Selling a House in California

Selling a house is one of the most significant legal transactions you'll ever participate in. It's important to know your legal rights and understand the process.

Working With a Real Estate Agent

In California, real estate agents have what's called a "fiduciary duty" to the home seller in instances in which they represent the seller, and not the buyer. In California, this means that the agent must act with the utmost care, integrity, honesty, and loyalty in dealings with the seller. It also means the diligent exercise of reasonable skill and care in performance of the agent's duties. Additionally, the agent has a duty to disclose to the seller all facts known to the agent materially affecting the value or desirability of the property that are not known to, or within the diligent attention and observation of, the parties.

California law requires that the seller provide the buyer with a completed "Real Estate Transfer Disclosure Statement." This is a pre-printed form that lists many features or conditions about the home, the land, and the area where the home is located. The seller must list on this form any possible problems he or she knows about that might affect your willingness to purchase the home. This statement must disclose all known structural defects as well as problems with or information about the heating, plumbing, mechanical and electrical systems.

The seller also must include potential problems of which he or she is aware such as easements, environmental hazards, landfills, flooding, zoning violations or noise problems. It is also the duty of the seller's agent to conduct a visual inspection of the home and report all facts that materially affect the value or desirability of the property.

In addition, the seller must also complete a single page disclosure form found in "The Homeowner's Guide to Earthquake Safety." In this document, sellers disclose anything they know about the earthquake readiness of their property.

When selling a condominium in California, the seller must give the buyer copies of the homeowners' association bylaws, financial statements, and other documents. The seller also is obligated to disclose any unpaid assessments.

• Items on the property
• Operating condition of certain items
• Defects in walls, ceilings, floors and sidewalks
• Existence of environmental hazards, easements, construction without permit, zoning violations, flooding problems, earthquake damage, deed restrictions and neighborhood noise problems or other nuisances
• Some property owners are required to disclose that the property is near an airport
• Depending on the age of the property you are purchasing, the seller may be required to disclose whether they have knowledge of any lead based paint in or on the property
• A death that occurred on the property within three years of a sale and the circumstances of that death if it was a gruesome or offensive death, or if it affected the reputation of the property

Purchase Agreements

When you've got a serious buyer, you'll receive a written offer to purchase your home. You have the right to use the Residential Purchase Agreement RPA-CA when making offers or accepting offers on property in California.

You won't have very long to decide whether or not to take the offer or propose a counteroffer so it's important to be informed ahead of time.

Common counter-proposal items include:

• A higher purchase price
• A higher deposit
• Giving buyer less time to remove contingencies
• Excluding certain items from the sale
• Providing you move in time to vacate the house after the sale is closed
• A clause making it a contingency that your attorney approve the contract
• A "liquidated damages clause" that details how much money the buyer will owe you if the buyer backs out of the deal for reasons other than the contingencies listed in the contract

Legal Title Issues

Your California real estate lawyer or title company will investigate the legal title of the property you want to sell, and may find issues you'll need to understand.

In California, for example, an implied easement may be present where there is an easement by necessity. Generally, whenever a transfer occurs that results in a "landlocked" parcel and there is no method of access whatsoever, except over the land retained by the seller, or over the land of a stranger, then the necessity is recognized. Another implied easement is recognized when land in one ownership is divided and, at the time of division, one portion is being used for the benefit of the other portion.

The property you're interested in may also be subject to a "lien," which is a charge on the property to satisfy a debt or other obligation owed by the current owner of the property. A lien encumbers property as long as it exists and has been recorded in the public records.

In California, liens on a piece of property may include:

• Mortgage
• Mechanic's Lien
• Judgment Liens
• Unpaid Taxes
• Unpaid Municipal Utilities (water and sewer)
• Lien on divorced couple's property to be paid at time of sale

Closing Costs

In California, you may need to pay for the following charges - called " closing costs"-at the time you sell your home:

• Satisfying the remaining balance on loan (if house not paid in full)
• Transfer taxes
• Documentary Stamps on the Deed
• Title insurance
• Property taxes (prorated)
• Broker's commission
• Negotiating Closing Costs
• Home Inspection

Specific Performance

In California, a seller who agrees to sell a particular property must do so unless the buyer fails to meet all the terms of the purchase agreement. This is called "specific performance," which is a legal action to compel performance of a contract where one party is ordered by a court to comply with the terms of the agreement. If you have second thoughts on a particular sale, you'll want to immediately contact an attorney.