November 9, 2020
Buying or selling a house? There are a myriad of documents you will be receiving, reading, and signing during the course of the transaction. Here are some of the most common and important.
Real Estate Purchase Contract
Virtually every sale of a home will have a real estate purchase agreement, which is a contract between the seller and buyer confirming the purchase price, closing date, contingencies, the rights and obligations of the parties, and other terms.
There may also be addenda or amendments that amend the terms of the purchase contract, most commonly used after inspections and appraisals where one or more parties wants something changed or done (such as a repair) before the transaction is completed.
Seller and Buyer Agent Agreements
Whether you’re buying or selling a home, you are likely to have a real estate agent representing you in the transaction. A seller’s or buyer’s agent agreement is the contract between them and their respective agent, outlining the terms of the relationship, such as who pays the agent’s commission, length of the agreement, and any terms for terminating the relationship.
Buyers will often have to secure funding to purchase a home. The lender will prepare certain home loan documents, such as the loan application, the note, deed of trust/mortgage, loan estimate, and closing disclosure.
Sellers must disclose certain problems (both past and present) with the home/property that they are aware of that could affect its value. These might include mold or pest problems, water damage, or renovations done without a permit.
At some point during the transaction, the buyers will often have an inspector go to the property to inspect it, and the inspector will prepare a report with notes on the property’s condition and/or any potential issues.
This report estimates the current fair market value of the property. The mortgage lender will often require this before signing off on the loan, to make sure the property is actually worth the amount the buyer agreed to pay. If the appraisal finds the property is valued much lower than the sales price, the buyer will often try to negotiate a lower purchase price.
Although not required, and less common in home purchases, some buyers will get a survey of the property to determine the legal boundaries of the property. This is especially important if there are disputed assets such as a body of water or a road.
Title Insurance Policy
An insurer will run a title search to see if there are any competing claims to a home, any liens against the property, or any fraudulent signatures on ownership documents.
Escrow instructions give the escrow holder the authority to act, telling the escrow holder what to do, and when to do it. They indicate all of the specific steps to be completed (and conditions that must be satisfied) before the escrow is complete. An escrow holder can only act in accordance with the escrow instructions – without signed instructions, the escrow holder cannot proceed. It is therefore important that they be clear, and accurately reflect both the parties’ intentions and the escrow holder’s duties.
A closing statement is essentially an itemized list (or accounting) of the charges and credits in connection with the escrow account. Closing statements reflect the purchase price of the property and relevant financial terms, funds deposited, payments to third parties, debits and credits, closing costs, and payoffs of existing loans or liens.
Mortgage lenders provide borrowers with a closing disclosure, which lists the loan type (fixed-rate or adjustable-rate), loan term (often 15 or 30 years), interest rate, and closing costs.
A deed is a legal document conveying the ownership rights from the seller to the buyer. It is normally signed by the both the seller and buyer (and notarized), and sent to the buyer after the title transfer documents are recorded in the county public records office.
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ESKRIDGE LAW may be contacted by phone (310/303-3951), by fax (310/303-3952) or by email (email@example.com). Please visit our website at eskridge.hv-dev.com.
This article is based on the law as of the date posted at the top of the article. This article does not constitute the provision of legal advice, and does not by itself create an attorney-client relationship with Eskridge Law.