What Paperwork Do I Need to Sell My House?

The house selling process is full of paperwork: contracts, disclosures, addenda and a myriad of legal documents. The seller is usually required to provide key pieces of documentation during a sale. Failing to document or avail the requisite paperwork can make a seller lose a potential buyer or risk legal action following the sale. The documents used during a home sale serve to establish the terms governing the transfer of the home ownership. They also place legal obligations and responsibilities on both the seller and the buyer. A variety of legal paperwork are needed during a sale to protect the interests of the buyer and the seller, they include:

1. The Sales Contract

This is the most important sale document for any transaction because it settles any disputes that may arise after the transaction has been completed. It covers all the aspects of the sale like the date for completing the sale, the price for the sale, the date that the buyer takes possession of the house, the conditions for terminating the sale and the dates for inspections. A signed sales contract is legally binding for both parties. The uniform Commercial Code governs commercial transactions that cut across states, this can be particularly important for sales involving parties from different states (www.ffiec.gov/pdf/pr022801_statement.pdf).

2. Residential Property Disclosure

A property disclosure document is used to detail all the defects in the home. This document acts as a legal notice to the buyer, it informs them of all the problems like damaged fixtures and the presence of mold. Some states require a property disclosure form for all home sale transactions. Some defects like mold require special disclosure forms. Sellers can be held liable for damages if they fail to disclose any defects they knew of before the sale.

3. Title Documents

A property deed is a legal document that designates property ownership. Home sellers are required to avail the title documents for scrutiny by the buyer. Buyers or their financing institutions can then stipulate the company to complete the title search and transfer process. It is advisable to involve a title company right from the start even instances where the buyer is getting financed. The company handling the transfer will also organize the closing of the deal. Whoever owns the deed owns the property, therefore, after a sale, the title deed has to be transferred to the name of the buyer.

4. Occupancy Agreements

Occupancy agreements dictate the terms guiding when the seller vacates the house and when the buyer moves in before sealing the deal. A pre-occupancy agreement works when the buyer moves into the house before the deal goes through. This agreement spells out the party that will be held responsible for any costs or losses to the house. Occupancy agreements are important because a seller’s home insurance may not cover the house when you vacate the house, the buyer’s policy may also fail to take effect until the sale is completed. A post-occupancy agreement is required if the seller intends to stay in the house after the sale has gone through. It also covers details such as the rent to be paid to the buyer as the seller continues to live in the house. Items such as the allocation of costs such as utility bills and taxes are also covered in this agreement.

5. Financing Addendum

If the seller contemplates getting a mortgage to facilitate the purchase, third party financing clause must be attached. This document allows the termination of the sale if the buyer fails to get financing within a specified period. The document also protects buyers from losing money if their mortgage application is rejected.

6. The Promissory Note

A promissory note is basically a promise to pay. Promissory notes are attached to the property and secured by a trust deed, a land contract or a mortgage. Promissory notes are important for buyers who do not qualify for conventional mortgages they enable them to use the seller as the provider of the loan and the purchased home acts as the security.

The Closing Statement

Legally, a real estate deal should include a clear closing statement. Also known as a settlement statement, this document facilitates the finalization of house sale transactions. It must include all the fees paid by every party involved in the sale. This document can also outline what happens if the seller backs out of the sale. The buyer has the right to get the HUD 1 settlement statement for evaluation at least a day before the closing of the deal (http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/rmra/res/respa_hm).

Failing to provide the above documents can lead to serious legal outcomes for the seller. In addition to these, the solicitor facilitating the transaction may need proof of identity from the seller. It is important to crosscheck the documents before submitting them to the buyer. The broker will then check the documents and offer their recommendations.