Buyer's and Seller's Rights and Duties
The common principle is that buyers and sellers who enter into an agreement regarding a real estate transaction owe certain duties to one another. This standard helps promote good faith and fair dealing between buyers and sellers, which minimizes future legal disputes. If you are either, a buyer or a seller in a real estate transaction, an attorney at the Law Offices of Salar Atrizadeh, who is experienced and knowledgeable in real property law, can help guide you through your transaction.
A seller has a duty in a real property transaction to present marketable title. To present marketable title, a seller must not attempt to sell the property to another buyer. Additionally, the title must be free of any encumbrance, such as a lien or mortgage on the property. This requirement does not need to be written in the purchase agreement to be binding. Indeed, California law imposes this requirement on all sellers. Therefore, a seller would need to settle a mortgage on a property before transferring title to the buyer. Sellers are also obligated to inspect the property and inform buyers if there are any conditions that affect the value of the property. This can include, among others, termites, foundational problems, structural concerns, and plumbing issues. According to California law, sellers of residential property must also provide a Natural Hazard Disclosure Statement to buyers.
In California, the law requires the parties to perform their duties under a real estate contract in a timely manner (i.e., time is of the essence). The law does not set a specific timeline, but only requires that parties do not delay the transaction in bad faith, or fail to perform their requirements without a good excuse. Both parties also have a duty to satisfy any conditions (e.g. promises) with a good-faith effort. For instance, if a seller promises to make improvements on the property before the sale of the property, the seller has a duty to make a good-faith effort to satisfy this promise. Additionally, buyers have a duty to make a good-faith effort to secure financing to purchase the property. In the event that the property is substantially damaged, without the fault of either the buyer or the seller, before the buyer takes title of the property, California law excuses the purchase and requires a refund to the buyer. However, buyers and sellers are at liberty to negotiate to different terms and conditions in their purchase agreements.
In the event that legal disputes do arise, buyers and sellers are increasingly seeking resolution through arbitration. Although, California law does not require real estate agents and brokers to be attorneys, buyers and sellers engaging in residential or commercial real estate transactions can benefit from the legal counsel of a skilled attorney. Having an attorney oversee the transaction ensures that both parties are aware of the applicable legal requirements and all parties are satisfying their duties under the purchase agreement.