Types of Construction Defects

Construction defects usually include any deficiency in the performing or furnishing of the design, planning, supervision, inspection, construction or observation of construction to any new home or building, where there is a failure to construct the building in a reasonably workmanlike manner and/or the structure fails to perform in the manner that is reasonably intended by the buyer. Some of the most common and high-cost construction defects include:

• Structural integrity - concrete, masonry & division, carpentry, unstable foundations
• Expansive soils
• Mechanical
• Electrical
• Water intrusion (often resulting in toxic mold)
• Thermal and moisture protection
• Doors, windows and glass
• Finishes

Generally, courts categorize construction defects in one of four categories: design deficiencies, material deficiencies, construction deficiencies, or subsurface deficiencies.
Design Deficiencies
Design professionals, such as architects or engineers, who design buildings and systems do not al ways work as specified, which can result in a defect. Typical design deficiencies relate to building outside of the specified code. Roofs are an example of a typical design defect that result in water penetration, intrusion, poor drainage, or inadequate structural support.
Material Deficiencies
The use of inferior building materials can cause significant problems, such as windows that leak or fail to perform and function adequately, even when properly installed. Window leaks can result from many things including, rough framing not being flush with outside at openings, improperly flashed windows, improperly applied building paper, window frame racked during storage/moving, lack of sheet metal drip edge above window header, etc. Common manufacturer problems with building materials can include deteriorating flashing, building paper, waterproofing membranes, asphalt roofing shingles, particle board, inferior drywall and other wall products used in wet and/or damp areas, such as bathrooms and laundry rooms.
Construction Deficiencies
Poor quality workmanship can result in a long list of defects. A typical example is water infiltration through some portion of the building structure, which may create an environment for the growth of mold. Other problems include cracks in foundations or walls, dry rotting of wood, electrical and mechanical problems, plumbing leaks, or pest infestation.
Subsurface Deficiencies
Expansive soil conditions are typical in California and Colorado, as well as other parts of the country. Many houses are built on hills or other areas where it is difficult to provide a stable foundation. A lack of a solid foundation may result in cracked foundations or floor slabs and other damage to the building. If subsurface conditions are not properly compacted and prepared for adequate drainage, it is likely the property will experience problems such as improperly settling to the ground (subsidence), the structure moving or shifting, flooding and in many cases more severe problems such as landslides.

Read more ...

Construction Defect Basics

A house is generally a homeowners' single most valuable financial investment and one of the most important emotional investments. To them it is more than bricks and mortar; it is the place where they live, rest, and raise their families. Unfortunately, hundreds of thousands of unsuspecting homeowners realize their new homes suffer from some type of construction defect that will cost thousands of dollars to repair, depreciate the value of their home, or force them to leave their home.
Defects in construction cover a broad spectrum from minor problems like popped nails and peeling paint to situations when a house must be bulldozed. Some cases involve leaky windows that have led to toxic-mold contamination. Other problems include faulty design, code violations, cracked foundations, substandard workmanship, and unsafe structures.
The number of construction-related cases surged during the housing bubble that ended in 2008, since houses were being constructed in record numbers to meet the high demand. Many general contractors are inexperienced and others mass produce thousands of houses. The home construction industry is intensely competitive. Many builders respond to the competition with low bids for contracts, then cut corners, and frequently employ unskilled or overworked subcontractors and poorly supervise subcontracted work. At a time when government regulation is more important than ever, government inspection departments do not have the funding to adequately inspect homes and often approve below-par construction. The combination of these factors results in homes that are built with serious defects.
Limits on Potential Claims
Most states impose time limits on construction defect claims by Statutes of repose and Statutes of limitations. Statutes of repose specify the time period within which a cause of action can arise at all. Under these statutes, the limitation period may expire before the plaintiff's cause of action has arisen. Conversely, statutes of limitation foreclose suits after a fixed period of time following occurrence or discovery of an injury. These statues are complex and vary from state to state. It is critical that you seek the advice of an experienced attorney if you believe the damages to your home are the result of a construction defect before you lose your right to seek a remedy from the responsible parties.
In most states the time limits begin to run when the defect is discovered, or should have been discovered by a reasonable person. If the defect is patent, or apparent based on reasonable inspection, the action against a defendant must begin within the time period specified by state law. If the defect is latent, or not readily apparent by reasonable inspection, any action to recover damages generally must be within ten years after improvements are substantially completed.
Conclusion
Construction defect litigation is complex. It may involve several defendants, include insurance companies and involve many legal theories. Most states impose complex time limits on when a claim may be brought. If you believe your home suffers from a defect caused by the builder, or another party, protect your rights. Talk to an attorney with experience in this complex area of law.

