Firm News

Legal issues that may arise in a home purchase

Ideally, a real estate deal will be smooth sailing, but the reality is that bumps often occur along the way. Sometimes, buyers may require a legal remedy for an issue with the property or the contract.

First-time home buyers and market veterans alike should be aware of these potential legal issues when buying a home.

Undisclosed property issues

If a home inspector uncovers or the seller discloses defects in the home, the buyer can negotiate the offer based on the estimated cost of repairs. However, sometimes major problems go unnoticed until after closing.

In New Jersey, sellers legally imply that a home can be safely inhabited by the act of selling the home. They must also disclose known defects in the property that may not be immediately obvious to a buyer. Listing the property “as is” does not release a seller from these legal requirements.

Undisclosed additions

Significant changes to a property require a permit from the local jurisdiction. If a seller has constructed an addition or otherwise majorly altered the structure of the home without a permit, he or she may be responsible for fines or back property taxes at closing. Otherwise, the buyer may end up shouldering these costs if the city discovers the permit issue months or years after closing.

Condition of home

The purchase agreement indicates the required condition of the property upon closing, including completion of all negotiated repairs and items that the seller included with the sale, such as furniture. The buyer may delay closing or seek financial recourse if the seller leaves the home in poor condition, fails to complete repairs as agreed or removes items that he or she should have left with the house.

Restrictive covenants

This type of agreement requires or restricts a buyer regarding the use of the property and land. For example, the home may be subject to an easement that requires public use of a portion of the land for road access. Buyers may want to negotiate the terms of restrictive covenants.

Firm News

Should you place your possessions in a trust?

What is a trust? Trusts create a fiducial relationship whereby you (the grantor/ trustor) give another party (the trustee, the authority to handle your asset (trust property) on behalf of a third party (your beneficiary) for the beneficiary’s benefit.

In estate planning, a trust is a planning tool that helps manage property and assets during your life or after you have passed on. Many people use a trust to supplement a will.

So, should you place your possessions in a trust? Trusts are an excellent tool for financial planning and preparing for the future. For example, the property passes directly to your designated beneficiaries upon your death without going through probate.

Benefits of placing property in a trust

  1. It helps protect your assets from creditors and potential lawsuits.
  2. It can include an incapacity clause. Here, you can designate a person to handle your affairs on your behalf in case you become incapacitated or mentally unfit. This individual could then sign your papers on your behalf.

Types of trusts

Although there are trusts that may fulfill many specific purposes, primarily, there exist two types of trusts that you can choose from:

  • Revocable trusts – As a trustor, you maintain legal ownership and control of your assets. An asset placed into the trust may be subject to estate tax, and the trustor is responsible for paying the taxes on the asset’s income. It is more flexible, and you can modify the trust to your needs.
  • Irrevocable trusts – Legal ownership for the trust passes on to the trustee. This lowers the taxable portion of your estate as the trustee pays the taxes through the trust. Also, the trust is permanent, and you can only make changes if you receive the permission of everyone mentioned in the trust.

It is important to place your property in trust and safeguard the future of your beneficiaries because failing to plan is planning to fail.