A Homebuyer’s Bill of Rights

The Fine Print

When it comes to purchasing a home, a buyer’s rights are largely determined by the fine print of their contract. And what is permitted in these purchase contracts varies widely from state to state. As such, it’s easy for a novice homebuyer to get roped into signing something that entitles them to less than what their state laws stipulate. Fortunately, according to Eric Bramlett, a real estate agent based in Austin, Texas, most purchase contracts are based on “promulgated forms” that each state has designed for its residential areas. Scanning these forms can help you verify that what you are seeing in a specific contract is in accordance with the laws in your state. “Sometimes these forms can be relatively hard to find,” Bartlett admits, but he suggests that prospective homebuyers start looking on their local real estate commission’s website (here is Texas’s version, for example here) . But Bartlett says that realtors in most cases will be familiar with the regulations and can explain them to prospective buyers. As the home-buying season begins, MainStreet asked experts about the rights homebuyers have in the process, and about what they should know when dealing with realtors, title companies, banks and sellers. Photo Credit: striatic


Right to Equal Treatment

While the specifics of many laws vary from state to state, New York-based real estate attorney Edward Mermelstein points out that federal Fair Housing Laws are applied nationally. These laws, established in 1968, essentially prohibit discrimination in the sale, rental and financing of dwellings based on race, color, national origin, religion, sex, familial status and disability. This means that anyone who feels that they are being denied a property because of discrimination – and are willing to do their due diligence to prove their case – can take the claim to court. Photo Credit: familymwr


Right to an Honest Broker

What happens if you discover that a realtor made a false claim about a property in order to get you to buy it? (For instance, they tell you there’s a bid on a property with the intention of getting you to make a higher one, despite the fact that this purported bid does not exist.) According to Jennifer A. Chiongbian, an associate broker with Rutenberg Realty NYC and a member of the Real Estate Board of New York, sales are supposed to be made without “any undue pressure” so any shady practices could be argued in a court of law. However, Eric Bramlett, a real estate agent based in Austin, Texas points out that “it can be tough to get money in these types of lawsuits,” so the easier recourse is to report the suspected broker first to his or her agency, and then to your state’s local association of realtors, which will investigate the complaint and decide if any additional legal action should be pursued. Photo Credit: Thetruthabout


Right to Representation

Most home sales are brokered by a real estate agent contracted by the seller. However, a homebuyer who is uncomfortable with this arrangement can seek out additional representation. “You can ask for a different agent from [the agency showing the property] to represent you,” Chiongbian explains.  However, you will need to do this prior to making an offer. As Chiongbian explains, the agent who is ultimately responsible for getting the buyer to make a purchase earns the commission on it, so that can cause some complications. In legal terms, it’s called “procuring cause” and changing agents mid-negotiation can cause you to end up in sticky court situation with the competing realtors. Photo Credit: cletch


Right to Back Out

Once a seller accepts an offer on their home, the buyer will make “an earnest money deposit” – more commonly known as the down payment – which essentially gets the property taken off the market until both parties close on the deal. As MainStreet has reported, there are several hoops that both the buyer and the seller need to jump through before the closing can take place and, while specific rights do vary from state to state, Bramlett says that the buyer can generally get his or her deposit back during this time should the property prove to be anything other than what was expected. For instance, if an inspector discovers cracks in the foundation during the home inspection (which usually takes place after the sale but before closing), the buyer can back out without any financial repercussions. Photo Credit:  justinbaeder


Right to Renegotiate

A buyer can also request to re-enter negotiations should the bank appraisal – another fairly standard step in the closing process – comes back significantly lower than the agreed-upon price. If the seller refuses to come down, Bartlett says, the buyer can walk away from the sale unscathed. The same rules don’t apply to the seller, however, should the bank appraisal reveal that the property is worth more than the offer on the table. Sellers must still follow through with the deal, Bartlett says. Photo Credit: Irish Philadelphia Photo Essays


Right to Full Disclosure

Bartlett says that, generally speaking, a buyer can also back out of the deal if the title search reveals there are liens on the property or if a survey intended to establish the property lines around the house reveal a problem with the land. For example, a neighbor may have built a fence that blocks off property that technically should come with the house in question. Photo Credit:  doortorive


Right to Repairs

If the property you are trying to buy gets damaged during escrow, the seller may be responsible for the repairs. Many states allow purchase contracts to include a clause that says the owner must maintain the home in the same condition as when initially viewed by the buyer. This is because certain damages will be covered under the homeowner’s (the seller’s) existing insurance policy.   If you were careful to have this clause included, you can walk away from the sale without penalty should the seller refuse to fix the property, Bartlett says. Photo Credit: jefeld


Right to Safe Property

According to Mermelstein, most states and municipalities have ordinances that protect a buyer should the seller fail to disclose that there is an environmental risk associated with the property. This means you can reneg on your commitment to buy the house if you discover, prior to closing, that it was built atop a contaminated soil or in a flood zone.   What happens if you discover the issue after you’ve moved in? “That’s a lawsuit,” Bramlett says. Photo Credit:  Ken Lund


Right to Choose Your Bank

When it comes to financing a new home, buyers reserve the right to shop around for the best interest rates. This is also true if you’re in the market for a property in foreclosure or short sale. You don’t have to get a mortgage from the bank who owns the property. “It’s encouraged, but you can go elsewhere,” Bramlett says. What else should be you know about buying a distressed property? Take a look at MainStreet’s 8 Steps to Saving Big on a Foreclosed Home! Photo Credit: cogdogblog


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