Top 10 Things to Keep in Mind When Signing a Real Estate Purchase Agreement
Whether you are buying a single family home, townhome or condominium, the one thing you cannot afford to overlook is the purchase agreement. This agreement between buyer and seller is a legally binding document that spells out what you are purchasing and the conditions the sale must meet. Therefore, it is important that you consider the following recommendations prior to signing the agreement:
1. Read the fine print. Since each sale has specific conditions that must be met, there is no standard agreement. Therefore, you must review the agreement in its entirety. The Florida Bar, the Florida Association of Realtors and other organizations have recommended forms; however, these forms must still be tailored to your individual purchase.
2. Pay attention to deadlines. It is important that you understand the specific deadlines under your agreement and any penalties that may result from not meeting these deadlines. You will have certain time constraints with regard to making deposits, obtaining financing, performing inspections, examining title, and even terminating the agreement. You may unintentionally waive rights under the agreement by missing a deadline or not notifying the other party in the manner specified in the agreement.
3. Complete the home inspection. A home inspection is not required, but it can save you time and money resulting from unexpected and costly repairs. If you find a serious problem with the home during the inspection, you will have an opportunity to back-out of the deal, or ask the seller to fix it or pay for you to have it fixed (as long as your agreement included a home-inspection contingency).
4. Request a permit search. Since open permits do not typically impact title, permit searches are often times not performed. A buyer can inherit a mess created by the seller if an open permit exists. If work was done on the property without obtaining final approval of a permit, the buyer may be responsible for remediation costs to close out the permit and to pay fees and penalties assessed by the municipality for violations.
5. Review your title commitment and policy. It is important that you examine and clearly understand the title exceptions as your rights and responsibilities with respect to the property may be adversely affected by the exceptions noted.
6. Inspect association budgets. When buying a unit in a condominium, you must be sure to inspect the association’s budget to ascertain whether there are sufficient reserves. An association with an insufficient budget, may soon be passing a special assessment if there is not enough money in reserves to pay for necessary improvements.
7. Understand your rights and restrictions as set forth by homeowners’ associations. If the property is subject to a declaration of condominium or homeowners’ association, you will be provided with a document stating your rights regarding your use and enjoyment of the property. Your ability to rent and/or sell the unit may be affected by these use restrictions. Be sure to also review this document carefully.
8. Closing costs. It is important that you understand your closing costs and your right to shop around for a lender and title service provider. Each agreement is unique and may subject you to differing costs and expenses for items such as title, special assessments, repairs and settlement charges. These terms are negotiable and may vary between providers.
9. Perform a thorough walk through. You want to make sure no damage has occurred and nothing has been removed or altered that is included in the purchase. Give yourself ample time to perform a walk through review; although necessary, it is not a substitute for the home inspection described above.
10. Clearly understand the entire agreement. The purchase agreement is full of fine print and legal terms; if you sign without legal representation, you risk being bound to terms you may not understand or do not want. Once the agreement is signed, the terms are set in stone and it may destroy any chance of re-negotiating the terms of the purchase. With any contract, it is always best to consult a legal professional, especially if you are not clear about any item.