Buying or selling real estate is one of the most significant financial transactions many people will make. However, without proper precautions, these deals can easily lead to legal disputes, financial loss, or even litigation. Here are some essential ways to minimize risks and avoid legal conflicts in real estate transactions:
1. Use a Written Agreement
Always formalize the transaction with a written contract. Verbal agreements or informal promises are difficult to enforce and can lead to misunderstandings.
2. Clearly Define Terms and Conditions
Ensure that all key terms—such as purchase price, deposit amount, closing date, and conditions for sale—are clearly stated in the agreement. Ambiguity is one of the main causes of disputes.
3. Conduct Thorough Due Diligence
Before signing any agreement, both buyers and sellers should conduct proper due diligence. This includes reviewing property titles, checking for liens, zoning restrictions, easements, and ensuring compliance with local laws.
4. Get Professional Legal Advice
Real estate transactions involve complex legal and financial considerations. Hiring a qualified real estate lawyer can help you navigate the process, avoid common pitfalls, and ensure your rights are protected.
5. Disclose All Material Information
Sellers are legally required to disclose any known issues with the property. Failing to disclose defects such as structural damage, contamination, or boundary disputes can lead to lawsuits.
6. Clarify Roles of Agents and Third Parties
If real estate agents, brokers, or other professionals are involved, clearly define their roles and responsibilities to avoid conflicts of interest or miscommunication.
7. Address Dispute Resolution in the Contract
Include a dispute resolution clause in the agreement. This can specify whether disputes will be resolved through negotiation, mediation, arbitration, or litigation, and which jurisdiction’s laws will apply.
Written by Paul Choi, Founder of Sky Law
