How to Help Buyers Understand the Legal Side - PropertyBlawg

How to Help Buyers Understand the Legal Side

by Tom Schooley on April 19, 2013

You’re tired of renting and desire a home to call your own. Luckily, it’s a buyer’s market; renters are itching to cross the thresholds of their newly-purchased homes while prices remain reasonable. However, just because a home’s price tag is economical, it does not mean it’s realistic to assume there’s nothing more to mind.

New owners, those without prior experience or people to guide them along in an efficient manner, beware. Recognize other concerns related to purchasing a new home as well as associated legal parameters.

Title Insurance

Title insurance, and associated fees, may seem like more costs atop an accumulating pile. Paying associated fees to purchasing purchase a home is to be expected, but what is not so apparent is the legal implications of the insurance. What do you know about the previous owner and all money matters associated to the property dating back to its commercial estate?

Title insurance ensures the new owner is free of financial responsibilities and liens associated with previous owners or events aligned with the property. Title insurance coverage encompasses proper representation and impending expenses required to settle an open issue. The title insurance is a one-time fee, designating a clear transfer from prior to new owner. Liens must be recorded in public records; so, its best practice to research your property’s history before purchase.


An appraisal is like getting a bunch of artists in a room and having them weigh the aesthetic value of a work, using a 1-10 rating system; it’s not entirely objective. Therefore, ensure your lender is charging you, the buyer, for only one appraisal. Furthermore, ensure that the appraisal properly reflects the actual value of the home, rather than the price the lender desires.

In worst case scenarios, buyers are charged for multiple appraisals and settle on a much higher price than a home is actually worth on the turnaround market. Legally guard yourself from worst-case scenarios by hiring legal counsel or someone who can clearly demonstrate the appraisal properly reflects the home’s value.

Truth-in-Lending Disclosure

Centuries ago, seamen used the stars to guide vessels through the waters; the truth-in-lending disclosure is similar; it guides buyers through agreed terms of the home’s mortgage. The document describes the exact amount of the loaned monies, the APR, the number of expected payments and the rate of each, the terms of the loan (fixed/variable), and other pertinent information.

This document is incredibly important and should be read by legal counsel. The property for sale is associated to a number of agreements and fixed or changing rates; it is best for new owners to allow counselors illuminate financial realities and to-be legally-binding contracts once signed.

Loan Application

Errors on a grocery list are excusable; getting grapes rather than grain isn’t a huge mistake. However, errors on a loan application can spell disaster. Sometimes, to-be owners don’t see the final version of the application until the day of close. Amid excitement and cumbersome paper demands, errors on an application may be overlooked, later influencing a legally-binding agreement.

It’s advised to have counsel present during the day of close, or ensure your lawyer reviews the terms of the application in its final version.

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