the seller to the buyer, which occurs after both have met all the terms of their contract and the deed has been recorded. This term can also be used to explain the timing of when the deed/ownership of the house will be transferred to the new owners. The closing usually takes place at the office of someone like a title officer, escrow officer, or real estate lawyer--someone who is licensed in initiating the transaction and purchase agreement.
Do I need an attorney to create a real estate transaction contract or purchase agreement?
Each state varies. In some, attorneys are not usually involved and the parties use an escrow company instead. In other states, each party has an attorney who handles all of the details of the offer and the closing. Be sure to check on your local jurisdictions laws. You can find more information at your states department of real estate or you can ask a real estate broker.
What is seller financing?
Sometimes, if you are unable to get a loan from a commercial lender or bank, the seller will loan you money to buy the home. A seller who wants to spread the income from the home over a long period of time may be more willing to do this. There are two methods of seller financing:
The first method occurs when the seller takes back a mortgage on the home. The buyer signs a promise to repay the loan AND either a mortgage or deed of trust. Both of these would allow the seller to foreclose on the buyer should the buyer default on the payments of the purchase agreement. The seller then transfers the deed to the buyer. Therefore, the buyer has title and can sell the house or refinance it, just like if he or she had obtained a mortgage from a bank or commercial lender (as long as the buyer keeps current on the payments described in the purchase agreement).
The second method is like a "rent to own" contract. The seller keeps the title until the buyer pays off the loan. After the loan is paid off, the seller transfers title to the buyer through a deed. This type of purchase agreement is called different names such as "contract for deed," "contract of sale," "land sale contract," or "installment sales contract". Because the title is not transferred to the buyer until later, the buyer does not have the power to sell or refinance the property, until after he or she pays off the loan and title is transferred. Because of this limited power, this second method is less popular than the first.

Read more ...

Types of Home Ownership

Fee Simple

The most common form of ownership, when a homeowner purchases a home, is the fee simple absolute. The holder of a title in fee simple has full possessory rights now and in the future for an infinite duration. There are no limitations on its inheritability. The holder of the estate can sell the entire estate or any part of it and dispose of it by will at time of death. When a condominium or townhouse is purchased, the owner typically purchases the residential unit in fee simple and obtains the right to use the common areas. Each unit has its own tax bill, deed, mortgage and ownership rights but shares in the maintenance of the common areas.

Joint Tenancy with Right of Survivorship

In this type of title each owner holds an undivided share of the estate. There is a right of survivorship which means on the death of one joint owner, the surviving owner or owners retain an undivided right to the entire estate, which is not subject to the rights of the heirs of the deceased co-owner.

Tenancy in Common

In a title held as a tenancy in common, each owner has an undivided interest in the entire property. Each tenant has the right to possession of the whole property. There is no right of survivorship. Each tenant has a distinct proportionate interest in the property, which passes by succession. There is a presumption that a conveyance to two or more persons is a tenancy in common.

Tenancy in the Entirety

This is a marital estate, which can only be created between a husband and wife. It is similar to a joint tenancy except that the right of survivorship cannot be destroyed, since severance by one tenant is not possible. An existing marriage is requisite for a tenancy by the entirety. In many states there is a presumption that a tenancy by the entirety is created in any conveyance to a husband and wife. This type of title is considered somewhat archaic and the majority of states have abolished this type of tenancy, favoring instead that the couple take title to the property as joint tenants with right of survivorship

Read more ...

Checklist to Help You Decide if You're Ready to Buy A Home

Buying a home is a big step in your life, especially if you have never owned a home before. The following checklist is intended to help you decide whether now is the time for you!
Your Work History

• Have you been steadily employed for the last two years?

• If you have recent gaps in your employment history, what caused them?

• If you changed jobs, did your pay match or exceed the pay from your old job?

• Has you income fluctuated during the last two years? Why?

Your Credit History

• Do you pay your bills on time?

• Do you carry large balances on your credit cards?

• Have you ever defaulted on a loan (including your student loans)?

• Have you obtained copies of your credit report directly from all three of the companies that collect the data lenders depend on? The companies are Equifax, TransUnion, and Experian (formerly known as TRW).
  • What do your credit reports say?
  • Are your credit reports accurate?
  • Are there items on your reports that a lender might deem unfavorable to you?
  • If you currently have loans you owe, do you send in the monthly payments?
  • If you have long-term loans, how long do you have to pay them off?
  • Do you pay your rent on time?
  • Have you every had property repossessed?
  • Have you ever had a bank foreclose on your house?
  • Have you ever had a creditor turn your account over to a collection agency?
  • Has a court entered a money judgment against you that you haven't paid?
  • Have you ever filed a bankruptcy petition? How long ago?
  Saving Money
  Have you been saving money for your down payment and closing costs?
  
  • How much have you saved?      
  • Are you setting aside money on a regular and consistent basis?
  TIP: The down payment usually is at least 5% of the price of the house you want to buy.
  TIP: You could save your money in a financial account that pays more in interest than a regular savings account and your money will grow faster.
  TIP: Your employer may have direct-deposit options for you, and you could designate a set percentage of your check to be deposited directly into your down-payment account every time you get paid.
  How Much Can You Afford?
  Lenders have legal limits on how much money they can lend you, so you need to have a good understanding of where your dream home fits within those limits. The amount a lender can lend for a mortgage depends on how much you earn and how much you spend each month.
  
  • Lenders look at the total amount you pay for housing each month, add costs like property tax, insurance premiums, and any homeowners' association fee and compare it to your monthly gross income. They generally try to keep the amount of the loan low enough so your monthly housing costs do not exceed 28 percent of your monthly gross income.
  • Lenders also look at your other long-term debts, such as your car loan, student loans, credit-card debt and the like to see what other monthly payments you have to make. They add these monthly costs to your monthly housing cost, and compare the total against your gross monthly income. These two kinds of costs taken together should not exceed 36 percent of your gross monthly income.
  • If your gross monthly income and your debts exceed these two guidelines, you'll need to adjust your expectations. You will need to decide whether to wait until your cash flow improves and your savings are larger, or whether you should set your sights on a lower-priced house.
  Getting Prequalified for a Loan
  A smart buyer starts shopping for a loan before he or she starts looking for a house, and certainly before making any offers! Being pre qualified means that a lender has looked at your finances and credit history and has decided that you can get a loan, and how much you can borrow.
  
  • When you're prequalified, you may speed your search for your home because you will be able to focus on homes in your price range.      
  • When you're prequalified and you find your home, you will be able to make an offer you can stand behind. People who aren't prequalified make offers contingent on getting a loan. If you were the seller, wouldn't you rather work with somebody you know can get financing?

Read More http://www.onlinelegalnews.net/c/real-estate-law.html

Read more ...