Terms of the Sales Agreement
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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