An investment in real estate is often the largest monetary investment that a person can make. As such, it is vitally important to understand all your risks and protect your rights whether you are buying or selling commercial or residential real estate. Contract negotiations can be complex depending on the particular facts and needs of the parties in each transaction. Speaking to an attorney to understand the risks and the complexities of a real estate contract is vital. Once the attorney has reviewed a term sheet or contract, they can explain the terms and the risks involved in the transaction, can amend the terms where needed to protect the rights of the clients and minimize the risks incurred.
Once the contract is finalized, purchasers of property should arrange for home inspections conducted by licensed home inspectors. The inspections vary with the particulars of each property, but at a minimum, include a general home inspection, a radon test (testing the level of radon concentration in the home), a wood-destroying insect inspection, a scan for an underground oil tank and a permit history search obtained from the township’s building department. Additional tests may be warranted depending on the conditions present at the property, and may include tests for mold, lead-based paint and a Level II chimney inspection. Home inspectors and attorneys can guide their clients with respect to the results of the home inspection reports, but generally all reports are shared with the current owner of the property together with a list of issues to be addressed by the sellers. The sellers arrange for the repairs prior to closing with paid receipts to be provided.
If financing for the purchase is required, purchasers should be contacting mortgage lenders, and are typically required to apply immediately for a loan. While the borrower is responsible for providing requested documentation to the lender, the attorney arranges for a title search and survey of the property, and supplies copies to the lender as well. Purchasers should expect to incur costs for title insurance, the cost for which is based upon the purchase price of the property.
At the closing, the purchasers will execute the documents required for their loan while the sellers will execute the conveyance documents. Both parties are required to sign the HUD-1 Settlement Statement typically prepared by the purchasers’ attorney setting forth all of the closing costs for each party in the transaction. The Deed from the sellers and related documents are delivered to the purchasers as well as any required fire department and occupancy certifications, and finally, the keys. The checks are disbursed and title is transferred to the new owners.