Read more ...

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 ...

Do I Need a Lawyer to Buy a House?

Buying a home will probably be the largest and most significant purchase you will make in your life. It also involves the law of real property, which is unique and raises special issues not present in other transactions. So while you don't need a lawyer to buy a house, it may be beneficial for a number of reasons. See FindLaw's lawyer directory for a list of local real estate attorneys, which some states certify as "Real Property Specialists." 
This article focuses on the reasons a home buyer may want to hire an attorney. See FindLaw's Buying a Home section for related articles and resources.

The Home Buying Process, in Brief 

In the typical home purchase, the seller enters into a brokerage contract with a real estate agent, usually in writing. When the broker finds a potential buyer, negotiations are conducted through the broker, who most often acts as an intermediary. Once an informal agreement is reached, buyer and seller enter into a formal written contract for the sale, the purchase agreement. The buyer then obtains a commitment for financing. Title is searched to satisfy the lender and the buyer. Finally, the property is transferred from the seller to the buyer, and the seller receives the purchase price bargained for in the contract. This seems simple, but without a lawyer, the consequences may be more disastrous than purchasing a car that turns out to be a lemon, or a stock investment that was unwise.

The Brokerage Agreement: How a Lawyer Can Help 

Having the help of a lawyer when buying a house can help you avoid some common problems. For example, a seller may sign a brokerage agreement that fails to address a number of legal problems. This happens quite often. Realtors often use standard forms, expecting that they will cover all circumstances or will be easily customizable for unusual circumstances.
But in the absence of an agreement to the contrary, the seller may become liable to pay a brokerage commission even if a sale does not occur, or to pay more than one brokerage commission. If the agreement allows the seller the right to negotiate on his or her own behalf, for example, you may avoid this problem. A lawyer can explain the effect of multiple listings. He or she can negotiate the realtor's rights if the seller withdraws the property from the market, or can't deliver good marketable title.
The seller should have the advice and guidance of a lawyer when buying a house with respect to a brokerage agreement. Even if the agreement is a standard form, its terms should be explained to the seller and revised, if necessary. An attorney should also determine if the agreement was properly signed.
Even if a lawyer is not needed during the course of negotiations, the buyer and seller each may have to consult with a lawyer to answer important questions, such as the tax consequences of the transaction. To a seller, the tax consequences may be of critical importance. For example, the income tax consequences of a sale, particularly if the seller makes a large profit, may be considerable. An attorney can advise whether the seller can take advantage of tax provisions allowing for exclusion of capital gains in certain circumstances.

Questions Your Attorney Will Ask About the Purchase Agreement 

The purchase agreement is the single most important document in the transaction. Although standard printed forms are useful, a lawyer is helpful in explaining the form and making changes and additions to reflect the buyer's and the seller's desires. There are many issues that may need to be addressed in the purchase agreement; below are some common examples:

• If the property has been altered or there has been an addition to the property, was it done lawfully? 
• If the buyer has plans to change the property, may what is planned for the property be done lawfully? 
• What happens if a buyer has an engineer or architect inspect the property and termites, asbestos, radon, or lead-based paint is found? 
• What if the property is found to contain hazardous waste?
• What are the legal consequences if the closing does not take place, and what happens to the down payment? This question raises related questions: Will the down payment be held in escrow by a lawyer in accordance with appropriately worded escrow instructions? How is payment to be made? Is the closing appropriately conditioned upon the buyer obtaining financing?

