Martha and her husband had been homeowners for nearly twenty years when they finally paid off their home mortgage. Looking back on it, Martha marveled at the legal path she and her husband had followed to get to the point that they owned a beautiful home, free and clear of any debt obligation. There had been the initial wrangling over the purchase contract when the home inspection had revealed defects about which the sellers had known but fraudulently failed to disclose. Then they had refinanced their home not once but twice, first to get away from an adjustable-rate mortgage and then to get an even better rate when interest rates fell further than expected. They’d also had a dispute with the city over a special assessment against their home for sidewalk installation up and down the street, with the tax assessor over a big hike in their home’s assessed valuation, and with an insurer over smoke damage from a kitchen fire. But with some adept navigation, everything had come straight in the end. And now, they had a wonderful home and valuable financial asset.
Housing
Law also has a lot to say about your housing. We each need a secure place to live. Shelter is such a basic need that in law it approaches a civil right. Even the homeless or others in need of emergency shelter have certain legal protections, with which the first section below deals. Law also provides substantial protection to renters, which the second section below describes. Law also closely regulates home purchases and sales, the rights, obligations, and advantages of homeowners, the mortgages that homeowners use to finance home purchases, the foreclosure of those mortgages, and tax advantages and obligations of homeowners. Home insurance raises other legal issues and protections. A home is the largest asset that most of us purchase in a lifetime. Laws addressing home purchase, sale, financing, security, taxation, and protection mean a lot to us. Consider below these and other legal rights, responsibilities, and opportunities your housing implicates.
Shelter
We all hope to have secure shelter at all times. Yet no one is immune from the natural and artificial disasters, domestic violence, and other events that can leave us in need of emergency shelter. Law offers the homeless certain protections. We get to use public spaces with reasonable security for our persons and effects, when we must rely on those public spaces for temporary shelter. Courts have granted constitutional protection against law-enforcement actions involving unreasonable search, seizure, and disposition of personal effects, and against arrests for loitering. State and local laws create homeless-assistance programs. Law may also require police to offer emergency shelter before taking other actions to arrest or remove homeless persons and dispose of their personal effects. Federal law authorizes special programs for the housing, care, and education of runaway and homeless youth. Federal and state laws authorize subsidies to transition individuals and families from emergency shelter into apartments with rent tied to household income. Once in housing, you have further legal support to defend yourself and family members against violence and threats of violence. State laws authorize restraining orders to remove violent family members or other individuals from your home and personal-protection orders to keep them from threatening your security in and around your housing. Public-interest lawyers, legal-aid lawyers, and family lawyers deal frequently with emergency-shelter issues. Consult a qualified lawyer if you or someone about whom you care needs the law’s help with housing.
Audit: Identify which of the following issues your community faces with respect to emergency shelter: (a) inadequate 2-1-1 or other social-assistance referral system; (b) insufficient number of emergency-shelter beds; (c) loitering and panhandling reducing personal security and interfering with tourism or business; (d) law-enforcement mistreatment of the homeless; (e) inadequate access to the courts for restraining and personal-protection orders; (f) insufficient quantity of transitional, subsidized housing; (g) landlord discrimination against homeless prospective tenants; (h) inadequate law enforcement for victims of domestic violence; (i) inadequate legal relief for victims of natural or human-caused disasters. Get qualified legal representation when facing any of the above issues.
Rental
Law gives you substantial support when renting your housing. State laws closely regulate the landlord/tenant relationship. Rental laws address a landlord’s charging, holding, and returning security deposits, giving adequate notice before eviction, securing tenant personal property when evicting, and charging for cleaning the apartment after tenancy terminates. Rental laws require landlords to maintain apartments in safe conditions with smoke alarms and deadbolt door locks, and habitable conditions with working plumbing, heating, and electricity. Rental laws also require landlords to ensure tenants’ quiet enjoyment of the premises by abating noise, odors, pests, drug dealing, prostitution, and other disruptive conditions and activities. Law may permit you to withhold or escrow that part of your rent representing the lost value of uninhabitable parts of your apartment. Rental laws also prohibit race, sex, and religious discrimination in renting and may prohibit landlords from banning unmarried couples or families with children. Outside of these statutory protections, the lease determines legal rights and obligations including rent, the duration of tenancy, the right to have pets, and what access you may have to common areas and amenities like pools, exercise rooms, and tennis or basketball courts. Read your lease before signing. Consult a qualified legal representative when suspecting violation of your rights as a tenant or when having a dispute with your landlord over the terms and conditions of your tenancy.
