Interpretation of the Residential Purchase Agreement

Transcription

1 Interpretation of the Residential Purchase Agreement

2 Introduction Before becoming a homeowner, many aspects are involved including emotional, legal, financial and contractual. The RPA is a legal agreement that establishes your willingness to buy a home, the seller s wilingness to sell it. This interpretation is meant to help understand the RPA and Joint Escrow Instruction. Should you want specific legal advice or tax advice for your situation, you must seek a legal/tax professional.

3 Offer/Agency Paragraph 1 asks for your name and the names of anyone else who will be the owners of the home, property address, how much you are will to pay for the property; when you want to close escrow in other words when you will pay for and own the property Paragraph 2 does two things: One, it lets you know that the broker who represents you may also be working with other buyers or through other Realtors working for the same broker. Two, it lets you know whether the broker who is working with you on this particular sale also represents the seller on same sale.

4 Finance Terms/Allocation of Cost Para.3 identifies how you will pay for the property. Most buyers give some money at the very beginning called a deposit (Earnest money deposit). An escrow /company that is neither controlled by you or the seller will hold this money. It also states whether you need a loan or will pay cash. Para.4 states whether you or the seller will pay for certain costs: reports; earthquake fires/floods: a title insurance policy, the services of the escrow holder and certain property taxes or other governmental fees.

5 Closing Possession Para.5 specifies when you want to move into the home and when the seller will move out. If the property is currently rented, the issue of what will happen to the existing tenants also needs to be addressed. It also states when you will get the keys to your new home.

6 Statutory Disclosures/Cancellation Lead/Paint Para. 6 identifies those things that the Seller must disclose to the Buyer, by law, in writing. Examples: Paint on the property that may have lead in it; if the property is likely to be in an earthquake zone or fire/flood area and a list of what Seller knows is wrong with the Property. Buyer may cancel the contract and get your money back if Seller does not comply w/i time frame. This paragraph specifies that both CA and FED law require you to withhold a portion of the purchase price and send that amount to the tax collection agency. Certain exemptions may apply.

7 Condo/Items Included & Excluded Para.7 lists many other things that the seller has to tell you or give you such as documents (CC&R)s that establish rules of Planned Development Para 8 lists items to be included with Sale that are attached to the property; ie. Carpets vs. are rugs. You can ask for certain items to be sold with the home by writing it into this paragraph.

8 Condition Effecting Property Para. 9 says that you are buying the property in the condition it is when your offer is accepted (AS IS). The seller does not have to fix anything that is already broken; although, Seller has to disclosure what is wrong with property. This section reminds you that you have the right to check out the property and have a professional Home Inspection and Seller may be asked to fix the problem. Again, Seller does not have to fix all problems. If the Buyer is not satisfied, Buyer has thee right to cancel the contract and get your deposit back if the seller refuses to fix the problem.

9 BIA and Matters/Seller Disclosures Para.10 says that if seller has agreed to make repairs, they will be completed before Buyer becomes the owner of the property; repairs may show up on the Home Inspection paid by the Buyer. Buyer promises the seller that if Buyer/inspector damages the property, Buyer pays Seller to correct damage. Buyer will have a final walk-through Para.11 is where you would write additional terms that are not pre-printed on contract or indicate that other docs will be attached/proceded. These docs may modify or supplement contract or simply provide you with additional infromation that you can use to make a decision about the property.

10 Title&Vesting/Sale of Buyers Property Para.12 talks about an insurance policy whereby a title company will examine the sellers ability to transfer property w/o some other person or entity claiming a right to the property such as the seller not really owning the property or some one else has the right to use part of the property; ie. PG&E Para.13 applies if Buyer needs to sell property you own in order to buy another one.

11 Time Periods/Repairs Para.14 A Buyer has a time period of 17 days to inspect the home, review docs and make a decision to cancel w/i 17 or move forward to close an escrow Para.15 determines on how agreed-upon repairs are to be completed by the Buyer or Seller.

12 Final Verification of Condition (VOC)/Prorations Para.16 This is the last time the Buyer may inspect the property and be sure the Seller has taken case of Repairs if agreed. Para. 17 This pertains to certain costs/expenses that are paid periodically between the Buyer and Seller should escrow close w/i time frames.

13 Selection of Vendors/MLS Para.18 may offer a list of service providers to help with the purchase of property; ie. Home Inspectors and Home Warranty Companies Para.19 This Organization allows Brokers and realtors to report the sale and its terms into a Multiple Listing Service. Thousands of properties are listed on a Regional basis to assist the Buyer and Seller in their respective community. It is used to help identify properties for buyers and establish an asking price for the Seller.

14 Equal Housing Oppt/Attorney Fees Para. 20 states that the Broker, Seller and Buyer will not unlawfully discriminate in the sale o the property. Para.21 states that if a lawsuit or arbitration is necessary, the Loser will pay for the winner s attorney fees.

15 Definitions/Broker Comp. Para.22 simply defines terms used throughout the contract. Para.23 states fee to pay a real estate broker. (%/fee)

16 Escrow Instructions/Liquidated Damages Para. 24 Tells the escrow holder what to do and how to hold title(single/joint) and how to pay the brokers at the close of escrow. Para. 25 Should the Buyer cancel the contract without a proper reason, Seller can sue you. The most the Buyer can lose is the amount of money you have given as a deposit or 3%.

17 Dispute Resolution/Agency Para.26/26A /26B /26C; 26A allows a third person called a Mediator to help solve an issue/issues between Buyer and Seller. 26B allows for an Arbitrator who has the authority to decide for Buyer and Seller the issue at hand without going to court. 26C identifies those times Buyer does not have to mediate or arbitrate and may include the Broker Para. 27. This section lets the Buyer know that the Broker may be working with other buyers directly or with other Realtors working for the same broker. It lets the buyer know, too, whether the Broker who is working for him/her on one particular sale also represents the seller on this same sale. Agency also means that the Broker representing him/her may be trying to sell other properties for other sellers that have listed their property for sale with the broker either directly or with another Realtor working for the same Broker.

18 Time of Essence/Expiration of Offer Para 28 Any changes in the contract are only enforceable by writing not verbal and may be amended by other documents. Para.29 In order to create a binding contract, both Buyer and Seller sign and return the Realtor you are working

19 Acceptance of the Offer Para.30 is where the Seller can either accept your offer or give you a counter-offer. Once the counter offer is accepted and signed, returned back to Seller s agent within time frame, then there is a binding contract. Buyer Inspection Advisory The last two pages suggests items you may want a Home Inspector to check on the property. Once determinations are made, escrow comes into the picture to seal the deal!! The Buyer has a new home!!