Purchasing or selling a house or a commercial piece of property can be one of the most personal and financial commitments a business or an individual may make. Because of this, it is very important to be aware of exactly what they are buying, including the boundaries, the title, and the condition of the premises.
Real estate laws provide protections for many parties, including:
- Land owners;
- Real estate agents; and
During a real estate transaction, it is very important that the purchase and sales documents be well-written in order to avoid problems and delays later in the process. Lawsuits may arise when the parties to a real estate transaction have a dispute.
These types of lawsuits may include issues such as:
What are Some Tips Individuals Should Know About Buying or Selling Property?
There are numerous tips and terms which will be helpful to individuals who are buying or selling property, including:
- A broker. Buying and selling property is typically handled using agents who are commonly known as real estate brokers. Brokers are individuals who either help other individuals find property to purchase, or in the alternative, assist property owners with selling their property. Brokers also manage all of the paperwork involved with the property transaction;
- Disclosures. When an individual sells their home, they must be sure to reveal all of the defects with the property that they are aware of, which includes things such as structural or electrical problems. This duty to disclose is called the disclosure of material defects, or, in some cases simply, disclosure;
- Buyer’s duties. Typically, a potential buyer of a property has the right to inspect a property before the closing for any potential defects or zoning issues. Additionally, a buyer should also check to see whether there are any mortgages or liens on the property. A buyer will be able to review this information at their local county recorder’s office.
If an individual is renting a property or residence, it is also good for them to be aware that a landlord owes their tenants several important duties, including:
- Habitability. This duty provides that the landlord guarantees that the property is habitable, or livable, and that the landlord regularly maintains the property and keeps it in good shape. Part of this duty involves that landlords repair any issues which arise, such as heating or plumbing issues. This is also called the implied warranty of habitability;
- Ordinances. A landlord guarantees that the property conforms to the laws of the city and the state;
- Duty to deliver possession. Although the details of this duty will depend on the jurisdiction, landlords generally have a duty to deliver possession of the premises to a tenant, such as giving keys to the tenant and ensuring that no one else is living in the housing unit;
- Implied covenant of quiet enjoyment. This duty refers to the tenant’s rights to keep the landlord from interfering with their use of the premises, such as by making the property uninhabitable or by wrongfully evicting a tenant.
Tenants also have their own duties to uphold when renting the property, including:
- Paying rent on time in accordance with the terms of the lease;
- Following any rules or restrictions which are listed within the lease, such as no pets, no loud noise, etc.;
- Not using the premises for an illegal purpose, such as dealing drugs or gambling in a state where it is illegal; and
- Making ordinary repairs and keeping up the property, including not vandalizing the apartment and alerting the landlord if there is an issue with the plumbing, etc.
Tenants who fail to adhere to the terms of their leases will result in a breach and may cause the tenant to lose their security deposit, subject them to further money damages, and may even cause them to face an eviction.
It is important for an individual to be aware that a purchase or sale of a residence or property can be done completely on their own, however, they are most often executed by an experienced broker or agent. Brokers can make the sale of a home or property easier, but they also often require contracts and commissions.
If an individual decides to have the help of a broker with their sale or purchase, their attorney can review any contracts prior to signing.
What is a Real Estate Brokerage Agreement?
Real estate brokerage agreements are contracts which are formed between brokers and their clients. Contracts are typically between one broker and their client, although they may also involve other parties.
It is important to note that brokerage agreements are not the same as home sales contracts, which deal with the actual property transaction. Instead, a brokerage agreement, or a broker agreement, outlines the duties which a broker has to their client.
Brokerage agreements also outline the duties of the client, such as their duty to pay the broker. Because of this, broker agreements are typically formed well before a client purchases a home.
What is Covered in a Real Estate Brokerage Agreement?
A broker handles many different tasks for their clients. These tasks may vary depending upon the broker’s background and their specific focus.
The broker’s duties will also be different depending upon whether the broker is representing a client who is a buyer versus a client who is a seller. In general, a brokerage agreement can contain important terms, including:
- Terms regarding property listings;
- Obtaining loans or financing for the client;
- Viewing and presentation of property;
- Whether the broker has exclusive rights over the interests of the client;
- A clause describing methods for resolving potential disputes; and
- Payment methods and interest rates.
There may also be various other terms which are included. Some brokerage firms use standardized contract forms. In some cases, however, an individualized contract may be required.
What if a Brokerage Agreement is Violated?
A violation of a broker agreement may occur in numerous different ways. For a client, the main source of breaches of contract occurs due to a failure to pay a broker on time or in accordance with the amount which is listed in the contract.
Another type of breach which may occur happens when a client begins working with another broker when their contract provides exclusive dealing rights for that broker. For brokers, one common breach of agreements occurs when the broker does not exercise enough diligence in their efforts.
For example, if a broker is lax in placing listings for the property or they do not keep up with offers from buyers, they may be held liable for a breach. In addition, real estate fraud may negatively affect the contract rights of the broker.
In these types of cases, the non-breaching party could be awarded damages in order to compensate them for their financial losses. The amount which is awarded will be dependent upon several factors, including the market values and the terms of the contract.
Should I Hire a Lawyer?
It is essential to have the assistance of a real estate lawyer for any issues, questions, or concerns you may have regarding a brokerage agreement. These agreements are very important to the process of buying or selling property.
Brokerage agreements, however, may also be complicated. Your attorney will assist you with negotiating, drafting, and finalizing a contract. If a legal dispute arises from the brokerage agreement, your lawyer will represent you in court.