If you receive this 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.
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