Reviewing A Home Purchase Agreement

Reviewing A Home Purchase Agreement

As we all know, purchasing a home is one of life’s most important – and complicated – moves. One must secure financing. One must find that perfect house, that perfect fit. One must examine the house with a critical eye.

Yet the most important step in buying a home just might be completing the purchase contract. Much – what home you buy or sell; how you buy or sell it – is contained in the agreement. So before signing, read the purchase contract closely and consider the following list of questions provided by the American Bar Association:

  1. Is the purchase contingent on matters such as the availability of financing on acceptable terms or the sale of the house which the buyer presently owns?
  2. Exactly what land, buildings and furnishings are included in the offer? Are appliances, certain fixtures and other personal property included in the purchase price?
  3. When can the buyer take possession?
  4. Is the seller required to provide good, marketable title? Marketable title is title that can be readily marketed (sold) to a reasonably prudent purchaser aware of the facts and their legal meaning concerning liens and encumbrances.
  5. Who pays for the examination of the title to the property in the event the offer is accepted? Who pays for the abstract of title or title insurance?
  6. Have utilities been installed if the property is new construction?
  7. Who pays for the cost of the survey of the property? Does the lender require a survey as a condition of the loan approval?
  8. What inspections are required by the municipality? Which party will pay for the inspection? Will there be a home warranty contract paid for by the seller? Should the purchaser conduct and pay for a separate home inspection? What kinds of disclosures is a seller required to provide to a purchaser, and what happens if those disclosures are not provided?
  9. If a mortgage is to be given, is there a tax or recording fee for the filing of the mortgage. If so, which party will pay that tax?
  10. If a loan is to be obtained from an outside lender, who will pay the loan closing costs?
  11. If termite damage is found, will the seller pay the cost of repairs?
  12. Are there any restrictions on the use of the property?
  13. If your offer is accepted, who bears the risk of loss if the property is damaged prior to closing?
  14. What persons (such as husbands or wives) are required to sign and accept the offer?
  15. Are any of the boundary lines in dispute?
  16. What are the remedies if the buyer or seller defaults under the contract?
  17. Are there Realtors® involved? If so, who pays the commission? Is the commission payable even if the sale does not close?
  18. Whose responsibility is it to pay for governmental special assessments that arise prior to closing?
  19. What type of deed will be conveyed?
These are just some of the questions. Again, do your homework and make sure the purchase contract is exactly as you wish.    

The following are key issues to consider when reviewing a home purchase agreement.