What Are the Common Legal Issues in Real Estate Transactions?

When someone buys or sells property in Tennessee, they’re entering a process involving many moving parts and potential risks. Real estate law plays a central part in helping people avoid pitfalls and make informed choices. 

At Steven C. Frazier, Attorney at Law, I’m committed to effectively guiding Tennessee clients through these matters under and supporting clear decisions at every step.

Title and Ownership Disputes

Ownership issues often arise early. A title search uncovers past liens, unpaid taxes, or improper transfers in many transactions. If not addressed, these can delay or derail a closing.

It matters to:

• Review public records for liens or judgments.

• Check for gaps in the title chain.

• Handle unresolved claims from previous owners.

Clearing title defects takes priority. Doing so protects all parties from future litigation or unexpected claims on the property.

Boundary and Survey Problems

Another common snag involves boundaries. Survey discrepancies—like fence lines that don’t match legal descriptions—can lead to neighbor disputes or unexpected limitations on use.

Property buyers and sellers should:

• Compare the legal description with a current survey.

• Address encroachments or easements early.

• Resolve overlaps before transferring ownership.

Accurate boundary agreements prevent disputes that could extend long after settlement.

Financing Contingencies and Loan Issues

Real estate transactions often hinge on financing. Loan approval, appraisal values, and contingency clauses determine whether a deal proceeds or stalls.

Key considerations include:

• Making contract terms conditional on loan approval.

• Confirming the appraised value meets the purchase price.

• Understanding what happens if financing falls through.

When financing fails, parties must follow the agreement’s terms—perhaps renegotiating or walking away, depending on contingencies written under real estate law.

Inspection Results and Repair Obligations

Home inspections can reveal defects—like structural issues, mold, or faulty wiring—that trigger negotiation or repairs. Based on these findings, buyers may request fixes, credits, or even back out.

Inspectors might uncover:

• Foundation cracks or water intrusion.

• HVAC, plumbing, or electrical problems.

• Environmental hazards, such as asbestos or radon.

Those findings inform decision-making. They shape how parties adjust the purchase price or demand seller contributions, guided by contract language rooted in real estate law.

Contract Clauses and Contingency Pitfalls

Real estate contracts include many clauses—from due diligence periods to financing and inspection contingencies. Misunderstanding or missing deadlines in those clauses can create a serious risk.

Watch for:

• Expiration dates for financing or inspection periods.

• Hidden obligations for appraisal shortfalls.

• Timeframes for earnest money refunds.

Staying organized and acting within deadlines protects clients from losing deposits or having to perform unexpectedly.

Disclosure Requirements in Tennessee

Tennessee sellers must disclose certain defects or known issues, such as water damage, termite history, or mechanical problems. Failing to meet disclosure obligations can lead to post-sale liability.

Key points include:

• Sellers must fill out the Tennessee Residential Property Condition Disclosure.

• They should report known hazards or material defects.

• Buyers should review disclosures carefully and inspect as needed.

Thorough disclosures foster fair outcomes and reduce legal exposure later.

Zoning and Land Use Restrictions

Land use rules can surprise buyers—especially those hoping to develop property. Zoning ordinances, subdivision rules, or historic overlay districts may limit permitted uses.

It’s wise to:

• Check current zoning and allowed uses.

• Confirm allowable modifications or additions.

• Consult local planning departments where needed.

That way, buyers won’t buy a lot only to find they can’t build the structure they envisioned.

Homeowners Association (HOA) Rules

Properties subject to HOA restrictions pose extra legal considerations. Covenants, conditions, and restrictions (CC&Rs) affect everything from paint colors to landscaping.

Key considerations:

• Reviewing HOA rules early.

• Checking fees, special assessments, and violation policies.

• Understanding architectural review procedures.

Buyers should be careful not to rely solely on verbal assurances from sellers—HOA governance documents hold sway.

Tax Implications and Assessments

Taxes can shift after a sale. Buyers often inherit property tax valuations, reassessments, or unpaid taxes. Knowing how property taxes work is critical under real estate law.

Buyers and sellers should:

• Check current tax status, including proration at closing.

• Evaluate any pending or imminent reassessments.

• Anticipate special assessments or homestead exemptions.