Most buyers finance a substantial portion of the purchase price for a home with a mortgage loan from a lending institution. The purchase agreement should contain a carefully worded provision that it is subject to the buyer's obtaining a commitment for financing.
Again, it is important to remember that printed contract forms are generally inadequate to incorporate the real understanding of the buyer and seller without significant changes. In addition, there are many kinds of mortgages that may be available. Mortgage loan commitments and mortgage loan documents are complex. Lawyers can review and explain the importance of these various documents.

The Title Search 

After the purchase agreement is signed, it is necessary to establish the state of the seller's title to the property to the buyer's - and the finance institution's - satisfaction. Generally, a title search is ordered from an abstract or title insurance company. In some states, and in outlying areas of others, title insurance is not typical. In such cases an attorney is essential to review the status of title and render an opinion of title in lieu of a title policy.
Assuming you are in an area where title insurance is customary, an attorney can help review the title search and explain the title exceptions as to what is not insured, and determine whether the legal description is correct and whether there are problems with adjoining owners or prior owners. He or she can also explain the effect of easements and agreements or restrictions imposed by a prior owner, and whether there are any legal restrictions which will impair your ability to sell the property.
The title search does not tell the buyer or seller anything about existing and prospective zoning. A lawyer can explain whether zoning prohibits a two-family home, or whether planned improvements violate zoning ordinances.

Closing the Transaction 

The closing is the most important event in the purchase and sale transaction. The deed and other closing papers must be prepared. Title passes from seller to buyer, who pays the balance of the purchase price. Frequently, this balance is paid in part from the proceeds of a mortgage loan. A closing statement should be prepared prior to the closing indicating the debits and credits to the buyer and seller. An attorney is helpful in explaining the nature, amount, and fairness of closing costs. The deed and mortgage instruments are signed, and an attorney can be assure that these documents are appropriately executed and explained to the various parties.
The closing process can be confusing and complex to the buyer and seller. Those present at the closing often include the buyer and seller, their respective attorneys, the title closer (representative of the title company), an attorney for any lending institution, and the real estate broker. There may also be last minute disputes about delivering possession and personal property or the adjustment of various costs, such as fuel and taxes. If you are the only person there without a lawyer, your rights may be at risk.
Perhaps the most important reason to be represented by a lawyer when buying a house is conflicting interests of the parties. Throughout the process, the buyer's and seller's interests can be at odds with each other, and even with those of professionals involved in the sale. The broker generally serves the seller, and the lender is obtained by the buyer. Both want to see the deal go through, since that is how they will get paid. Neither can provide legal counsel. The respective lawyers for the buyer and seller will serve only their own clients' best interests. Seeking the advice of a lawyer when buying a house is a very good idea from the time you decide to sell or to buy a home until the actual closing.
You don't always need a lawyer to buy a house, but real estate attorneys provide many valuable services and can actually help you save money in the long-run or avoid buying the wrong property.

Read more ...

