Understanding The Legality of Property Rights for Sellers

Purchase-sale agreements involve many legalities and have significant implications for sellers. As such, sellers must know the laws governing sales in their area. Understanding these regulations helps all parties avoid legal disputes and safeguard their interests. Moreover, understanding your legal rights and obligations is vital for sellers to ensure a smooth and successful transaction. 

What are Property Rights?

Property rights in fee-simple ownerships allow the owner to sell, rent, lease, or develop the property as they wish. Should owners decide to sell the property, they retain certain rights throughout the real estate transaction. Consider the following:

  • Right of possession and control: Sellers have legal authority to possess, control, and manage their property until the sale is complete. They can live in and use their property until the sale is finalized and the ownership is transferred to the buyer.
  • Right of transferability: Sellers have legal authority to transfer property ownership. This could include gifting it to a friend or family member or any other mutual agreement between the parties.
  • Right of market exchange: Sellers can sell their property to a buyer for a reasonable price based on market conditions and preferences. They also reserve the right to negotiate and accept or deny offers.
  • Right of legal protection: Property rights are enforced by law to ensure legal recourse in the event of disputes. This means sellers can confidently engage in real estate transactions without fear of infringement.

Until the sale is complete, sellers reserve the right to enjoy their property and exclude others from entering it. Once the property deed is legally transferred from the seller to the buyer and recorded with the county, the buyer becomes the official owner. Consult a lawyer to ensure you follow the legal procedures. 

Limitations of Property Rights

Property rights play a crucial role in the real estate market and thus have significant implications for sellers, especially concerning their limitations. Consider how local, state, and federal regulations can restrict property use, development, or modification. For example, zoning laws determine what owners can or cannot do with their property within designated areas. Owners cannot build a residential property if an area is zoned for commercial use. Other limitations include:

  • Easements: A property owner allows another individual access to use a portion of their property for a specific purpose. For example, two neighbors who share the same driveway may have an easement that allows both owners to use the driveway as needed.
  • Liens and Encumbrances: Liens and encumbrances are a third party’s right to or liability for a property. In other words, persons who do not own the property may claim it. For example, if an owner defaults on their mortgage, lenders have a legal right to put a lien on the property, which could affect the property’s sale.
  • Environmental Restrictions: Environmental regulations may restrict how property is used so that the government can protect natural resources. 

Sellers must be aware of these restrictions to make informed decisions and safeguard their interests. Ensuring the property’s title is free and clear of any liens, encumbrances, or creditor claims is crucial. Otherwise, they can negatively impact a seller’s ability to follow through with the transaction.

Legal Requirements for Property Sales

Sellers should be aware of several legal requirements for real estate transactions. For example, the Purchase Sale Agreement (PSA) is the key contract. The PSA must clearly outline the terms, conditions, contingencies, disclosures, and any other provisions. Once the contract is signed, it is legally binding and enforceable. 

Other required documents may include:

  • Listing Agreement
  • Preliminary Title Report
  • Loan/Mortgage Documents
  • Tax Declaration
  • Records of Utility Bills/ Records of Repair and Maintenance
  • Records of Homeowner’s Insurance
  • HOA Covenants and Agreements
  • Disclosure Statements
  • Plans and Permits

Before the sale is finalized, both parties must sign the PSA and resolve any other contingencies provided in the contract. The seller must demonstrate that they can sell the property to the buyer without any liens. Once the seller receives a buyer’s offer, other legal requirements may include a contingency removal form, documents related to receipts for recent repairs, and any warranties that may be transferred to the buyer.

Necessity of Real Estate Agents

It is essential to note the necessity of real estate agents and attorneys in protecting a seller’s property rights. For example, real estate agents play a significant role in negotiating with the buyer and handling paperwork. They also provide the seller with other benefits, such as attracting new buyers and organizing open houses, to name a few. When the property is sold, the seller pays their agent a commission based on the sale price.

Moreover, real estate attorneys also play a significant role in the legality of property rights for sellers. An attorney can guide the sale, protect their client’s interests, and ensure compliance with appropriate laws and regulations. These legal professionals can conduct property title searches to verify ownership and recognize existing liens, encumbrances, or other property claims. Attorneys also review and draft documents, including PSAs, mortgage notes, and other contracts. 

During closing, attorneys prepare necessary documents, oversee the funds transfer, and ensure proper recording of the title and deed. If disputes arise, real estate attorneys can mediate and resolve the issue, helping sellers to avoid legal pitfalls. 

Common Legal Issues for Property Sellers

Sellers may face various legal issues during property transactions. These can negatively impact the sale and may also result in legal consequences against the seller. As such, sellers must know how to avoid these pitfalls and what to do if issues arise.

  • Failure to disclose: Sellers are legally obligated to disclose any known defects or issues with the property to potential buyers. Failure to do so can result in legal action against the seller. To avoid this, be transparent with disclosures. If issues arise, you may not be held liable. However, circumstances vary, so it is vital to consult an attorney.
  • Title issues: A clear title is necessary for a property sale. Any liens, encumbrances, or judgments on the title can prevent the seller from transferring ownership to the buyer. To avoid this, consult an attorney to conduct proper title searches. If issues arise, your attorney can resolve them.
  • Contract disputes: The purchase-sale agreement (PSA) is a legally binding contract between the buyer and seller. Any disputes arising over the contract terms can lead to legal action. To avoid this, consult an attorney to draft or review documents properly. If issues arise, your attorney can protect your rights and interests.
  • Home inspection issues: Buyers can conduct a home inspection before finalizing the sale. The buyer can request repairs or a price reduction if the inspection uncovers any problems. To avoid this, be transparent with disclosures and conduct due diligence before making claims about the property’s condition. If issues arise, your attorney can help you navigate them.
  • Zoning and permit issues: Local zoning laws and building codes may restrict what a seller can do with their property. Failure to comply with these regulations can result in legal action. To avoid this, sellers should know their property’s zoning laws and regulations and relate this information to the buyer. If issues arise, your attorney can help you resolve them.
  • Financing issues: If the buyer cannot secure financing, the sale may fall through, leaving the seller without a buyer. Sellers may also face legal problems if they fail to disclose any financing terms or conditions. To avoid this, consult an attorney to draft or review documents properly. If issues arise, your attorney can protect your rights and interests.
  • Disputes with real estate agents: If a seller has hired a real estate agent to represent them, any disputes with the agent regarding their services or commission can lead to legal action. To avoid this, hire a credible agent and have your attorney ensure your contract with the agent is legally sound and in your best interest. If issues arise, your attorney can represent you.


Sellers need to understand the legality of property rights to ensure a smooth and successful sale. Equally important is that sellers secure an attorney who can guide them through the transaction. An experienced real estate attorney can help sellers avoid legal disputes and safeguard their interests. 

Legal Expertise You Can Rely On

Scroll to Top