Audit: If you rent housing, confirm that you know the following terms and have them in writing: (a) monthly rent amount; (b) lease term, meaning when it ends; (c) whether you have the option to renew the lease at its expiration; (d) whether rent increases with renewal; (e) security deposit you paid; (f) description of any damage to your unit when rented to you; (g) rights you have to use amenities like laundry service and recreational facilities; (h) rights you have to pets. If you have issues, disputes, or concerns over these or other terms, then consult a qualified legal representative.
Purchase
Buying a home is one of the biggest financial decisions many of us ever make. Law offers you substantial protections when buying a home, especially when you know your legal rights. A seller advertising a home must not misrepresent its condition. A buyer who reasonably relies on a seller’s knowing misrepresentations as to hidden conditions may recover the attendant loss. Some states require sellers to complete a disclosure statement disclosing faults. Buyers also routinely include a home-inspection contingency in the purchase contract, to be able to revoke the contract if discovering a material defect that the seller refuses to address. Buyers also often include a financing contingency in the sale contract to ensure the availability of a mortgage commitment. The purchase contract should also include the form of the deed, the title-insurance obligation, pre-closing walk-through inspection, and the closing date. If contractor inspection or walk-through inspection reveal material defects, then negotiations over price reductions may ensue. Contracts often include a contingency for attorney review. With the help of legal counsel, buyers should also inspect the title-insurance commitment for exclusions to be sure the property is free from encumbrances. Federal and state laws also protect buyers from sellers unwilling to sell because of race, sex, religious, or similar discrimination.
Audit: When buying a home, ensure that you understand and negotiate the following terms in your purchase contract: (a) fair price; (b) reasonable refundable earnest money; (c) financing contingency; (d) contractor-inspection contingency; (e) attorney-review contingency; (f) seller’s disclosure statement; (g) seller’s title insurance for clear title; (h) warranty deed; (i) reasonable closing date; (j) possession at closing or seller per-diem payment after closing; (k) tax pro-ration to closing; (l) pre-close walk-through inspection; (m) seller pays transfer taxes. If you do not understand or cannot negotiate these terms, then retain qualified representation to assist you.
Mortgage
Law also says a lot about how you finance your home. Few buy a first home without borrowing money to pay for it. Banks lend money for home purchases only by taking a mortgage on the home as security for loan repayment. Federal and state laws govern mortgages. For example, your mortgage application must accurately represent your income, assets, and debts, or you may have committed federal and state crimes. The lender must likewise accurately represent to you the terms of your loan, including adjustable interest rates, balloon payments, late fees, and other terms that may harm or disadvantage you later. Banks that fail to disclose material terms may violate laws and rules against predatory lending. Banks that refuse to lend to certain borrowers may face regulatory sanctions and liability for racially discriminatory practices. The law of mortgages further deals with the note and mortgage terms. A mortgage grants the lender control of the property on the borrower’s default, as the next section addresses. Note terms should include the interest rate, whether the rate is fixed or adjustable, the period over which you must repay the loan, the resulting monthly payment, whether you must carry mortgage insurance, and other terms. Approach mortgage transactions with caution. You are sharing with the lender control over your home.
Audit: If you are a homeowner with a mortgage, identify the following terms and conditions: (a) the bank or other entity currently holding or administering your mortgage; (b) the current interest rate on your mortgage; (c) the current interest rate on new mortgages; (d) your mortgage balance; (e) whether your mortgage payments are current; (f) the mortgage term (date of final payment); (g) whether you are paying for mortgage insurance; (h) whether you now qualify to drop mortgage insurance or can purchase it for less through term life insurance. Consult a qualified representative if you are unable to confirm this information, have questions over what it means, or believe that you may be able to gain better terms in a mortgage refinance.
