House flipping is defined as earning a profit by buying a house and then reselling it. The house must be purchased with the direct intention of reselling it to be considered a flip.
People who are looking to flip houses seek to increase the value of the house by either holding the title as the value increases or paying for repairs and updates.
Once the value has risen, the house is resold, and the flipper earns a profit. When done correctly, house flipping can be a beneficial investment.
Potential Title Concerns
There are a number of important potential legal concerns to consider before attempting to flip a house. It’s necessary to do your research and prepare your plans before taking on the task of house flipping.
In the worst scenarios, flippers may end up with a house that’s decreasing in value or costs way too much to repair. Flippers must also be on the lookout for these important title issues:
- Restrictions on re-selling homes
- Issues with title searches
- Discovering fraud
- Title Insurance and validating ownership
Detailing Title Concerns
The Federal Housing Administration is in charge of monitoring all home resales throughout the country. The agency has strict restrictions that may complicate the resale of your home depending on how quickly you are seeking to make the sale.
For most homes, the agency requires a minimum of 90 days before the owner can resell it. Sellers need to look into all state and federal laws regarding selling homes to ensure they remain compliant. If the house you purchased has title issues, they may not appear during an initial search.
Complications with fraudulent titles, abandonment or deeds can cause serious issues when flipping property. When title complications arise, the flipper will spend an extraordinary amount of time and money attempting to sort out the mess.
It may also be prudent to purchase title insurance to prevent liability issues that could arise in the future. Sadly, fraudulent activity does occur at times in the house-flipping industry.
Fraud involving the real estate, title or home mortgage will slow your progress and could prevent you from effectively flipping the home. If you notice any indications of fraud, then it’s crucial to involve local police as soon as possible.
Contact a Cherry Hill Real Estate Attorney for a Consultation in New Jersey Today
An experienced real estate attorney can help you explore your options and determine the best course of action for you, your family, and/or your business when it comes to flipping houses.
The experienced NJ real estate lawyers at The Law Office of Joel R. Spivack understand the nuances of NJ real estate laws, so we can help you protect your interests.
Call us anytime at 856-488-1200 or fill out the online contact form to schedule a confidential consultation. We have an office conveniently located at 1415 Marlton Pike East, Suite 302 Cherry Hill, NJ 08034.
The articles on this blog are for informative purposes only and are no substitute for legal advice or an attorney-client relationship. If you are seeking legal advice, please contact our law firm directly.