Retro image of lawyer signing important legal document on black desk. Over black background.

If you’ve decided to buy a house, it will be the most significant financial transaction of your life.

Except you are part of the very few people who can pay cash, you will likely be paying for your home for the next twenty years, at least.

Therefore, it is essential to know the legal requirements for buying a home to safeguard your investment.

In this article, we outline seven important legal documents you need when buying a house.

1. Promissory Note

You will need to sign a promissory note if you are financing your home purchase with a loan.

A promissory note outlines the terms of your mortgage, including the monthly payments, interest rate, and amortization.

It is a legally binding document that compels you to pay back the borrowed amount with a predetermined interest at specific intervals.

Because it is legally enforceable, a promissory note allows the lender to recover the debt through any legal means possible or sell the debt to another lending institution.

2. Closing Disclosure

The closing disclosure lists all closing costs for the seller and buyer of the property.

Housing law requires the seller to send this document to the buyer at least three days prior to closing.

That way, the buyer can go through the form and resolve any outstanding issues before the actual date of signing.

3. The Deed

The property deed is another vital legal document that must be signed when buying a property.

A property deed provides the legal description of the property and transfers ownership officially from the seller to the buyer.

The deed must be filed with the county clerk after the seller and buyer have signed it so that the transaction will be in the records of the local authority.

In case you plan to sell the property in the future, any potential buyer who performs a title search will find the deed which proves the previous owner transferred ownership to you legally.

4. Bill of Sale

The bill of sale outlines every other item the property owner is selling along with the building.

Say, the seller also wants to transfer ownership of the home appliances, security systems, water features, furniture, and lighting to you.

The bill of sale will outline all these items and state that the seller has now transferred ownership to you.

5. Tax Declarations

Most states levy a tax whenever the transfer of ownership of a building occurs on their territory.

Usually, the tax will be paid once you file the deed with the county clerk.

You may also have to sign a proration agreement with the buyer to determine how to split any outstanding property taxes.

6. Abstract of Title

The abstract is a document that outlines records of persons that may claim ownership over a property.

For instance, you are buying a property that was given to the seller as an inheritance.

The abstract of title must outline other people who may claim ownership of the property because of their relationship with the previous or current owner.

Before buying any real estate, it is important for your attorney to perform due diligence to determine other parties that could claim ownership of the property.

The reason for this is that you as the buyer will be responsible for any claims made on the property by third parties who are not signatories in the transaction.

If you have any reason to doubt the veracity of an abstract of title, get a title insurance to protect your investment.

7. Seller’s Affidavit

The home seller must provide an affidavit stating that they are the rightful owner of the property you want to buy.

The notarized statement must also outline any potential claims on the property, including outstanding leases, boundary line disputes, or liens.

In case any issues arise after closing, you may be able to use the seller’s affidavit to defend your case in court.

Final Words

Depending on the state and the type of property you are buying, you may need to sign more than the seven legal documents outlined here.

Regardless of how badly you want to buy a home, it is vital to follow due process.

Be patient and get an experienced real estate agent or attorney to review each of the documents before you sign them.

Remember, a home will likely be the largest thing you will buy in your life; don’t rush through the process to avoid financial and legal pitfalls.