Why is it hard to get financing from a bank?
The bank wants to know lending you money to buy a home is a good investment. It requires such things as:
Making sure the home is in good condition (inspection).
Having an expert report on the value of the home (appraise it) to make sure the price is fair.
Making sure you are getting clear title to the property.
Making sure you can afford the home.
Why is bank financing good?
Banks usually must follow laws that give homebuyers some protections. If you buy a home with no bank involvement (examples: on a contract financed by the seller or a rent-to-own or lease option), you must protect yourself.
What if I cannot get bank financing?
You could enter a real estate contract or rent-to-own transaction. If you do, make sure:
You get the home inspected.
The seller has clear title to the property.
The price is fair.
Paperwork is legal and protects your interests.
Should I do a real estate contract?
*Avoid sellers looking for homebuyers without social security numbers or with bad credit.
Maybe. This can be complicated. Get independent advice first. Make sure it is a good investment for you. Do not trust the seller to
Draft, explain, or translate important paperwork.
Tell you if the property is in good condition or price is fair.
If you cannot afford professional advice, wait until you have saved enough so you can. A seller who discourages you from getting advice may have something to hide.
*You do not need bank financing to get these services. You can find them on your own.
What help or advice should I get?
Inspection: Have an independent professional inspect the property
Appraisal: Have an independent professional appraise the property to make sure the price is fair.
Title search: Hire a title company to make sure
Legal advice: Get help from a certified housing counselor, legal aid office, or lawyer to make sure
All agreements are in writing.
You understand everything.
The paperwork is legal and fair.
The paperwork represents your best interests.
*Do not trust the seller or their agent to explain or translate anything for you.
Writing and recording: All agreements relating to real property (land) must be in writing. You must record them with the County Auditor. Do not expect the seller to do this.
Normally before recording, someone must pay a real estate excise tax. Make sure:
Check with the county auditor’s office to make sure your interest has been properly recorded.
Escrow company: Use them to close the deal and handle all your payments to the seller.
Enforce contract: You and the seller must follow the contract. Make sure the seller is paying the taxes or insurance if the contract says so.
If you are in default because you missed a payment or broke the contract some other way, make sure the seller follows laws such as Washington’s forfeiture laws. Get legal help if the seller is not following the contract or you become unable to.
I have a real estate contract. When do I get title to the property?
After you have made all payments under the contract.
I have a real estate contract. What are my rights?
If you default, the seller must first record the real estate contract with the Auditor before doing anything against you. The law on real estate contract forfeitures is at RCW 61.30.
What about rent-to-own, lease option, or lease-purchase?
These programs are similar. Usually, at first you pay an upfront fee and rent as a tenant. You have the option to buy the property in the future for a set price. The landlord (owner) applies some or all of your rent payments toward that price.
During the rental period, the landlord still owns the home and is legally responsible for it. The landlord may try to shift responsibility for maintenance to you.
You can lose your right to buy the property and everything you invested in it by violating the contract in even a small way, such as making payment late or a maintenance violation.
*In rent-to-own situations, you rarely have the same rights as other homebuyers. The landlord can usually evict you just like other tenants.
Make sure your agreement is in writing. Follow the steps in “Should I get a real estate contract with the seller,” above. Make sure:
The home is in good condition.
The price is fair.
The seller/landlord can give clear title.
You understand the written contract. It is fair and legal.
*Do not let a landlord use the rent-to-own contract to get more rent from you and shift responsibility for keeping up the property to you, with no realistic expectation that you will ever be the true owner.
What if I need legal help?
CLEAR is Washington’s toll-free, centralized intake, advice and referral service for low-income people seeking free legal assistance with civil legal problems.
Outside King County: Call 1-888-201-1014 weekdays 9:15 a.m. - 12:15 p.m.
King County: Call 211 for info and referral to a legal services provider weekdays 8:00 am – 6:00 pm. You can also call (206) 461-3200, or toll-free 1-877-211-WASH (9274). You can also get info on King County legal service providers at www.resourcehouse.com/win211/.
Persons 60 and Over: Persons 60 or over can call CLEAR*Sr at 1-888-387-7111, regardless of income. Asset limits may apply.
Deaf, hard of hearing or speech impaired callers can call CLEAR or 211 using the relay service of your choice.
CLEAR and 211 will conference in free interpreters when needed.
This publication provides general information concerning your rights and responsibilities. It is not intended as a substitute for specific legal advice.
This information is current as of August 2019.
© 2019 Northwest Justice Project — 1-888-201-1014
(Permission for copying and distribution granted to the Alliance for Equal Justice and to individuals for non-commercial purposes only.)