Buying a new home often conjures exciting images of more space, a bigger yard, an attractive neighborhood, and the like. Homebuyers should temper their excitement with a bit of caution to make sure they are aware of potential pitfalls before the agreement of sale is signed. Once the agreement is signed, it can be tough getting out of the obligation to buy if something undesirable is later discovered.
Fundamentally, it is important to understand that when a prospective homebuyer makes an “offer” to a seller (which is often by way of the realtor’s pre-printed sales agreement form, with or without customized provisions), that “offer” contains more than simply a proposed purchase price. It is, in fact, a proposed agreement of sale. If accepted by the seller, the “offer” becomes a legally binding contract, and the terms of that document will control the transaction. Tedious as it may be, the prospective buyer must carefully review all of the terms of the “offer” before extending it to the seller.
Here are some examples of issues we’ve seen that resulted in expensive disputes with sellers:
We didn’t know the property was part of a planned community with a homeowners’ association.
Many developments are “planned communities” under Pennsylvania law. Typically, planned communities have legally recorded restrictions of varied intrusiveness that govern the community. These restrictions are the private laws of the development and can be enforced by the homeowner’s association, and also can be enforced in court. Some folks like the idea of strict rules governing lot size, the number of buildings that can be on the lot, and the size of homes. There can also be rules and regulations regarding paint colors, displaying of flags, outside laundry drying, lawn furniture, etc. Homeowners’ associations can often impose fees on property owners for maintenance, snow removal, and other services. If you are concerned about restrictions and potential fees, you’ll need to find out if the home you want to purchase is part of a planned community. You will also need to obtain copies of the property restrictions, as well as any rules and regulations or other documents from the homeowners’ association. While the seller is required to disclose whether or not the property is part of a planned community and provide the pertinent documents, it is best to be sure the right questions are answered before signing a sales agreement.
The property has an inadequate well or septic system.
It’s always a good idea to have private wells and septic systems professionally evaluated. Most buyers have the prospective home inspected by a general home inspector, but the water and septic evaluation is often limited to turning on faucets and flushing toilets. While they may appear fine during such cursory tests, circumstances change significantly when the family moves in and high demands are placed on these systems. If it turns out that the well is low-yielding, or the septic system has diminished capacity, these deficiencies can severely impact the family’s lifestyle and may be costly to remediate. The prospective buyer should also make sure that the well is at least 100 feet away from the septic system. In many cases, it is difficult to prove in litigation whether the seller did not sufficiently disclose problems with wells and septic systems. Even if litigation is successful, it is very expensive and the seller may not have money to pay your judgment.
The actual property lines are not where they appeared to be.
Candidly, most homeowners do not have pre-purchase surveys of properties, and boundary issues on typical residential lots are rare. However, instances do arise where a fence line, hedge, or other apparent border does not indicate the actual property line. There have been cases where the unsuspecting buyer discovered that a portion of the septic system sand mound or well was actually located wholly or partially on the neighboring property. It is the buyer’s responsibility to confirm the actual property lines.
Boundaries may not be a significant issue in recent developments with recorded subdivision plans that can be compared to actual physical features. Older, and especially more rural properties may be more likely to have potential boundary issues. If boundaries are a concern, the potential buyer should consider having the lot surveyed. Once the home is bought, boundary issues can be very complicated and expensive to resolve.
There is a Megan’s Law offender living in our neighborhood.
It is the buyer’s responsibility to determine whether there are Megan’s Law offenders residing in neighboring properties. If a buyer discovers that the next-door neighbor is an offender after the sales agreement is signed, in most cases, there is likely no recourse against the seller, and the purchase must be completed. If Megan’s Law offenders are a concern, the seller should contact state or local police, or visit this website: www.pameganslaw.state.pa.us prior to entering an agreement of sale.
The original mortgage financing fell through and now we can’t afford the interest rate.
If you are financing the purchase with a mortgage, as most of us do, you need to make sure that your duty to go through with the purchase is contingent on your obtaining financing at the interest rate you require. You don’t want to be in a position where you are legally obligated to purchase the home with an interest rate you cannot afford; or worse yet, forced to buy a home without a mortgage to pay for it. You should also clarify the conditions under which your deposit will be returned to you. If you can’t get financing at your required rate before a certain deadline, your deposit should be refundable in full.
These examples are not exhaustive, and prospective homebuyers should identify all potential issues and circumstances that could change their minds about buying the home. As in most situations, money for a lawyer is better spent preventing problems rather than paying to try to fix them after the agreements are signed or the deal has closed.
Find out how we can help you in your home purchase with our Real Estate Law services.