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Disclaimer
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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