The legal framework for buying or selling property in the United States is extensive and, in many cases, very different from that of other countries. Each state regulates these transactions through its own rules and requires buyers and sellers to meet specific conditions intended to ensure transparency throughout the process. For international parties, the experience can become even more challenging, especially when they are unfamiliar with the mandatory disclosures or the documentation required to move toward closing. Understanding these obligations from the outset helps reduce risks, prevent delays, and approach each stage with greater confidence.

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Essential legal requirements for buying or selling property

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The process begins with confirming that both parties have the legal capacity to complete the transaction. From there, real estate contracts typically follow a standard format within each state, although the details may vary by jurisdiction. These agreements outline the purchase price, the property’s condition, inspection timelines, and the deadlines leading up to closing. In addition, the real estate agent plays a significant role, assisting with the property search as well as the negotiation. Many states also involve an attorney who reviews the documents and safeguards the interests of the party they represent.

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Another common element is the use of an escrow account: a neutral system that holds the funds while all required verifications take place. Money is released only once every step in the contract has been met, providing a higher level of security and reducing the likelihood of disputes. At the same time, the due diligence phase includes reviewing the property’s status, identifying potential liens, assessing its overall condition, and ensuring no outstanding claims exist.

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Mandatory disclosures: what the seller must provide

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In the United States, sellers must disclose relevant information about the condition of the property. These disclosures allow buyers to understand potential risks or defects that could affect the value or future use of the home.

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Typical disclosures involve known material defects, repair history, moisture issues, structural concerns, pest damage, or any circumstance that could influence a buyer’s decision. For properties built before 1978, federal law also requires a specific warning regarding the possible presence of lead-based paint. It is important to note that disclosure rules vary significantly by state; some require extremely detailed information, while others impose a more limited set of obligations.

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Requirements and particularities for foreign sellers

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Sellers who are not U.S. tax residents must comply with additional requirements. The most prominent is the withholding mandated by FIRPTA. This legislation instructs the buyer to withhold a percentage of the gross sales price and remit it to the IRS as an advance on any capital gains tax that may apply. Although the standard rate is around 15%, there are exceptions depending on the nature of the transaction and the intended use of the property.

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To explore this law further, including how the withholding works, possible exemptions, and the required forms, we recommend reading our guide, “How FIRPTA withholding works”.

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Inspections, appraisals, and necessary verifications

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Before closing the transaction, a full inspection of the property is customary. A qualified inspector examines the structure, electrical and plumbing systems, roof, installed equipment, and any component that may affect safety or functionality. The resulting report often guides repair negotiations or price adjustments if significant issues arise.

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The appraisal is another essential step, especially when a lender participates. Its purpose is to confirm that the property’s value supports the agreed purchase price. In parallel, a title search is performed to verify that the title is free of liens or encumbrances. In many states, buyers also obtain title insurance, a safeguard against future claims related to the property’s history.

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The closing process

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Closing brings together all remaining steps. During this phase, documents are reviewed, agreements are signed, funds are transferred, and the deed is officially recorded. The escrow agent manages payments, releases the funds, and ensures that no outstanding requirements remain. Once the recording is complete, legal ownership transfers to the buyer.

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Real estate transactions in the United States require precision, knowledge, and careful review of documents, legal requirements, and mandatory disclosures. With proper preparation, expert guidance, and access to tools that streamline the process, both buyers and sellers can move forward with greater security and avoid unnecessary complications.