Buying a House with Someone

Many people consider buying a house together, for many different reasons. Whether it is your first-time home or an investment property, buying a house together does have its perks. If done with care, this arrangement can be very beneficial in getting you a house that you may not have otherwise been able to afford. Be sure to figure out the details explained in this article prior to buying a house together, though, in order to avoid financial and legal chaos.
Decide Between Tenants in Common and Joint Tenants with Right of Survivorship
When you take ownership of property, you receive a piece of paper, called a "deed," that shows you have title. This deed explains how you want to own the property. When you and another person or persons are buying a house together, you can own the property either as tenants in common (TIC) or as joint tenants with the right of survivorship (JTWROS). You still own the home in each scenario, but the implications of each are different.
Tenants in common
Each tenant in common owns his or her own separate and distinct share of the same property. The size of this ownership share may vary, but each person has an undivided, equal right to use and occupy the entire property. When a tenant in common dies, his or her share of the property goes to his or her beneficiaries, rather than to the other tenants in common. This form of holding title is most common with unmarried persons, especially if they each contribute a different amount towards the property.
Joint tenants with right of survivorship
Each tenant has the right of survivorship, meaning that if one owner dies, that owner's interest in the property will pass to the surviving owner or owners. The interest in property of the deceased owner simply evaporates, and cannot be inherited by his or her beneficiaries. Unlike a tenancy in common, where co-owners may have unequal interests in a property or fractional ownership, joint co-owners each have equal shares in the property. This form of holding title is most common between husbands and wives or parents and children, where the joint tenants want title to pass automatically to the surviving tenant.
In both TIC and JTWROS, when one of the tenants wants to sell his or her part, he or she would sell his or her interest in the property. This is because it would not be feasible to divide the house down the middle and each own respective portions. The buyer would get the same rights and interests as the seller had. If you are buying a house together as a rental property, each tenant would be entitled to a portion of the rental income, proportionate to his or her share.
Compose a Written Co-Ownership Agreement
Some people make the mistake of assuming that any issues or disagreements that arise will be worked out when the time comes. This approach can put a lot of strain on you, your time, your money, your relationship, and can even end up with you in court. Instead, try and think of anything that may arise during the course of your co-ownership, and write out what should happen in those instances. After the agreement is satisfactory to all tenants, each of you should sign it. Below are some issues that you absolutely should include in your agreement.
What is each tenant's fractional ownership?
This is probably the most important agreement to be made, since it affects the property once you decide to sell your share, or after you die. This decision is easy if you have a JTWROS. In that case, you simply divide your interest into equal parts. For example, if there are two of you, you would each agree to divide your shares 50/50.
If you have a TIC, you have more options, because you don't have to divide your interests 50/50. Instead you can divide the shares into fractional ownership. Some people decide who owns what based on how much money each tenant contributes. You could also agree that tenant A is going to receive a larger share, because of all of the maintenance she does; or that tenant B deserves a larger share, because he pays all of the property taxes each year. However you want to divide it up is fine, just as long as you all agree.
How will ongoing expenses be paid?
Ongoing expenses, like mortgage payments, property taxes, utilities, maintenance costs, and insurance premiums should all be allocated according to what all of the tenants thinks is fair. Some people decide to split everything completely equally. Other people divide it based on the same percentage as ownership, or based on the percentage of a down payment each person made. Many times, if the home is a vacation home, the tenants divide up the expenses based on how much time each tenant will use the home.
How does a tenant destroy his or her interest?
You have every right to destroy your interest in the property by conveying your interest to someone else. You do not need any of the other tenant's permission to do this, as it is your property right to keep or sell your interest as you wish.
The affects of destroying your interest vary depending on whether you are in a TIC or a JTWROS. Without a co-ownership agreement, in a TIC, the tenant wishing to destroy his or her interest may obtain a partition of the property. A partition of the property divides any land into distinctly owned lots. Sometimes, especially with a house, this is not possible. In that case, a forced sale of the property could be conducted, with the proceeds being divided according to shares. Each co-owner is entitled to the right of a court-ordered partition. The good thing about determining who owns what percentage ahead of time in a co-ownership agreement is that you can avoid the court's interference in partitioning. In your agreement you can also waive the right of partition.
When a JTWROS tenant terminates his or her interest, the remaining co-owners keep their JTWROS between them and remain joint owners of the remaining interest. If the terminating tenant conveys his or her property to a third party, however, that third party owns his or her share on a TIC basis with the other tenants. The original tenants still preserve their joint tenancy interest between each other, while the new tenant is a tenant in common with the other two.
This result arises because the timing is different. The original tenants all received their interest in the home at the same time, whereas the new tenant received his or her interest at a later time. If all the tenants wish to maintain a joint tenancy, then all of the original tenants must transfer the joint interest of the remaining joint tenants and the new joint tenant together, in one instrument. Absent an agreement that specifies otherwise, this is what happens when a tenant breaks or destroys his or her interest.
One way around the default approach is to actually specify in the co-ownership agreement that a selling co-owner must preserve an opportunity for the remaining tenants to purchase the interest before any third party. Adding this provision makes sense; however, you must also think about how you will fairly assess the property value at that time, whether the remaining co-owner must accept the sale offer, and what will happen if the remaining co-owner does not have sufficient funds to accept the sale offer.
Buying a house together has its perks, as long as all the parties involved are thoughtful and careful in deciding what will work best for each of them. Often times, it is a good idea for each of them to consult an attorney who will look out for their individual property interest.

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 ...