Why Is Consumer Protection Important In Real Estate?
Owning real estate is often seen as a cornerstone of the American dream, symbolizing not just personal achievement but also a source of pride. The realm of real estate, however, is marked by its complexity and the substantial financial commitments involved.
When substantial investments in property are at stake, it’s essential to be aware of the legal safeguards in place to protect you from fraudulent practices and misrepresentation.
The focus on consumer protection in real estate has intensified lately, driven by an increase in fraudulent property deeds and mortgage scams. By familiarizing yourself with the intricacies of the real estate process and the protective laws that surround it, you can navigate these transactions with greater confidence and preparedness.
Consumer Protection Laws in Real Estate and Timeshare
Initiated in the 1960s, the United States government has enacted a range of consumer protection laws specifically addressing real estate transactions. These laws are particularly important due to the high risks associated with property purchases and the significant disparity in knowledge between real estate brokers and their clients. The aim of these consumer protection laws is to level the playing field, ensuring that those who engage in real estate transactions do so with a fair and informed perspective.
The Truth In Lending Act (TILA)
This law was enacted in 1968 in order to limit what mortgage lenders can do when lending money to others for real estate purchases. Prior to the creation of this law, mortgage brokers were able to steer borrowers toward unfavorable loans in an effort to increase their fee.
TILA limits how brokers can generate their fee and holds brokers responsible if they attempt to line their pockets at the consumer’s expense. Additionally, this law allows a consumer to cancel their loan within three days after closing if they no longer want to go through with the transaction.
The Fair Housing Act (FHA)
For many years there were laws on the books that prohibited certain people from purchasing or renting property based on their race, gender, or other immutable characteristic. The Fair Housing Act was created in order to hold real estate companies, landlords, and financial institutions accountable for discriminating based on those factors. Individuals who believe that they have been victims of an illegal housing practice may file a complaint with the Department of Housing and Urban Development [HUD] or file their own lawsuit in federal or state court. The Department of Justice brings suits on behalf of individuals based on referrals from HUD.
The Real Estate Settlement Procedures Act (RESPA)
When you close on a real estate transaction, there are a number of documents that you must sign. There are a number of disclosures that you will be provided with. The Real Estate Settlement Procedures Act (RESPA) was created to make sure that you are informed on the closing process and how much it will cost. Without this law, real estate buyers could easily be bilked into paying exorbitant or unnecessary expenses tacked onto the closing and settlement. This law also prevents brokers from receiving kickbacks from lenders in exchange for directing consumers to high interest mortgages.
Why Are These Laws Important?
Whether you are renting or buying, the real estate transaction process might be totally foreign to you. This is especially true for first time buyers. Lawmakers recognize how uniformed the public is concerning this area. The foregoing laws seek to protect consumers from the usurious tactics that brokers, lenders, and real estate companies have used in the past. Without these laws in place, greedy and morally bankrupt individuals and corporations could discriminate against prospective purchasers and drive up the cost of home ownership, preventing some hard-working consumers from achieving their dream.
Should I Hire A Real Estate Attorney?
As with most legal issues, you may benefit from hiring an experienced attorney. There are very specific laws that regulate what a broker or lender can and cannot do. Are you facing a problem with a real estate transaction in the Tampa Bay area? Our experienced attorneys will thoroughly review your situation and advise you on how to resolve your matter. To consult with The Finn Law Group about your situation, call (855) 346-6529 or email us for a free consultation with a real estate attorney. Follow us on Twitter for more on Timeshare real estate laws.