Foreclosure
Mortgages give lenders the right to foreclose on your home in the event of your default. To foreclose means to begin a process to remove you from the home and sell the home to pay as much of the remaining mortgage balance as possible. Federal and state laws closely regulate mortgage foreclosures. Some states require lenders to foreclose only through a court proceeding, while other states permit lenders to foreclose without going to court. In either case, the lender must give you proper notice of your default to give you a chance to dispute default, bring your balance current, or seek replacement financing to keep your home. If you do not wish to keep the home and have no equity in it, then you may be able to provide the bank with your deed to the home instead of going through foreclosure. Foreclosure affects your future ability to obtain credit. The outcome of foreclosure typically depends on whether the home is worth more than the mortgage balance. Homeowners whose homes are worth less than their mortgage balance may face a deficiency balance and personal liability after the home’s foreclosure and sale. Federal, state, and lender programs address and discourage mortgage foreclosures. You may qualify for deferred payments, reductions in payments, or reductions in your mortgage balance under those programs. Consult a qualified representative if you fall behind or expect to fall behind in payments.
Audit: If you have fallen behind on your mortgage payment or expect to do so, then take these steps: (a) develop a written budget; (b) adjust your budget to attempt to remain current on your mortgage; (c) notify the lender in writing, requesting information on the lender’s mortgage-relief programs for which you qualify; (d) research federal and state mortgage-relief programs for which you qualify; (e) determine the value of your home, comparing it to your mortgage balance; (f) determine whether you wish to keep the home; (g) confirm your plan of action for the best possible outcome. Consult a qualified representative for advice on your plans or if you receive a foreclosure notice.
Insurance
Your home is a significant financial asset that you should be protecting with homeowner’s insurance. Homeowner’s insurance typically protects you against damage to the home from fire, lightning, wind, hail, or other natural or artificial accident or occurrence. Homeowner’s coverage may cover repair or replacement, or pay the value of the loss. Homeowner’s coverage also typically includes repair or replacement of the home’s contents up to a certain value. Proving what you lost in a fire can be a significant challenge. Consider video-recording everything you own in a quick annual tour of your home. Your homeowner’s coverage may also pay for temporary housing during your home’s repair. State laws regulate the insurance industry closely to ensure the protection for which you bargained. Some of those laws have to do with requiring insurance companies to maintain adequate reserves so that they are financially able to pay you when you suffer insured losses. Other provisions may protect you against unfair or hidden policy terms and exclusions. When you apply for a homeowner’s policy, be sure to make accurate and complete disclosures. False material disclosures, particularly those affecting the insurer’s risk, may void the policy. Notify the insurer promptly in writing if you intend to operate a business in your home, install a wood-burning stove, store chemicals, or conduct any other activity that increases the insurer’s risk or that the insurance application asked you to disclose. Consult a qualified legal representative in the event of any question over insurance coverage.
Audit: If you own a home, obtain your homeowner’s insurance policy and its declarations page or cover sheet to confirm each of the following: (a) the value for which the policy insures your home at least equals its current appraised value; (b) the policy’s contents coverage approximates the value of your contents; (c) the policy does not exclude any specific contents such as valuable collectibles or artwork that you have in the home; (d) the policy does not exclude damage caused by any improvement such as a fireplace, wood-burning stove, sauna, or spa that you currently have in the home; (e) you are not conducting any excluded business use in the home. Obtain a copy of your insurance application to confirm its accuracy and correct any error or omission.
Enjoyment
Law also grants you certain rights and privileges as the owner of your home. Single-family homeowners usually own in fee simple, providing full rights to use, control, alter, and improve the premises while excluding others. By contrast, condominium owners share limited interests in the whole while having exclusive access to their part, without the unilateral right to alter or improve. Your right to exclude others from your home means that you may pursue a civil action for ejection or criminal charges for trespass against those who enter without your permission or other legal authority, whether or not they cause any damage. State nuisance laws give you a right of civil action to stop others from interfering with your use and enjoyment of your home because of noise, odor, light, smoke, and similar offenses. Others may have easement rights particularly to maintain utilities but also possibly to cross your property to access other properties. Easements may arise by continuous adverse use such as when others cross your property for an extended period along a defined path. You may even lose ownership to parts of your property if a neighbor or another builds a structure, driveway, or fence on your property and maintains it there for an extended time. Zoning laws and building codes may restrict your ability to improve your property in the manner that you desire. Consult a qualified legal representative if you have any dispute over your ownership, control, use, enjoyment, or improvement of your home.
