Introduction To Buying A Home
Buying or selling a house does not have to be stressful... but
without the advice of a competent Real Estate attorney to guide you through
the process, it can be a disaster! During the home buying process,
after you have located that perfect property, your real estate broker
probably will give you a preprinted purchase and sale agreement. Read ALL
of the documentation carefully and know that both changes and additions
to this pre-printed form agreement can be made. If this is your first
home purchase, or if you don't completely understand every clause in the
contract do not ask your agent or broker. Their main concern is that
the sale goes through. Seek the advice of a local real estate attorney.
The remainder of this article will list and discuss 9 issues a buyer
should take notice of in the purchase and sale agreement.
1. Price
For most, if not all, home buyers, the sales price is the most
important term of the purchase and sale contract. However, it is not the
only term, and many others are just as, if not more important than, the
selling price.
2. Title
"Title" refers to who presently owns the house. First, you want to
make sure that the seller is the actual owner. You, the Buyer, want to
ensure that the "Chain of Title" shows the seller as the owner. The
seller should provide Title free and clear of all liens and encumbrances
by others. To ensure the title is clear, the Buyer should request a
title search be conducted. Who pays for the title search is a negotiable
term.
3. Move-in Date and Personal Property
The purchase and sale agreement show state a move-in date and what, if
any, personal property is being sold with the real estate. If you, the
buyer, are expecting certain appliances and other fixtures to be there
upon move-in, those items should be listed in the purchase and sale
agreement.
4. Mortgage Exit Clause
Sometimes an interested buyer who enters into a purchase and sale
agreement with every intent on purchasing the home is just unable to
secure a mortgage for that home. Other times, the interested buyer can
secure a mortgage, but due to unforeseen reasons is unable to secure a
mortgage at a favorable interest rate. When this happens, what happens to
the deposit? Well, absent a clause to the contrary the deposit may be
withheld as non-refundable. The purchase and sale agreement should
therefore provide that your deposit is refundable if the sale is canceled
because you are either unable to secure a mortgage loan, or mortgage
financing at an interest rate at or below a specified rate.
5. Termite Inspection
Prior to the providing financing, the buyer's lender will require a
certificate from a qualified inspector stating that the home is free
from termites and other pests and pest damage. So what happens if the
home is termite infested? Well, that could become the buyer's nightmare.
However, as the buyer you can request this issue be addressed in the
purchase and sale agreement. The clause may say something like: "if
pest damage is found, you the buyer reserve the right to cancel the
purchase and sale agreement". Alternatively, the clause may say, "if pest
damage is found, you the buyer reserve the right demand immediate
treatment and repairs by the seller."
6. Home Inspection
In addition to the Termite Inspection, prior to the purchase being
finalized, the buyer should secure and personally pay for a home
inspection from a licensed qualified inspector. Such an inspection should
determine: (1) the condition of the plumbing, heating, cooling, and
electrical systems; (2) the condition of the structure itself, including
the roof, siding, windows and doors; and (3) the lot, which should be
graded away from the house so water does not drain toward the house and
into the basement (in turn causing water damage). Again in the
purchase and sale agreement, the buyer should reserve the right to cancel if
unsatisfied with the inspection results. In addition, such a clause may
provide that if unfavorable conditions exist, the buyer reserve the
right demand the seller make immediate repairs, or reduce the sale's price
according to the reasonable value of the needed repairs."
7. Lead Based Paint for Homes Built Before 1978
If you buy a home built before 1978, you have certain rights
concerning lead-based paint and lead poisoning hazards. The seller must: (1)
give the buyer a copy of the EPA pamphlet "Protect Your Family From
Lead in Your Home" or other EPA-approved lead hazard information; (2)
relay any actual knowledge he has about the home's lead-based paint, or
lead-based paint hazards, and provide the buyer with any relevant
records or reports; and (3) attach a disclosure form to the purchase and
sake agreement which will include a Lead Warning Statement and place for
all parties to acknowledge and sign. As the buyer, you have at least
ten (10) days to do an inspection or risk assessment for lead-based paint
or lead-based paint hazards. However, to have the right to cancel the
sale based on the results of an inspection or risk assessment, you will
need to negotiate this condition with the seller and have the clause
specifically included in the purchase and sale agreement.
8. Who Pays What Real Property Expenses
Most, if not all, property is subject to some form of expense such
as taxes, water and sewer charges, and utility bills. The buyer come to
an agreement with the seller on how such expenses, related to the
property, will be divided on the date of closing. Unless you agree to
otherwise, the buyer should only be responsible for the portion of the real
property expenses owed after the date of closing.
9. Escrow
Depending on local practices, the buyer may have the option of
selecting the escrow agent or escrow company. For states where an escrow
agent or company will handle the closing, detailed instructions on the
buyer's, seller's and lender's responsibilities should be provided in the
escrow agreement. In addition, who bears the cost of the escrow is a
negotiable term and different escrow and closing related fees may be
borne by different parties.
Obviously the above list only covers some of the important terms
that should be included in a home purchase and sale agreement. As your
home purchase will probably be the most expensive purchase you make, it
may be wise to have a local real estate attorney review the
documentation before you sign on the dotted line. Unfortunately, while there are
some honest real estate brokers and agents out there, their main intent
is to ensure the sale goes through. The buyer on the other hand wants
to ensure he is getting what he paid for, not unforeseen problems.
Disclaimer: This article contains information gathered from the
Federal Consumer Information Center.
