Advice for Purchasing a Home and Other Real Estate

THE PURCHASE AND SALE AGREEMENT

One of the first documents given to a prospective buyer by a real estate agent/broker is the purchase and sale agreement or contract. Few people realize that this paper is the most important step in purchasing a home — the details of this agreement determine the terms of your purchase. Detrimental provisions in the contract may not be corrected or avoided later in the transaction, so the best time to retain an attorney is before the contract is signed. Before signing, read the agreement carefully. The law usually requires judges to treat you as if you read every word of a document before you signed it, so you should try to read everything carefully before you sign a document. The items you should consider discussing with a lawyer include the following:

• Exactly what land, buildings and furnishings are included in your offer? Are the window treatments, fixtures, the stove, outbuildings, refrigerator and the like included? Which items are excluded? It is not always easy to know whether something is being sold with the home. Confirm that the agreement lists the correct property address, legal description and/or parcel identification number that corresponds to that listed on the deed.

• What payments are due under the contract? 

• When can you take possession? If other than the date of closing, is there an Occupancy (pre or post) Agreement? Be sure to clarify whose responsibility it is to insure the property upon taking possession.

• Is the seller to furnish you with a good, marketable title? If not, you may be purchasing the property even though other people may have previously asserted claims to all or some of the property, or there may be claims that have been brought by those involved in construction or remodeling of a home.

• Which kind of deed should the seller give? Be sure to discuss the difference between a warranty deed and quit claim deed. If you are taking title either as a trustee or as joint tenants with right of survivorship, be sure that you understand your obligations thereunder.

• Who selects the escrow agent and who pays for the title insurance for the property in the event the offer is accepted?

• Have utilities been installed and paid for? Are the utilities ready to transfer on the day after the closing date?

• Should a surveyor be employed to locate the improvements on the property and confirm that there are no encroachments onto or from abutting properties? Who should pay for the cost of the survey? If there are issues that will affect the title, what remedies are listed in the contract?

• If a loan is to be obtained from an outside lender, who will pay the loan closing costs? There are usually local customs as to which costs are paid by the buyer or the seller, but it is better to make this explicit in the contract.

• Can the buyer cancel the contract and obtain a refund of the deposits if the buyer is denied a loan, and, if so, under what conditions?

• If termite damage is found, will the seller have to pay the cost of repairs and treatment? If so, is there a limit?

• What are the zoning regulations, or other restrictions, on the use of the property?

• What is the time within which the offer to purchase should be accepted or refused? Is the date of such acceptance to be vital to the offer?

• If your offer is accepted, what steps should be taken with respect to insuring the improvements to protect you, the prospective buyer, pending the final closing?

• Who should be required to sign and accept the offer to make it binding?

• Are boundary lines properly specified? If not, will such deviations result in cancellation of the contract?

• Are timber, mineral and water rights, if any, properly covered?

• Who is responsible for paying property taxes?

• What are the remedies if the buyer or seller defaults?

• Should the purchase be contingent on any outside matters such as the availability of financing on acceptable terms or the sale of the house that you currently own? 

• Whose responsibility is it to pay for the real estate broker?

• Whose responsibility is it to pay for governmental special assessments that arise before closing? What is payable after closing? What about homeowner or condominium association assessments? Are the appropriate HOA addendums completed? Does the contract allow time for you to review any and all applicable bylaws?

• How long should the buyer have to inspect the property?

• Does the seller know of any defects? Is there a disclosure form that the lawyer recommends? Has a written disclosure or denial of any defects been completed?

Your lawyer may not be able to answer some of these questions until examining many public records, including court and governmental files.

It is important that your purchase agreement be prepared or reviewed by your own lawyer before you sign to ensure the agreement covers your requirements. Remember that even printed form agreements are negotiable, but this requires knowledgeable and independent professional guidance.