Owning a Home

Purchasing and owning a new home is typically part of the American dream for first-time homebuyers. While homeownership offers financial rewards over being a renter like building equity and tax benefits, it also involves navigating a complex landscape of laws and regulations. From understanding the legal steps in the homebuying process to knowing your rights and obligations as a homeowner, being informed is essential to protect your dream home and enjoy your new property to the fullest.

This article explores the key legal considerations involved in buying and maintaining a home. From that first down payment to renovations and improvements, this practical guide will help you make confident and informed decisions on your path to homeownership.

Basic Maintenance and Repairs

Entering the housing market and buying a house is a major financial decision. It can also be a good investment. To keep your home in good shape, there are general maintenance items to tend to either monthly, seasonally, or annually. A few examples include:

• Test your smoke alarms each month
• Inspect your home’s exterior for damage or potential problems
• Have your HVAC inspected twice a year
• Inspect your roof for loose shingles, damage, rot, or mold, and clear any debris
• Clean dryer vents at least once a year to avoid lint buildup that can cause a fire
• Flush your water heater once a year to clear out sediment

Basic maintenance can help you avoid costly repairs and protect your home from fire dangers.

Home Improvement Projects

Home renovations and improvements can boost your home’s property value. Upgrading your kitchen will always add value. A bathroom refresh can keep your home looking contemporary. Plus, it’s a good idea to replace worn-out appliances and fixtures.

Most homeowners learn how to do minor repairs, maintenance, and improvements themselves. Painting a bedroom is not difficult, but it may take a while to master. Larger projects, like rewiring your house or installing a new gas line, require specialized training and tools and might be a bit more than you’re ready for.

You may need to hire a contractor for more complex jobs. As the word "contractor" implies, the legal relationship hinges on the terms of the contract. Some states require a valid home improvement contract before work can begin. Even if your state is not one of them, a contract will help you protect your interests. At a basic level, the agreement outlines the details of the work planned upfront so both parties are in agreement. The contract should also include a starting date, an estimated date of completion, and what it will cost.

When you have work done on your home, keep all receipts and contracts on file in case you need to return any materials or take legal action against a contractor. Once the work is completed, it’s important to thoroughly inspect it before signing off and making a final payment.

Your Mortgage and Property Taxes

Unlike renters, property owners are responsible for paying property taxes to their county government. These taxes are usually based on a combination of the assessed value of the land and the structure. Some exceptions exist for certain agricultural or rural properties. Property tax funds pay for local services such as schools, parks, libraries, and fire departments.

Most mortgage lenders will add property tax estimates into their monthly payments, holding the property tax funds in escrow until they’re due. The lender then makes the property tax payment for you and will send you a receipt.

You will receive a bill yearly if your mortgage company does not include property taxes. You must pay your property taxes or risk losing your home. The county can place a lien on your property or sell it to recover your unpaid taxes.

Liability and Homeowner’s Insurance

Homeowners are often liable for injuries that occur to visitors. This may even apply to trespassers, although trespasser liability is limited. Homeowners should confirm policy exclusions. This is the concept of premises liability. A visitor who slips on an icy walkway and breaks their hip may be able to sue for damages by alleging the homeowner’s negligence. A reasonable homeowner in this situation would either remove the ice or place a warning sign at the beginning of the walkway.

One way to protect yourself from property lawsuits is to buy a homeowner’s insurance policy, which gives the insurer the right to settle or defend lawsuits involving the insured property. Almost all mortgages require that you carry homeowner’s insurance. The policy won’t cover all claims involving the property such as intentional acts by the homeowner.

Mortgage insurance also covers the physical home itself, including its contents. The terms of the contract determine the extent of coverage. If your home sustains damage from a serious storm, weather event, or natural disaster, your homeowner’s insurance will cover the cost of repairs after you pay the deductible. Your insurance can also reimburse you for lost possessions.

If your home suffered other damage that requires repairs, check with your insurance agent to see if your policy covers it.

Know Your Community

Getting to know your neighbors can have many benefits. Building a community can help you feel more secure in your home. Neighbors often look out for each other and help if someone is in need.

Neighbor disputes can turn ugly if no effort is made to address the issue quickly. Understanding your rights, land boundaries, local noise ordinances, animal statutes, and land upkeep laws can help you avoid a volatile situation. Don’t put yourself in a tricky legal situation while trying your best to be a good neighbor.

Know what covenants, conditions, and restrictions may exist on your property so you can address conflicts and derail problems with a neighbor.

Homeowners’ Associations

A homeowners’ association, or HOA, is a governing body that creates and enforces specific rules related to a "common interest" development, such as a condominium complex or planned community. HOAs maintain the integrity and value of the individual units by ensuring the maintenance of common areas and uniformity among the units. For instance, an HOA may require homes to have a specific color scheme or plant only native trees.

Monthly HOA dues help pay for their operations and go toward shared landscapers and other services. Your HOA will also maintain amenities like a pool or clubhouse. Be sure to familiarize yourself with your HOA’s rules and requirements to avoid fines for violations.

Refinancing

Mortgage refinance changes the term of your original mortgage loan. Refinancing your mortgage can be helpful if the interest rates have dropped since your original loan or if you want to change the terms of your loan. Homeowners with an adjustable-rate mortgage often refinance to lock in a fixed-rate loan. Refinancing can also lower your monthly mortgage payment or allow you to gain access to your home’s equity.

Mortgage refinancing is a similar process to gaining your original loan. Applying for a new home loan, having a home inspection, and going through underwriting will feel familiar. You’ll attend closing and must pay closing costs unless you roll that money into your new mortgage. Your new mortgage company will pay off your original loan, and you will pay your new monthly payment to your new lender.

Foreclosure

Foreclosure is when a borrower cannot pay their monthly loan payments, and the bank moves to take the home and sell it to recoup their investment. The process can devastate your credit score, finances, and family security.

If you’re struggling to pay your mortgage and are at risk of foreclosure, a few options may help. You can talk to your lender about a mortgage modification. A mortgage modification is when you and your lender agree to change the terms of your loan to make it easier for you to pay.

You can also sell your home if you cannot afford it. A home sale will avoid foreclosure and hopefully allow you to pay off the mortgage.

Looking to the Future

Maintaining your home can also help when it comes time to sell. Explore your local market and see what other homes are selling for. Examine your property with a fresh eye. What improvements can you make for your home value to be market-ready? Contacting a real estate agent or realtor to assess your property can be helpful. They know the real estate market conditions and what it will take to get a good purchase price.

If you’d rather keep your home for future generations of your family, speak with an estate attorney to create an estate plan. There are multiple complex property law issues involved. An estate planning attorney can explain the pros and cons of various types of estate property rights and tenancies available in bequeathing your home.

If you have questions about your legal rights when making a home purchase, contact a real estate attorney. A lawyer specializing in property issues can help you understand your options and provide legal advice.

Explore the following links to learn more about these and other homeownership topics.

Related Resources

• Checklist: Before You Rent Out Your Property
• CC&R Basics
• Top Ten Tips for Filing Fire Insurance Claims
• Creation and Termination of CC&Rs
• CC&R Enforcement and Remedies
• Why You Should Buy Homeowners’ Insurance
• Property Rights: Deed in Someone Else’s Name
• Types of CC&Rs: Builders’ Restrictions
• What Is a Common-Interest Community?
• Understanding Mechanic’s Liens
• Types of Property for Tax Purposes