What are you legally required to do when selling your home in LA, California?December 10th, 2021 by Administrator
On the surface, home selling seems like a smooth process of taking money and giving your house, and all this convenience is possible when you have a reliable real estate agent by your side to guide you and do the rest of the work. However, if you are thinking of selling your home in Los Angeles, or in the neighborhood without any help, you must be aware of various legal requirements that California laws require you to fulfill.
Do you want to know what these legal requirements are? Keep reading to find what you must do as a home seller in California.
1. You Must Disclose All the Facts that Can Affect the Value or Desirability of Your Home.
California, like many other states in the United States, requires residential property sellers to disclose every detail in writing that can affect its value or desirability in the market. This disclosure obligation applies to almost every residential property seller, regardless of whether they are selling a standalone home, a high-rise condominium unit, an apartment, or a mobile home.
Note: If a home seller in California doesn’t fulfill this requirement, he can even be sued for hiding defects and issues.
Home sellers are exempt from this disclosure rule only if multi-unit buildings and properties are being transferred by court order or from one co-owner to another.
2. You Must Use a Title Company.
When you sell your home in LA, an LA title company will carry out a title search and develop a Preliminary Title Report, in short PTR. Then, the title insurance company will offer title insurance to the home buyer depending on the PTR.
Lenders need title insurance as a condition of funding the loan of the buyer. Hence, the home seller and home buyer should agree upon a title company and title insurance company. Most often, the company is suggested by the buyer when he or she makes the initial offer.
Note: The Real Estate Settlement Procedures Act (RESPA) doesn’t allow sellers requiring a buyer to use a particular title insurance company as a condition of the transaction.
However, in California, you can negotiate with the home buyer about who will pay for title insurance. In South California, meaning also in Los Angeles, the home seller customarily pays for title insurance. Sometimes, both seller and buyer may agree to pay the cost. Your real estate agent will help you know what is customary in your local area.
3. You Must Use an Escrow Agent for Home Selling.
It is customary for buyers to deposit funds in escrow and for sellers to deposit the deed in escrow. The escrow company will keep these items for safeguarding until all conditions of the escrow are met. After that, the escrow agent will be responsible for transferring the funds to the seller and the deed to the buyer.
4. You Might Need to Pay Transfer Tax As Well.
When a real estate property is transferred from the seller to the buyer, a document must be filed at the county recorder’s office to state that the property ownership has changed. When this document is prepared, a transfer tax is imposed by the county and the city. In Los Angeles and the rest of Southern California, the seller usually pays this transfer tax.
Understandably, it can be very hectic and complicated for home sellers to do every negotiation and choose the right title company, title insurance company, and escrow agent. However, with the assistance of a real estate agent, you don’t have to worry about a thing.