Why Is Consumer Protection Important In Real Estate?
Buying property for many years has been considered one of the hallmarks of the American dream. Having something that you can call your own can give you a sense of pride and accomplishment. But real estate transactions are perhaps some of the more complex and involved purchases that you will ever make. When property and large amounts of money are at stake, you will want to know that there are laws in place that will protect you from fraud and misrepresentation. Consumer protection in real estate has become a focal point over the last few years due to an uptick in false deeds and mortgage scams. Educating yourself on the real estate process and the consumer protections surrounding them can help you feel more equipped when you enter into a transaction.
Consumer Protection Laws In Real Estate and Timeshare
Beginning in the 1960s, the U.S. government created a number of consumer protection laws that apply to real estate transactions. Because of the large risk many people face when purchasing property, coupled with the large knowledge gap between the broker and the client, these laws are meant to level the playing field for the real estate consumer.
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.