By E. Drew Nelson, Attorney at Law
You may live in a house, a condo, or an apartment. You probably have neighbors close by. It all might seem very normal, until there’s a problem. When issues arise, emotions are high, sometimes resulting in legal action. Let’s take a look at some of the common residential real estate litigation scenarios.
#1: Residential Seller-Buyer Litigation: The Buyer Backs Out of the Purchase Contract
It may seem like buying or selling a house is fairly routine, but sometimes the buyer wants to back out of the agreement. Fortunately, North Carolina requires all agreements to buy or sell real estate be handled via a written contract, with many of the actual forms standardized to make the process consistent and easier to understand. Verbal agreements are not valid when it comes to buying and selling real estate.
If a buyer wishes to back out (or withdraw their offer) of the signed written contract prior to settlement, the agreement will often stipulate what penalties, if any, there will be. Typically, the contract will state that the buyer will make an “earnest money deposit” at the time the contract is signed. If the buyer does not fulfill the terms of the contract, the seller will be able to keep the earnest money deposit as damages for breach of contract. The amount of earnest money can vary widely but tends to increase when the market conditions favor sellers.
Written sales offers submitted by a potential buyer may have contingency clauses in them, which can give the buyer a legal “out” and right to break the contract (with or without the loss of earnest money). For example, the offer may be contingent upon the house passing inspection by a professional home inspector or on the sale of the buyers’ current property.
Whether you are buying or selling, we recommend you review the Purchase Contract (offer agreement) so you understand what happens when either party fails to fulfill his/her obligations under the agreement.
#2: Residential Landlord-Tenant Litigation: The Landlord Fails to Fix Something
Generally speaking, a landlord should make all repairs and do whatever is necessary to ensure the property is kept in a fit and habitable condition. This includes prompt repair or replacement of all electrical, plumbing, sanitary, heating, ventilating, air conditioning, and other facilities and appliances supplied or required to be supplied by the landlord.
If there is a problem the landlord needs to address, the tenant should notify the landlord of the issue. Your lease agreement will generally explain the required process. Depending on the state you live-in and what the nature of the problem is, you may need to notify the landlord in writing. It is advisable to notify your landlord both by phone and by email or regular mail to make sure you have fulfilled any potential legal obligation. Keep copies of any communication sent to the housing provider.
If the landlord fails to rectify the situation, some states may permit the tenant to withhold rent or a portion thereof. This is not the case in North Carolina. Never withhold rent unless a judge gives you written permission to do so. In NC, a tenant can file a complaint in small claims court to request relief. Be prepared to provide documentation of notification to the landlord of the issue. Pictures of the defect will be another important piece of evidence in your trial.
#3: Residential Neighbor-Neighbor Litigation: Property Boundaries
Sometimes neighbors disagree. Maybe there is a concern over an easement, the placement of a fence or another dispute over your property boundaries, but a disagreement with someone in such close physical proximity can cause a large amount of stress.
When such an issue arises, the first step you should take is to review any surveys, deeds, property descriptions or similar legal documents to determine if the property boundaries and/or easements are already established and known. If this review does not provide the needed information, a survey may be done by a professional to create a report establishing and documenting the precise boundaries of the property. This documentation can be helpful in the event the two parties cannot resolve the situation and a lawsuit is filed by one of the parties. These types of disputes may be resolved in court or through mediation.
#4: Residential Foreclosure Litigation
In the unfortunate event where a homeowner fails to meet their monthly mortgage obligation and defaults on the loan, the lender may initiate foreclosure proceedings to remove the homeowner from the premises and to acquire and sell the premises to recover the outstanding debt.
If you are a homeowner and are unable to pay your mortgage, we strongly recommend you contact the mortgage lender(s) to discuss options such as loan modifications, repayment plans or a forbearance agreement where payment is delayed.
Residential foreclosure litigation varies by state but can be very complex. Lenders will typically be represented by an experienced real estate attorney. If you are facing foreclosure, you should also speak to an attorney. The attorney will help you determine if there were any procedural errors, predatory lending concerns, or unfair practices which may provide you with a defense against the foreclosure.
Real estate litigation is complex, and the laws vary based on the type of property and whether you are the property owner, potential buyer, or a tenant. Speak to a real estate attorney about your specific situation.