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Buying and Selling a Home


May 1, 2005

The purchase or sale of a home is a major milestone in one’s life, giving rise to a variety of emotions ranging from initial excitement to last-minute stress. A basic understanding of the conveyancing process can help ease the stress and leave room for the excitement.

The Offer to Purchase

Once a Buyer has selected the house that is to become his/her new home, the first step to making the dream a reality is the Offer to Purchase. The Offer contains the essential elements of the transaction including identification of the parties, the property to be purchased, the time for purchase and the purchase price. It may also include such provisions as a contingency for inspectionof the property or a contingency regarding the Buyer’s financing, and, if applicable, a contingency for the review for condominium documents. Accompanied by a deposit, the Offer is signed by the Buyer and submitted to the Seller for consideration. Upon acceptance, the Seller signs the Offer. The signed Offer is a contract, i.e. a binding agreement between the parties.

After acceptance of the offer, the Buyer will likely have a homeinspection to determine the structural integrity of the home and any defects that may play a role in the outcome of the transaction. Many Buyers elect to have a pest inspection conducted as well. Theresults of the inspection may result in negotiations affecting thepurchase price, agreements to perform repairs or may result in the Buyer opting not to purchase the home.

The Purchase and Sale Agreement

The Purchase and Sale Agreement serves as the final agreement between the parties incorporating all terms that the parties agree upon. The Agreement is a binding contract that supercedes the Offer. It must be in writing, signed by all parties involved and include the following elements: identity of the parties, description of the property, sale price and date for performance (the closing date). The remaining termsof the Agreement are subject to negotiation between the parties andcommonly include the Buyer’s financing contingency and the Seller’s duty to provide clear title to the property.

The Working Period

After signing the Purchase and Sale Agreement, the Buyer and Seller must insure all requirements are met prior to the closing. If eitheris represented by an attorney, the attorney will perform the legalaspects of the work. In the time between signing the agreement and closing, the Buyer must apply for and obtain financing and obtain ahomeowner’s insurance policy on the property. Often the Buyerconducts a “walk through” to inspect the condition of the propertyimmediately prior to closing.

The Seller must provide certain documentation prior to closing, such as a certificate from the local fire department evidencing the property complies with smoke detector regulations. The Seller also obtains final water and sewer readings from their municipality to avoid last-minute adjustments at the closing. In the sale of a condominium, the Seller must provide a certificate of insurance and a 6(d) certificate stating there are no outstanding common expenses owed to the condominium association for the unit. In the case of new construction, the Seller must deliver a Certificate of Occupancy issued by the local municipality.

During this time, the lender’s attorney will conduct a title search of the property, which provides a historical record of transactions involving the property. In the event there is a title issue which would prevent the Seller from conveying clear title to the Buyer, the Seller is responsible for resolving the issue prior to closing. The lender’s attorney prepares the Settlement Statement containing the final figures prior to closing which may include such items as real estate tax adjustments, final water and sewer readings, closing fees, escrow funds, prepaid interest, payoff figures, and recording fees.

The Closing

Once the legal work has been completed, the Buyer has securedfinancing, and the Seller is able to provide clear title to convey to the Buyer, it is time for the closing. At the closing, the parties gather and the lender’s attorney conducts the closing, providing the closing figures and necessary documents to the parties. The Seller delivers the deed for recording as well as the other documents discussed above. After the parties have executed the closing documents, the lender’s attorney will record the necessary documents with the Registry of Deeds. After the recording of the deed, the transaction is complete. The obligations of the parties under the Purchase and Sale Agreement cease. The Sellercan enjoy the proceeds, and the Buyer may enjoy his/her new home. Although the closing may seem simple and straightforward, thereare potential legal ramifications associated with the process. Employing the services of an attorney is the best way to avoid and deal with any last-minute legal issues.



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