Home Buying Tools
Purchase and Sale Agreement
Normally, the buyer and seller will sign a standard Purchase and Sale Contract or
P&S when buying real estate. Some states allow signatures to be binding when faxing P&S
contracts. Massachusetts uses a pre-P&S "Offer to Purchase"
contract with the buyer's offer price, and any other additionally legally
binding stipulations by the buyer, to allow faster offers to the
seller.
It is widely recommended to seek the advise of an attorney before signing a
P&S agreement or Offer to Purchase. An experienced real estate attorney will uncover any
issues with the contract before you sign it. You could lose your deposit
on a property if there is a problem with the contract uncovered before
closing.
Please note, potential condominium buyers should add any legal stipulations
to the P&S such as: review and approve condominium master deed/bylaws,
association budget, association meeting minutes, and association financial
statements {an attorney can draft an "escape" clause for you) .
The following is quoted from the
Federal
Housing and Urban Development web site concerning the elements of
most purchase and sale agreements:
[Terms of Purchase and Sale Agreement]
If you
receive this [HUD] Booklet before you sign an
agreement of sale, here are some important points to consider. The real
estate broker probably will give you a preprinted form of agreement of sale.
You may make changes or additions to the form agreement, but the seller must
agree to every change you make. You should also agree with the seller on
when you will move in and what appliances and personal property will be sold
with the home.
Sales Price. For most home purchasers, the sales price is
the most important term. Recognize that other non-monetary terms of the
agreement are also important.
Title. "Title" refers to the legal ownership of your new
home. The seller should provide title, free and clear of all claims by
others against your new home. Claims by others against your new home are
sometimes known as "liens" or "encumbrances." You may negotiate who will pay
for the title search which will tell you whether the title is "clear."
Mortgage Clause. The agreement of sale should
provide that your deposit will be refunded if the sale has to be canceled
because you are unable to get a mortgage loan. For example, your agreement
of sale could allow the purchase to be canceled if you cannot obtain
mortgage financing at an interest rate at or below a rate you specify in the
agreement.
Pests. Your lender will require a certificate from a
qualified inspector stating that the home is free from termites and other
pests and pest damage. You may want to reserve the right to cancel the
agreement or seek immediate treatment and repairs by the seller if pest
damage is found.
Home Inspection. It is a good idea to have the home
inspected. An inspection should determine the condition of the plumbing,
heating, cooling and electrical systems. The structure should also be
examined to assure it is sound and to determine the condition of the roof,
siding, windows and doors. The lot should be graded away from the house so
that water does not drain toward the house and into the basement.
Most
buyers prefer to pay for these inspections so that the inspector is working
for them, not the seller. You may wish to include in your agreement of sale
the right to cancel, if you are not satisfied with the inspection results.
In that case, you may want to re-negotiate for a lower sale price or require
the seller to make repairs.
Lead-Based Paint Hazards in Housing 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 or sales agent must
give you the EPA pamphlet "Protect Your Family From Lead in Your Home" or
other EPA-approved lead hazard information. The seller or sales agent must
tell you what the seller actually knows about the home's lead-based paint or
lead-based paint hazards and give you any relevant records or reports.
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.
Finally, the seller must attach a disclosure form to the agreement of sale
which will include a Lead Warning Statement. You, the seller, and the sales
agent will sign an acknowledgment that these notification requirements have
been satisfied.
Other Environmental Concerns. Your city or state may
have laws requiring buyers or sellers to test for environmental hazards such
as leaking underground oil tanks, the presence of radon or asbestos, lead
water pipes, and other such hazards, and to take the steps to clean-up any
such hazards. You may negotiate who will pay for the costs of any required
testing and/or clean-up.
Sharing of Expenses. You need to agree with the seller
about how expenses related to the property such as taxes, water and sewer
charges, condominium fees, and utility bills, are to be divided on the date
of settlement. Unless you agree otherwise, you should only be responsible
for the portion of these expenses owed after the date of sale.
Settlement Agent/Escrow Agent. Depending on local
practices, you may have an option to select the settlement agent or escrow
agent or company. For states where an escrow agent or company will handle
the settlement, the buyer, seller and lender will provide instructions.
Settlement Costs. You can negotiate which settlement
costs you will pay and which will be paid by the seller. |
