The purchase of a home is a major endeavor and obtaining as much knowledge about the purchase is your best protection against being taken advantage of. Use reputable people at all stages of the purchase (real estate personal, mortgage lenders, home inspectors and so forth) to ensure that you get a fair deal. There are so many variables in the purchase of a home that legal recourse options are limited. Some general legislation and services that exist include:
Pre-Sale:
The Fair Housing Act:
The Fair Housing Act makes it an offence to discriminate against a home purchaser on the basis of: race, color, sex, religion, handicap, familial status or national origin. It is also against the law to make it more difficult for a targeted group of people to obtain a mortgage than for the population as a whole.
Seller Disclosure:
Seller disclosure requires the seller of a house to tell the purchaser about known problems that might become issues in the near future. In most states the seller disclosure laws are not very strict, but they are becoming stricter as buyers demand some protection when making this very expensive purchase.
Issues such as frequent flooding, known pluming problems and items such as roofing materials beyond their expected lifespan must be disclosed. However it is difficult to prove that some flaws that could result in costly repairs where known by the seller beforehand. To protect your self ask questions and get answers in writing so you have recourse should something break as soon as you take possession of the house. This also shows the importance of a quality home inspection prior to purchasing.
Post-Sale:
Home Warranty Programs:
Home Warranties are a form of insurance sold to homeowners to cover the cost of any repairs needed to the home. Unlike homeowners insurance they cover repairing/replacing the item that failed. So for example if your hot water heater where to develop a major leek and ruin a floor; the homeowner insurance policy would repair the floor, but a home warranty policy would not only repair the floor but repair or replace the hot water heater as well.
There are many companies selling home warranty programs and if you wish to purchase such a package you should do your homework. Find out what is covered, what your responsibilities are and how much it costs. Most cover the major systems in your house (such as the plumbing, heating and electrical systems) as well as most of the major appliances in the home. They cost in the range of $250 to $600 per year.
Home sellers may offer at no cost to the buyer a limited (say one year) home warranty program included in the selling price to reassure the buyer that there will be no unexpected repair bills after the sale.
Financial:
The Real Estate Settlement Procedures Act (RESPA):
The RESPA covers loans secured with a mortgage placed on one to four family housing. The act requires that the borrower receive: Information regarding various real estate settlement services (purchase transactions only). A good faith estimate of all of the closing costs that the buyer will incur on closing. Disclosure as to whether the lender will keep the mortgage or will transfer it to another lender Information as to how to go about conflict resolution.
A borrower may file a RESPA complaint and bring a private law suite if violations occur:
- The borrower has one year to bring about a law suite to enforce violations of sections 8 or 9. Section 8 deals with receiving kickbacks, fee-splitting or other unearned fees, while section 9 deals with requiring the purchaser to purchase from a particular company.
- The borrower has three years to bring about a law suite to enforce violations of section 6. Section 6 deals with issues involving the servicing the loan (including escrow account questions).
