7 Legal Issues To Consider Before Buying a House

It’s safe to say that buying a house is a very expensive purchase. Some might call it the most expensive purchase we could make. But regardless, buying a house is definitely something we should prepare for in advance.

More than that, we should prepare for all the legal things that come our way when doing so. So, here are the X legal things to consider before buying a house.

Getting Preapproved

You’ve probably heard plenty about mortgage preapproval. But do you know why it is important? Getting preapproved for a mortgage loan before buying the house is a smart move to make.

Not only does it mean you are ready to get a loan, but it also makes you a serious buyer. The latter is especially important when dealing with sellers. Being preapproved means you are ready to dish out a huge sum of money. And in the eyes of the seller, it means you are one step closer to buying.

Sending A Purchasing Offer

To buy a house you will first need to send a purchase offer. This is the natural next step once you’ve found the perfect house. Not only that, but it is the legal way of doing it.

To send a purchase offer, you will need to prepare some documents. If you’re going with a real estate agent, then do know this person will guide you through the process.

But there is a way to go about this, a way that will save you money. Instead of matching the offer by the seller, consider going a bit lower. This will not work always and sometimes you might end up in a bidding war with another buyer.

But if really want to save the most money, then you should consider hiring a real estate agent. This isn’t a legal requirement but having an expert by your side is always advised.


After submitting an offer, the seller then responds by either accepting, countering it, or rejecting it. If the seller does anything to change the offer, then make sure to take a long, hard look at the document as there could be key pieces of information hiding that could ruin the deal for you.

Once the negotiations end and you’ve agreed on everything, then the next legal step is to start the purchase agreement. There are a few things to consider in this step, which are:

  • Earnest Money

This is a deposit that the buyer pays the seller as a means to commit to the deal. The deposit is typically 1-2% of the total cost of the property but can sometimes be much bigger. A bigger earnest money deposit will put you on more favorable terms with the seller.

  • Contingencies

Contingencies legally protect both buyer and seller by letting them back out of the deal if certain things go wrong. For the buyer, a breach of contingencies allows them to retain the earnest money deposit.

  • Settlement Date

Very straightforward, a settlement date is a date when both buyer and seller agree to close the sale. Before this date comes, you will need to conclude all required inspections such as pests, flooding, etc, and the buyer must secure the new mortgage.

  • Date of Possession 

This is the date when you can move into your new house. It is very different from the settlement date as this gives you the right of possessing the house.

Mortgage Approval

Very different from mortgage preapproval, mortgage approval is the next legal step once the purchase agreement has finished. To get approved for a mortgage you will need to go to your lender with the details of the purchase agreement and start the process.

As always, you will be asked for more documents to bring with you. You will be taken care of if you’ve already hired a real estate agent for the process.

Home Inspections

In many states, home inspections are legally required and you will not be given a loan without one. All while getting your mortgage approved, you will need to do a few home inspections to make sure everything is in order.

For the lenders, a home inspection is yet another safety mechanism that makes the deal more secure on their end. If the home inspections come back without any glaring issues, then lenders consider the deal safe.

Before doing home inspections, make sure to have a real estate agent with you insert a clause that will allow you to hire home inspectors to do a full house inspection.

These are experts that look for issues, problems, and anything else that might jeopardize the deal. If a home inspector does indeed find any glaring issues with the house, then you will need to back a few steps and renegotiate the deal.

Meeting Contingencies

Contingencies protect both the seller and the buyer, but they are also ways to protect the deal itself. As a buyer, you might have to sell your existing house before purchasing the new one.

And if that’s the case, then you’ve probably started it in the contract. This is very contingency that many homeowners do. But do understand that this works against you.

If the seller has a buyer ready to buy the house without needing to sell an existing one, then they will be ahead of you. So you will need to act fast and meet all the contingencies that the contract states. While you can always sell your home in advance, but that means you will have to find someplace to live temporarily.

Title, Closing, and Filing

Once you’ve met all the contingencies in the contract, it’s time to finish the sale by completing the title, closing, and filing.

The title is the first legal step out of the three and it simply means transferring the property over to you. Before the seller could do that, they will need to pay any debts they have.

The closing, or mortgage closing, is a meeting with your lenders where you will sign documents and review finances before the lenders giving you the green light on your mortgage.

And the filing is the last step where essentially your real estate agent will file all the documents and paperwork with the county. And that concludes the legal considerations when buying a house.

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