5 Legal Risks FSBO Sellers Face

 Posted on October 09,2024 in Real Estate

Real estate owners who want to sell their properties can do so in one of two ways: through a realtor or on their own. The latter option is referred to as a "for sale by owner" (FSBO) transaction. Some sellers choose it because it allows them to cut costs by avoiding the realtor’s fee. However, as we will see below, FSBO sales come with certain legal pitfalls. These can be avoided by hiring a Texas FSBO real estate attorney who will help manage these risks and protect your interests throughout the transaction.

Here are five legal challenges FSBO sellers face.

Errors in Drafting the Purchase Agreement

The purchase agreement between the buyer and seller is the beating heart of the transaction. When the sale is facilitated by a realtor, he or she produces the purchase agreement. In an FSBO sale, however, the responsibility falls to the owner. Drafting the contract by yourself is a risky task because any errors you make can lead to legal trouble down the line. A real estate lawyer is the best resource for drafting a strong FSBO purchase agreement.

Failure to Disclose Property Defects

One of the most important legal duties a real estate seller has is to disclose any property defects to the buyer, such as:

• Plumbing issues
• Boundary or zoning disputes
• Mold or structural damage
• Electrical damage

Failure to disclose any defects can not only sabotage the transaction but can expose the seller to lawsuits later on. In an FSBO transaction, the seller should be extra vigilant in taking stock of the property’s flaws and notifying the buyer.

Failure to Clear the Title

Title issues are a serious concern in a real estate transaction. The seller’s ownership of the property should be clear of any threats such as liens, outstanding mortgages, ownership disputes, or unpaid taxes. If the title is encumbered with such issues, it can prevent the owner from selling the property. A title search should be performed before the sale, and an attorney should be consulted about any title issues.

Neglecting Fair Housing Laws

The Fair Housing Act prohibits discrimination against buyers, renters, or borrowers simply because they belong to a certain group. Realtors are usually careful about complying with the Fair Housing Act, but FSBO sellers may not be aware of the law and its provisions. Discrimination by a seller can invite serious legal repercussions.

Noncompliance With Regulations

Real estate transactions are subject to state and federal regulations. There are zoning laws, homeowner association rules, environmental regulations, and administrative rules. It can be difficult for an FSBO seller to keep track of all these regulations or even be aware of them, which can trigger legal problems.

Contact a Bexar County, TX FSBO Real Estate Attorney

Selling property without a realtor has its challenges. The good news is that these legal issues can be avoided with the help of a Wilson County, TX FSBO real estate lawyer. Geoff Mayfield, Attorney at Law is a highly experienced real estate attorney who offers clients excellent personalized legal services and is ready to walk you through your FSBO transaction. Schedule a free consultation by calling 210-535-0870 today.