When you sell a parcel of real estate, you have the expectation that everything will go reasonably smoothly. However, there are numerous things that can go awry before or during a real estate sale that can make things substantially more difficult, introducing potential legal or economic issues you will need to resolve. Here are five potential complications that can arise during your real estate sale:
- Zoning ordinances
- Almost every city, town and village have some form of zoning ordinances, which are local laws that dictate how different parcels of land can be used or developed. This can affect whether land can be used for residential, commercial, or industrial purposes, or it can affect the size, shape, density, or height of any structures allowed on the property. Moreover, zoning ordinances can change at any time, potentially altering the value of a property and making a potential sale impractical or impossible.
- Failed inspections
- New Jersey law does not require inspections to be performed before a sale of real estate can go through, but many purchasers will demand an inspection of the property before they will close on the sale. While the cost of such an inspection is usually on the purchaser, not the seller, it may be worth addressing any known issues with the property before you reach this point in the sale. Otherwise, you may find yourself needing to renegotiate the purchase price to account for added costs to the purchaser from any significant issues discovered in an inspection.
- Mortgages and loans
- Selling a property while you still have a mortgage or other loan attached to it might seem strange, but it does occasionally happen. However, if you intend to sell the property to someone else, you need to make sure that the purchase price is greater than the amount due on the mortgage, otherwise your lender will need to approve what is known as a “short sale” in which your lender accepts an amount less than what you owe them. Even if you do not require short sale approval, many real estate contracts are conditioned on the purchaser obtaining a mortgage commitment in an amount necessary for the purchaser to finance the purchase price. If the purchaser cannot get a mortgage commitment within the time specified in the contract, the contract can be cancelled.
- Property used as collateral
- When you take out a debt, the person or institution you borrow from may require you to put up some of your property as collateral to secure the debt. This will allow the creditor to seize the collateral if you fail to pay your debt back. Obviously, it would be awkward for a purchaser to find out their new piece of real estate was used as collateral for your loan, so make sure any outstanding debts you have are not using the real estate you are selling as collateral other than any mortgages or lines of credit against the property itself. Otherwise, you could face legal troubles from both your purchaser and from your creditor.
- Undisclosed easement or covenant
- Easements and covenants are related but separate issues that restrict your ability to use your land freely. An easement is a right someone else has over your land (such as the right to cross your property to access a waterway or a driveway, for example), while a covenant is a restriction placed on your land for the benefit of another (such as preventing you from building anything on the property that would restrict air flow to your neighbors). While it is perfectly fine to sell real estate that has an easement or covenant attached to it, this needs to be disclosed before the sale to ensure clear title and avoid potential legal issues.
Before you try to sell your home or other piece of real estate, make sure to contact an attorney to consult on any potential legal issues. The New Jersey real estate attorneys at Hunziker, Jones & Sweeney are skilled and experienced in the aspects of real estate law to ensure a smooth process as you purchase or sell your new home. Contact the Law Offices of Hunziker, Sweeney & Jones at (973)256-0456 or email firstname.lastname@example.org.