Secret Legal Considerations That Could Delay Los Angeles Real Estate Closings

Facing the most anticipated step in a real estate deal, closing on a home or commercial property can take weeks or months. When buyers and sellers consider a home purchase and the process they go through in the weeks-or-months before closing and the first day of negotiations, they naturally expect that closing will go according to plan. Los Angeles is both one of the most competitive and dynamic Los Angeles real estate attorneys markets in the country where homes often require large investments, special zoning rules, older buildings and complicated ownership histories. Hidden problems can happen at almost every stage before you are finished. That is why expert legal advice can help find, solve and avoid problems before they spiral out of control.

Late-In-Deal Negligence in the Title

Title problem is one of the major reasons for a closing to be delayed. Before law allows ownership to be transferred over, a title company also has to verify that the seller has the unequivocal title, that the seller has the legal right to sell the property.

Occasionally unresolved liens, unpaid property taxes, errors in recording, judgments or personal ownership disputes might arise during the title process. Older Los Angeles properties might even have recorded papers from decades’ worth of files requiring some careful consideration.

The title issue can prevent you from even closing that title until it changes when it matters. More paperwork, court orders or talks with creditors may be required before the deal can go forward.

Surprising Probate or Inheritance Gaps

Certain homes are sold following the passing of a family member, and certain probate complications can unexpectedly make a closing delayed.
There may be issues on who is the legal owner of the property, if all heirs will approve the sale, if the personal representative is authorized to pass the ownership.

Ownership documents are incomplete, or a probate case has not been determined, leading to the delay in closing the doors until the legal authority to do so is established.

Real estate attorneys frequently work with probate attorneys, title brokers and escrow officers to resolve the issue as quickly as possible.

Explaining Ownership Interests

Not every ownership dispute surfaces on-the-fly.

Interested parties (other than the original spouse, business partner, trust beneficiary, family heir, or co-owner) have a special interest in the property which was not included in the notice at the beginning of the property transaction.

A legally closed escrow will not be reached unless all participants on the rights of ownership have signed the relevant papers.

Typically before property can be transferred it is mandatory to examine deeds, trust forms, divorce orders, corporate documents, corporate papers, or probate.

Issues in Seller Disclosures

California law requires sellers to disclose known, material facts that could impact the value or desirability of a property.

Buyers who got the property are entitled to obtain credit, a delay, contingency days and even to have that transaction voided if significant defects were discovered late in the escrow process that never existed at the outset.

Structural damage, foundation movement, roof leaks, water intrusion, mold, unpermitted upgrades or environmental hazards, as well as previous insurance claims with respect to the property.

Disclosure disputes may take more inspections, legal and contractual scrutiny and examination to settle.

Improvements that Were Not Permitted

Los Angeles does have many older homes renovated throughout the region in recent decades.

Not every new building addition, garage expansion, ADU, patio enclosure or building remodeling project was given the permits.

All of this might lead to the fear, for example, that buyers, say, might find out parts of the site were constructed without permits, or whether there is a building code investigation, insurance, future resale value, financing eligibility, potential, municipal enforcement.

Buyers and sellers can have repairs, price changes, permitting, indemnity, and permits negotiated in a separate contract, and the process can last depending on the unique transaction.

Funding and Lender Legal Obligations

Not all the delays in the closing process are because the buyer must approve financing.

Lenders typically also consult title reports and survey data, insurance records, records on the homeowner association, and the condition of the property themselves in a legal manner.

If any new information emerges just prior to closing, further supporting documents may be needed before loan funds are released.

Missing legal documents, unpaid liens, incorrect legal descriptions, unclear title information all delay payment and thus slow down closing.

Homeowners Association Issues

Many Los Angeles condominiums, townhomes, and planned communities are ruled by homeowners associations (HOAs).

Owners, in escrow, usually check HOA financial statements, governing records, reserve studies, pending lawsuits, special assessments, and meeting minutes.

Buyers would look again if there emerged serious legal problems within the association — including ongoing litigation, insufficient reserves, large-scale planned assessments, or governance complaints — and lenders would need more thorough reviews before providing financing.

Boundary and Easement Disputes

The borders of a property are not always as clear as fences would have us believe.

Surveys sometimes show where nearby structures, retaining walls, fences, driveways, or landscaping are encroaching.

Easements that let utility companies, neighboring property owners, or government agencies access parts of the property could affect future uses, too.

Boundary disputes may trigger additional surveys, neighborhood owners may need to negotiate or negotiate with owners in the area, before a resolution can still occur — for them to begin closing.

Zoning and Land Use Concerns

Los Angeles properties fall prey to the restrictions and zoning regulations which dictate the zoning rules that they meet this process.

Buyers to their investments, in particular, who purchase property purchases such as investors or plan for changes to its future developments may find themselves stuck with laws and regulations on the setbacks, occupancy levels and/or restrictions that require historic preservation and other planning for restoration.

Should the buyer’s use in actuality be at odds with present zoning regulations, further legal analysis might be required prior to further purchase.

Escrow Document Errors

Even minor clerical errors can cause huge delays.

Certain documentation (e.g., incorrect legal descriptions or signatures in addition to inconsistent ownership, recording errors, inaccurate payoff statements, or partial closing documents) would also need to be corrected prior to escrow completing the transaction.

Despite being usually very easy to resolve, they can delay closing if noticed in the last minute.

Disputes Over Contract Terms

Not all disagreements have to do with the state of the place.

Buyers and sellers sometimes disagree over repair obligations, the personal property offered for sale, closing costs, dates of possession, contingency, or credits haggled upon after inspections.

Should such disputes not be resolved quickly, the parties may need further negotiations; mediation, or legal action shall be necessary before the transaction can proceed.

Environmental Concerns

Some properties will need to review their environmental requirements and be closed after the final inspection.

This is particularly true if the property has been contaminated with dirt, underground storage tanks, asbestos, lead-based paint, mold, drainage issues, or hazardous materials that lenders or buyers may deem worthy to inspect and remediate prior to the closing of the property.

Commercial properties typically require even more extensive environmental due diligence that can have a far-reaching effect on closing dates.

How a Real Estate Attorney Can Help Prevent Delays

The vast majority of closing delays can be reduced — or prevented altogether — with timely legal evaluation.

A real estate attorney in Los Angeles can assess purchase agreements, spot issues with title, review disclosure documents, review ownership records, negotiate resolutions to litigation, communicate with escrow officers and title companies, and make certain all legal requirements are met before the date that will close the property.

When a challenge arises unexpectedly, early intervention by legal counsel for help with problems can expedite issues and protect your financial interests.

Protect Your Closing Before Problems Arise

The fact that closing is late doesn’t mean that the transaction won’t fail; it can increase costs, introduce uncertainty, and put added stress on everyone.

A lot of the legal issues that tear a real estate closing apart may not hit you immediately when it goes under contract, so it is vital to do your due diligence.

Whether you’re buying your first home, buying into new commercial premises, or disposing of a beloved home that you’ve inhabited for decades, engaging with seasoned Los Angeles real estate personnel – including a seasoned real estate attorney – can help you uncover underplayed legal concerns before they turn into costly roadblocks.

Being a little proactive keeps your trade from getting bogged down in failure but ensures you don’t get hurt at every possible step along.