Real estate transactions involve multiple parties, such as buyers, sellers, realtors, escrow, and title companies. The cooperation from all of these parties is needed for a successful closing to occur. While a buyer may need to put more effort into a transaction, in the form of due diligence, inspections, and obtaining a loan the seller still has to complete their share of tasks as well.
One of the common issues that can break a real estate transaction is the seller not having clear title on the property that they are looking to sell. This is often due to unresolved liens on the property which were either forgotten about or unknown (a lien is a legal claim or encumbrance on a property that typically arises from an unpaid debt).
A lien gives the lienholder the right to seek repayment from the proceeds when the property is sold. If a lien is in question, the seller must resolve it before the property is transferred to the buyer.
As strange as it sounds, another common issue that can arise is when the Seller does not currently have the right to sell their property. This situation can be a result of a property that has been inherited from a family member who has passed. The Seller who is inheriting the property may be eager to sell and they get it listed and accept an offer but they haven’t legally taken ownership. If they are not legally on title to the property, they are unable to sign the Grant Deed. This issue can be resolved but the closing can be delayed.
Seller contingencies are another item that can break a transaction. An example is a contingency for securing a new property. The Seller wants to make sure they find a new home before selling their current home. If they are unable to do so, they can cancel the sale of your property.
Seller disclosures can delay or break a transaction as well. Sellers have a legal obligation to disclose any known material defects or issues with the property. If they fail to disclose accurately, this can lead to delays. Depending on the disclosures, it can also result in additional inspections from you as the buyer or you may even decide that the information disclosed has persuaded you to not purchase the property.
Given the current state of the real estate market, there are a significantly larger number of escrows falling apart due to seller issues. Buyers can protect themselves from wasting time, energy, and money by ensuring early on that none of the above-listed issues are likely to create an issue. Remember that a good seller will be cooperative with most reasonable requests and act in good faith.
If you have any questions regarding the purchase of a home, give us a call! One of our Mortgage Loan Originations will be happy to answer your questions and share their experience.