Audit: If you own a home, confirm your satisfaction with each of the following rights: (a) your clear title to the home; (b) your ability to exclude others from entering your property; (c) your enjoyment of your home free from interference; (d) your ability to maintain your premises as you wish to; (e) your ability to improve your home as you desire. Consult a qualified legal representative if you are dissatisfied with any of the above or with other rights and privileges of your home ownership.
Obligations
Law imposes certain obligations alongside your rights and privileges of home ownership. Homeowners pay property taxes. Property taxes can be substantial even to the point of forcing long-time homeowners out of their home. Failure to pay property taxes may result in the tax sale of your home after appropriate notice. Jurisdictions assess property taxes based on the value of your home. Because values are uncertain, state laws provide you with procedures to challenge the public appraiser’s valuation. Read the annual appraisal notice that you receive from the tax assessor. Satisfy yourself that your home’s annual change in value is in line with changes in the real estate market and that your home assessment is fair. Invoke the challenge and appeal procedures when the assessment is excessive. Another obligation that state laws impose is that you not conduct activities on your property that interfere with the health, safety, and welfare of the public or that interfere with the rights of adjacent property owners to enjoy their own property. Avoid bright lights shining into neighboring residences late at night, loud music or parties, smoke from bonfires, odors from garbage or refuse, fights and loitering around sports courts, and similar disturbances. Local ordinances may also require that you keep lawns mown, clean up brush and leaves, and otherwise maintain the grounds around your home. Local ordinance may require you to pay for repair of the public sidewalk in front of your home and to pay assessments for repair or improvement of walks, streets, and utilities serving your home. You must also comply with zoning restrictions not to conduct unauthorized commercial, industrial, agricultural, or other activities on your residential premises.
Audit: If you own your home, determine the value for which the tax assessor has appraised it, and compare that value to its market value. If its assessed value exceeds its market value, then consult a qualified legal representative about challenging the assessment at the next annual opportunity. Likewise, consult a qualified legal representative if you receive notice of a special assessment that you dispute, alleging your violation of residential zoning, or alleging interference with your neighbors’ use and enjoyment of their residences.
Sale
The law also closely regulates the sale of your home. When you list your home for sale with a real estate agent, the agent owes you the duties under the listing agreement, just as you owe the agent the duties and percentage fee under the same agreement. Read and consider the listing agreement carefully. To prospective buyers, you owe the legal duty not to misrepresent your home’s condition. Do not distort, disguise, exaggerate, or minimize the actual condition of your home, whether orally or in listings, flyers, or other advertising. State law may also require that you complete a seller’s disclosure statement. If so, read the statement carefully, while answering each required disclosure completely and truthfully. Misrepresentations or omissions from the disclosure statement may lead to your civil liability to the buyer. When you enter into a sale agreement with a buyer, read the agreement carefully to ensure that you agree with all terms. Expect to pro-rate the property taxes to the closing date. Negotiate who pays any federal, state, or local transfer tax. Expect to provide and pay for title insurance. Homes often appreciate in value, giving you the opportunity to benefit financially from your home’s sale. Be sure that the sale price will satisfy all mortgages, commissions, taxes, and other costs of sale. Be sure that you have the full right to sell and do not share that right with separated or former spouses, relatives, land-contract holders, or others who must approve your sale and may claim an interest in your sale proceeds. And determine whether you will owe capital gains tax on the sale. Consult a qualified representative over any sales questions.
Audit: Identity which of the following home-sale steps you feel qualified to complete: (a) negotiating and entering into a fair listing agreement; (b) completing an accurate and complete seller’s disclosure statement; (c) negotiating a fair sale price; (d) approving a fair sale agreement; (e) responding to demands for price reductions after inspections; (f) obtaining and correcting title-insurance commitment; (g) calculating tax pro-ration to closing date; (h) preparing or reviewing the sale deed; (i) conducting the closing. Retain a qualified legal representative for any of the above sale tasks for which you are not qualified.
Key Points
Law governs many rights and interests around your housing.
You have certain legal rights to shelter in emergency situations.
Landlord/tenant laws closely regulate rental housing rights and leases.
Law closely regulates the rights and protections of home buyers.
Law also closely regulates rights around home mortgages.
Law provides substantial protections around home foreclosures.
Law also regulates homeowner’s insurance and its protections.
Law helps you enjoy the rights and privileges of home ownership.
Law imposes restrictions, assessments, and other home obligations.
Law and sale-contract terms closely regulate your sale of your home.