Real estate deals look simple on the surface. Contracts get signed, money moves, and keys change hands. The legal reality is far more complicated.
Miss one rule and costs can snowball. A missed disclosure can invite penalties. An unclear clause can stall a closing for weeks.
This guide breaks down the seven issues that trip up buyers, sellers, and investors. You will see what each risk looks like in practice and how experienced brokers, attorneys, and lenders keep deals clean.
1. Title Disputes
The title sounds boring until it is not. Ownership questions can stop funding and sink timelines. The biggest enemies are hidden liens, boundary fights, and recording errors.
What a modern title dispute looks like
A buyer wins a bid and orders title work. A week later, a decades-old contractor lien appears. The seller never knew it existed, yet the lender will not fund until it is cleared.
Boundary issues cause similar pain. A fence sitting six inches over a lot line can block a sale. So can a missing release from a prior mortgage recorded two owners ago.
How professionals prevent title trouble
Strong title searches still matter. So do current surveys on commercial deals, including ALTA surveys that reveal encroachments and easements before closing. Lenders and buyers lean on title insurance to cure surprises that surface later. Title insurers routinely investigate claims and either cure defects or compensate insureds when losses occur.
A quick field story from the closing table
I once watched a small industrial purchase stall over a municipal lien discovered three days before funding. The lien tied back to an old code violation. The seller authorized a payoff at closing. Funds flowed once the title was recorded and a release filed that same afternoon. That is the value of a prepared title team.
2. Contractual Errors
Paperwork is where many real estate problems start. Small drafting mistakes can create significant legal exposure.
The Statute of Frauds is not optional
Real estate contracts must be in writing and signed. Courts expect a written agreement for the sale or transfer of land. Missing signatures, incomplete legal descriptions, or vague terms can kill enforceability.
E-signatures are valid, but process still matters
Electronic signatures carry legal weight in most U.S. transactions under the E-SIGN Act. A contract or signature cannot lose validity just because it is electronic. But parties must retain accurate copies of records for later reference. Poor consent or bad record retention can still sink a deal.
Contingencies deserve precise language
Vague financing or inspection clauses generate disputes. Specify timelines, actions, and outcomes if deadlines pass. Define "material defect" instead of leaving it to chance. Precise drafting protects both sides and speeds approvals.
3. Zoning and Land Use Regulations
Zoning is where big plans meet local rules. Your pro forma can collapse if the site’s use is not permitted.
The local rulebook controls your project
Every city divides land into districts with specific rules. Standard tools include rezonings, variances, and conditional use permits. Each requires a formal application and public review.
A real-world twist investors underestimate
Consider an 1890s county building pitched for housing and services. The parcel sat in a district that limited new uses. Planners flagged ADA, code, and parking hurdles, forcing either a variance or a full rezoning. The project had community support but still faced months of hearings. Good ideas still live or die by the zoning map.
Practical steps before you write the offer
Pull the zoning map and district text early. Meet a planner before design decisions harden. Ask about nonconforming uses, parking, height limits, and overlay districts. Put entitlement milestones and outs into the purchase agreement.
4. Environmental Concerns
Environmental law can surprise even careful buyers. Some laws impose strict liability that does not care about intent.
CERCLA can attach liability you did not expect
Under CERCLA, parties tied to hazardous substances at a site can face cleanup costs. Liability can be strict, joint and several, and retroactive. Landowner protections exist but require compliance with specific conditions. Savvy buyers complete “all appropriate inquiries” and track ongoing obligations.
PFAS rules are reshaping diligence
In 2024, the EPA designated PFOA and PFOS as hazardous substances under CERCLA. Releases carry reporting duties and reshape diligence and risk allocation. Expect lenders to ask sharper environmental questions on industrial or fire-training sites.
Lead-based paint still triggers federal disclosures
For most pre-1978 housing, sellers and landlords must disclose known lead hazards and provide the federal pamphlet. Buyers typically get time to conduct a lead inspection before signing. Failing to deliver these materials can derail closings and invite penalties.
5. Disclosure Requirements
Disclosure rules protect fairness and reduce ugly surprises. Regulations vary by jurisdiction.
Fair Housing compliance is non-negotiable
The Fair Housing Act bans housing discrimination based on race, color, national origin, religion, sex, familial status, and disability. That protection applies to sales, rentals, and financing activities. Agents and owners should train staff and document safe practices.
Property condition and known defects
States handle seller property disclosures differently. A wise seller documents known defects, past repairs, and permits. A wise buyer pairs that with professional inspections and, on complex tracts, a survey.
Property management realities courts notice
Courts examine patterns. Clean records of maintenance requests, rent increase notices, tenant complaints, and lease warnings matter. Modern property management software helps create those records and reduce misunderstandings.
6. Financing and Mortgage Issues
Money touches every step of a deal. Lenders bring their own conditions and timelines.
Appraisals and financing gaps sting
If an appraisal comes in low, lenders may cap proceeds. Buyers can renegotiate the price, add cash, or walk away. Clear contingency language around appraisal outcomes prevents last-minute fights.
Foreclosure pressure, redemption, and Chapter 13
When borrowers default, timelines accelerate. Some states offer redemption windows after a sheriff’s sale, while rules vary widely. Chapter 13 bankruptcy can pause foreclosure while a repayment plan proceeds under court oversight.
A New Jersey note for landlords and lenders
New Jersey’s Anti-Eviction Act requires “good cause” for residential evictions. Sheriff’s sales also carry local wrinkles that shape bidding and timing. Investors in New Jersey should budget time for these protections.
7. Escrow and Closing Challenges
Closings fail for predictable reasons. The good news is that most have known fixes.
TRID sets the three-day Closing Disclosure clock
Federal TRID rules require lenders to deliver a Closing Disclosure at least three business days before consummation. Certain last-minute changes can restart the clock. Teams that respect this timeline avoid rushed scrambles and funding delays.
RESPA governs escrow accounts and statements
Loan servicers must analyze escrow accounts and deliver annual statements on time. Borrowers use these reports to spot shortages and catch tax or insurance errors early.
Wire fraud is the silent closing threat
Business Email Compromise targets closings with alarming frequency. FBI data shows billions lost across sectors, with real estate a prime target. Title companies now require call-back verification and secure portals before any wire leaves an account. Treat last-minute email changes as red flags.
Conclusion
You do not need to be a lawyer to run clean deals. You do need a checklist, the right advisors, and a bias for documentation.
Start early on title, surveys, and zoning. Put precise words into contingencies. Respect TRID clocks and escrow rules. Teach your team to confirm wire instructions by phone every time.
If you operate in multiple states, build local playbooks. A rent rule in Oklahoma City will differ from protections in New Jersey. The best teams keep living documents, train often, and measure compliance monthly.
