Depending on your point of view, the myriad of federal, state and local laws impacting a single real estate transaction is either an unnecessary hindrance adding to the cost of the transaction on all sides, or needed protections for all parties, the environment and society in general.
From consumer protection to environmental protection to zoning, all branches of government want to have a say in your deal. Our Montgomery County real estate lawyer highlights some of the laws below.
Federal Laws Relating to Real Estate
By far the most encompassing of the three levels of government, federal statutes and their implementing regulations touch on all aspects of a real estate transaction and beyond:
- The sales process (e.g. what you can say and who you can sell to);
- Inspections (e.g. the duty to disclose);
- Appraisals (e.g. qualifications and non-hindrance);
- The lending process (e.g. who can be required to sign; disclosure of terms);
- The closing process (e.g. fees, title companies, closing costs, escrow); and
- The foreclosure process in the event of default under a mortgage (e.g. disclosure of rights and cure periods).
The following are some of the federal laws that may directly or indirectly relate to your real estate transaction: Fair Housing Act; Truth In Lending Act, Consumer Protection Ac; Real Estate Settlement And Procedures Act; Equal Credit Opportunity Act: Home Mortgage Disclosure Act; Fair Credit Reporting Act; Americans With Disabilities Act; USA Patriot Act; Dodd Frank Wall Street Reform and Consumer Protection Act; Financial Institutions Reform, Recovery, and Enforcement Act; Mortgage Reform and Anti-Predatory Lending Act; Environmental Protection Act.
Pennsylvania State Laws Relating to Real Estate
At the state level, Pennsylvania statutes and case law regulate the creation of the transaction, from contract formation, to conveyance and recording and everything between and beyond, including, for instance, how and when a contractor on a real estate project can enforce his right to payment, or what can and cannot be included in residential leases and the handling of security deposits.
Did you know that a residential landlord is limited in the amount of a security deposit he or she can require, how long it can be kept, under what circumstances it can be retained for past due rent or damages to the premises, and that certain violations can render the landlord liable for TWICE the amount of the deposit?
Did you also know that someone who, without the owners permission, openly and notoriously holds possession of the property of another for a certain period of years, under the specific provisions of Pennsylvania law, could become the owner of that property through the state’s adverse possession laws?
Montgomery County/Local Ordinances Relating to Real Estate
Most counties and cities in Pennsylvania have zoning requirements that must be met in the use and development of real estate. These include the type of development on any given site and the activity, appearance and signage all depending upon the planning philosophy of the local governing body.
So, for instance, if you lease real estate to residential or commercial tenants in Limerick Township in Montgomery County, you must annually report the name, home address and date of birth of each tenant by January 31, and any tenant change must be reported within 30 days of each change, regardless of the frequency of the change.
Another example pertains to yard/garage sales. Worcester Township (also in Montgomery County) requires a license to have a garage or yard sale, unless the person holding the sale has a state license to conduct auctions.
You can see the ordinances of each city or township in the United States at General Code.
These are not unusual or limited to Montgomery County, but rather typical of the kind of activities regulated by localities, the point here being simple awareness that many activities related to real estate may be regulated, even (and sometimes especially) at the local level.
America is the land of the free, but that freedom is not without restrictions when it comes to the sale and use of real estate. Consult with counsel the next time you’re thinking about converting that old, abandoned gas station to a coffee shop, padlocking the entrance to a rental of your tenant who is behind in rent, or installing new signage on your office building.
Federal, state and local laws can, and often do, apply with equal force to routine and not so routine cases. Good or bad, helpful or harmful, the fact is that they exist, and ignoring or learning about them after the fact can have negative consequences that are usually avoidable.
Contact us for more information on this subject, or to discuss your particular matter in greater detail.