There’s more to selling a condo in California than finding a buyer and closing the deal. The selling process involves a ton of legalese and paperwork which could be overwhelming, especially for first-time sellers.
If you want a smooth, successful, and relatively stress-free home sale, you have to know what is expected of you as a seller. Below are some legal requirements you need to consider when selling your home in San Diego:
Written contracts are essential
Any contract related to real estate deals should be formally recognized in writing to avoid misunderstandings and to keep the transaction transparent. Verbal agreements are unreliable and could be rendered void.
A contract helps protect both the buyer and seller during the transaction. The paper trail will clear up any disagreements regarding the finer details of the sale.
For example, if the buyer changes their mind or takes issue with something regarding the transaction, you can always refer to the contract and set the matter straight. Contracts also offer clauses and concessions to buyers and/or sellers so they can be protected if the sale falls through.
Due to the importance of contracts, you should have a licensed California Realtorassisting you in drawing up all of the forms in order to avoid any potential legal disputes.
Sellers must submit a Transfer Disclosure Statement
In California, sellers are required by law to submit a Transfer Disclosure Statement (TDS) to the buyer. This document contains material facts that may have an effect on the buyer’s decision to proceed with the purchase.
You should list down any potential problems and irregularities with the property in the TDS. Also, include additional disclosures like the homebuyer’s past home inspection and pest reports. If you’re currently living in the property, disclose it in the statement, as well.
Failure to disclose all relevant information could mean facing severe penalties. If you’re not sure about disclosing certain items, put them in the TDS anyway to be on the safe side. Ask your real estate agent and/or your real estate lawyer about items to be included in the TDS so you can cover all your bases.
Make sure to submit the TDS as soon as possible so the buyer can make an informed decision.
Sellers need to use a title company
When selling a California property, you must hire a title company to conduct a title search and create a Preliminary Title Report (PTR). In Southern California, it’s customary for the seller to pay for the buyer’s title insurance when purchasing a resale property. The responsibility of payment varies depending on the county or city so ask your real estate agent on how you should proceed.
Both buyers and sellers are allowed to suggest the title company of their choice. For the best results, buyers and sellers can discuss their respective options and agree on the title company and title insurance company to complete the task. You can even split the cost of title insurance with the buyer. Just remember that in real estate everything is negotiable.
Sellers should look into laws surrounding escrow
When closing the deal, buyers and sellers usually have an escrow agent to facilitate the sale. The escrow process involves buyers depositing a certain amount of funds into escrow referred to as the earnest money deposit (EMD) while the seller submits the deed. After the deal’s conditions are met, the escrow agent will transfer the funds and the deed to the respective parties. The buyer and seller usually pay for the independent escrow company together.
Although there are no laws requiring the use of escrow agents, there are regulations set in place to protect buyers and sellers. California’s Escrow Law sets up protections for buyers and sellers when they entrust money to independent escrow agents.
It’s customary for sellers to pay for transfer tax
In California, a transfer tax is imposed by the county and/or the city when real estate is transferred from a seller to a buyer. The state transfer tax costs 0.11% of every $1,000 of the overall sales price. In San Diego, the city and county currently charge $1.10 per $1,000.=
There is no set rule on who pays for the transfer tax. However, if you’re a seller in Southern California, it’s expected that you pay for the transfer tax. Discuss with your real estate agent any tax breaks or exemptions you’re eligible for to reduce the overall costs.
Need more selling advice? Get in touch with me, Max Mervis, today!
From property valuation to negotiations, I’ve been helping San Diego buyers and sellers in achieving their real estate goals for 25 years. Contact me today at 619.980.8385 or reach out to me by clicking here.