Law News and Tips
Moving On - Real Estate Contract Law
Fred L. Vilbig © 2018
It’s spring – at least according to the calendar. And for a lot of people, that means it’s time to start house hunting. If you’re going to move, early summer is probably the best time since the kids will be out of school and the weather should be okay. We’ve moved in February, and that was pretty unpleasant. So what’s involved in finding a house, getting a loan, and closing the deal? I’m going to focus on the contract. I am an attorney after all.
Most people work with a realtor. Realtors help buyers meet sellers. Some people already know each other, so a realtor may not be necessary there, but they can be helpful.
Once you find a home, you need a real estate contract. There is a standard residential form that realtors and most attorneys use, and it covers most situations. If there is something unique about your deal, there are places to include that.
The contract talks about financing. If you’re paying cash or don’t need to worry about financing, you can just check a box. Most people, however, need to find financing, so you can check the other box. You need to put in some limits on the loan amount and the interest rate to protect yourself, but that should be pretty easy to figure out. You just don’t want to have to close if you don’t get the loan you need to.
There are all kinds of riders (attachments) you can add, and a realtor or a real estate lawyer can help you wade through those. They can be pretty important depending on the deal.
You’re going to want to get title insurance. What that does is it protects you against buying a problem. Maybe the seller doesn’t really own the property; maybe there are easements that will keep you from using the property the way you want; or maybe the fence or driveway is on your neighbor’s property.
That last point brings up the survey. A regular title policy includes exceptions to coverage regarding survey matters. Your bank may require a “survey,” but it probably is what we call a “drive-by survey.” The surveyor can literally drive by the property and never get out of their car. Title companies won’t delete the survey exceptions without what we call a “stake-in-the-ground” survey. So be careful.
And if you’re buying a previously owned home, you’re going to want to insist on a detailed inspection. There never perfect, but they give you your best protection.
And something else for buyers to remember: your real estate agent gets paid when the deal closes; and the more the purchase price, the more they get paid. I know they are supposed to be working for you, but there is a built-in conflict of interest. Just something to think about.
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