With preparation, they avoid surprise tax bills that affect affordability after closing.

Environmental Concerns and Hazard Liability

Environmental issues, such as underground tanks, contaminated soil, or protected wetlands, can be hidden. Buyers should investigate environmental hazards before purchase.

Due diligence may include:

• Reviewing environmental assessments or Phase I reports.

• Checking for local underground storage records.

• Confirming water quality or soil concerns where relevant.

Alerts about environmental issues help buyers make smart decisions under real estate law and avoid long-term cleanup obligations.

Earnest Money Disputes

Earnest money protects sellers by compensating them if buyers back out without a valid cause. However, disagreements often arise about whether a buyer met contract terms.

Matters to analyze include:

• What breaches trigger forfeiture?

• What happens when deadlines aren’t met?

• Are refunds warranted under contract terms?

Clear terms and careful documentation help avoid fights over large deposits.

Closing Delays and Title Exceptions

Delays at closing often result from title issues or lender requirements. Parties must resolve those before the final transfer.

Avoidable issues include:

• Old liens or missing signatures on deeds.

• Outstanding judgments or judgments recorded in other jurisdictions.

• Incomplete payoffs on mortgages or taxes.

By working proactively, closing happens on time, with a clean title and financing secured.

Mechanic’s Liens and Contractor Disputes

Construction-related liens can attach even months after work is done if contractors aren’t paid. Buyers who take title after work may inherit those claims.

Protective measures include:

• Requesting lien waivers from contractors.

• Confirm that payment has cleared for any work on the property.

• Checking the list of recent improvements before closing.

Seeking assurance helps buyers avoid unexpected claims for unpaid labor or materials.

Lease Agreements and Tenant Rights

Buyers must deal with existing lease terms and tenant rights if the property includes tenants. Tenants may have rights that carry over even after the sale.

That means the buyer should:

• Review existing leases and security deposit responsibilities.

• Understand lease termination rights or notice requirements.

• Consider how rent prorations and deposits transfer at closing.

That supports a smooth transition and respect for tenant rights under real estate law.

Remedies for Breach of Contract

Contracts may allow remedies like specific performance, termination, or damages when a party breaches. Parties should evaluate how to address violations under contract terms.

Options include:

• Terminating the agreement and recovering earnest money.

• Filing for specific performance to force completion.

• Seeking monetary damages for losses due to breach.

Considering choices early helps parties respond according to contract terms and expectations.

Comparing Written Terms With Verbal Agreements

Verbal promises—like seller assurances about appliances or improvements—don’t count unless in writing. That principle matters in real estate law, where written terms control.

To avoid disputes:

• Put all agreements in writing and attach them to the contract.

• Confirm that any changes are initialed by both parties.

• Avoid relying on memory or informal conversations.

That helps prevent misunderstandings after closing.

Post‑Closing Title Problems

Even after closing, title issues, like missing heirs claiming property or misrecorded deeds, sometimes surface.

Good steps include:

• Conducting post-closing title review.

• Checking tax assessments for follow-up.

• Addressing claims swiftly via quiet title actions if needed.

Cleaning up residual title matters protects ownership in the long term.

Risk Management Through Document Review

Close document analysis is one way to protect clients in real estate transactions. Contracts, disclosures, surveys, and title work should all be reviewed with care.

That includes:

• Confirming descriptions match.

• Spotting missing or vague provisions.

• Advising clients on proper documentation.

Thoughtful review helps minimize surprises—and helps resolve issues before they become crises.

Aligning Goals With Real Estate Law Practice

Real estate work isn’t just paperwork—it’s about aligning clients' wants with what’s fair and allowed under Tennessee law. Whether they’re buying their first home, investing, or selling property, their goals matter.

Clients can confidently move forward by analyzing risks, prioritizing concerns, and making informed decisions. I focus on that at Steven C. Frazier Law, helping clients keep their interests front and center as they work through each stage under real estate law.

Reach Out Today

Property buyers and sellers can avoid costly pitfalls by staying alert and informed. At Steven C. Frazier, Attorney at Law, I help clients through these matters with clarity and confidence. If you're involved in a real estate transaction and want reliable support, we serve clients in Kingston, Church Hill, Johnson City, Bristol, or elsewhere in Northeastern Tennessee.