Selling a Home
Selling a home may well be the largest financial transaction in which you will be involved. It is wise to proceed with caution and be aware of the legal importance of the basic steps involved in selling a home.
One of the first questions you might have is whether you should engage the services of a real estate broker. Only you can answer this question. However, should you decide to hire a real estate broker you will be asked to sign a "listing contract" in which you will legally obligate yourself to allow the real estate broker to market your home for a period of time and pay a percentage of the sale price as a fee if a buyer is obtained. By law, the amount of the sales commission and the length of the listing agreement are negotiable; that is there is no set percentage of the sale price which is payable to the real estate broker if a buyer is found, nor is there a set length of time that you must permit the real estate broker to sell your home.
You should also be aware that the state of Pennsylvania has formed a recovery fund to reimburse persons who have suffered monetary loss in a real estate transaction due to the fraud or deceit in a real estate transaction by a real estate salesperson licensed by Pennsylvania. For more information on this call 717/783-3658.
Once a buyer is found but before a contract to sell is entered into, the Pennsylvania Real Estate Seller Disclosure Act obligates the seller to give a specific and detailed written disclosure to a buyer regarding any known material defects concerning the property. A "material defect" is a problem with the property or any portion of it that would have a significant adverse impact on the value of the property or involves an unreasonable risk to people on the land.
If the home was built prior to 1978, another preliminary step needs to be taken. Regulations issued by the Federal Environmental Protection Agency (effective September 6, 1996 for owners of more than four residential dwellings and effective December 6, 1996 for owners of one to four residential dwellings) require specific and detailed disclosures which must be made by the seller before the buyer is obligated to purchase. The buyer must be given a pamphlet providing information on the risks and dangers of lead-based paint. Additionally, the seller must disclose to the buyer the presence of lead-based paint that the seller has actual knowledge of and provide the buyer with copies of any lead hazard evaluation reports on the property available to the seller. The buyer also has the right to conduct an inspection of the property for lead-based paint for at least 10 days prior to becoming obligated to purchase, unless that right is waived in writing. The regulations also require that the sales agreement contain certain warnings and certifications regarding lead-based paint.
The next important step will be to enter into a written contract which legally binds you to sell the home and legally binds the buyer to buy the home. This written document is known by several names including Agreement of Sale, Agreement of Purchase, Articles of Agreement, Purchase Contract or Sale Contract.
This contract is the most important document you will sign in the entire process of selling a home. It sets forth the entire agreement between you and the buyer including the terms and conditions of the transaction such as the purchase price, the amount of the initial deposit or earnest money you will receive, what items of personal property are to be included or excluded (such as carpeting, gas grills, drapes, etc.), when the closing is to take place, which party will pay the realty transfer taxes, when possession of the property will be given, the remedies if either party defaults and the contingencies involved in the transaction.
The word "contingency" was just mentioned. A contingency is a condition or event that must occur after the contract is signed by all parties, or all parties will be released from their obligation under the contract. The most common contingency relates to a buyer obtaining mortgage financing. After the buyers make their formal application for financing, if they cannot obtain a loan, they can receive a refund of the deposit money and are released from their obligation under the contract.
However, if the loan is approved, and all other contingencies in the contract are met, the process continues. The formal occasion in which you meet the buyers to sign the deed and receive the net purchase price (after payment of expenses of sale) is called a "closing" or "settlement". At the closing you will review and approve all the financial aspects of the transaction and sign all the necessary documents.
Because of the importance of this process, financial and otherwise, it is important that you retain the services of an attorney to assist you. You may wish to review with your attorney the terms and conditions of an offer before accepting it. Your attorney will also help prepare the deed and other necessary closing documents and will accompany you at the closing to make certain that the transaction is finalized in accordance with the contract of sale. 7/11
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