Home Sales Agreement Term

When it comes to signing a sales agreement, real estate brokers typically will hand you a preprinted form containing the terms of the sales agreement. Despite this, many terms are in fact negotiable, so you should feel free to discuss changes, such as the sales price. That said, in order for the changes to be officially written into the sales agreement, the seller must agree to them.

It's important to have a thorough understanding of the terms of the sales agreement, especially when it comes to the sales price, which can often include appliances. In addition to that, there are other terms to be aware of:

Mortgage clause

The mortgage clause will state whether or not your deposit will be refunded if the sale is cancelled because you are unable to get a mortgage loan. Your agreement could allow the purchase to be canceled if you cannot obtain mortgage financing at or below a specific interest rate or through a specific loan program.

Settlement costs

You can negotiate which settlement costs you will pay and which will be paid by the seller. The seller may contribute a lump sum amount or may agree to pay for specific items on your behalf.

Inspections

Most buyers prefer to pay for the following inspections so that the inspector is working for them, not the seller. You may want to include in your sales agreement the ability to cancel the agreement or renegotiate the contract for a lower sales price or for the needed repairs if you are not satisfied with the inspection results.

Home inspection

You should 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. You should be present during the inspection to ask any questions.

Pests

Our lender may require a certificate from a qualified inspector stating that the home is free from termites and other pests and pest damage. Even if your lender does not require a pest inspection, you may want to obtain a pest inspection to ensure the property does not have termites or other pests.

Lead-based paint hazards

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 EPAapproved lead hazard information). The seller must also disclose any known lead-based paint hazards in the property through a Lead Warning Statement and give you any relevant records or reports.

Other environmental concerns

Your city or state may require sellers to disclose known environmental hazards such as leaking underground oil tanks, the presence of radon or asbestos, lead water pipes, and other such hazards. You may want to determine the environmental condition of the home for your own safety. You could also be financially liable for the clean-up of any environmental hazards.

Sharing of expenses

You need to negotiate 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.

This post is courtesy of the Consumer Financial Protection Bureau and the American Land Title Association. For additional questions regarding the legal process of purchasing or selling a home, please contact Michna Law Group via phone at (847) 446-4600 or by email at BJM@MichnaLaw.com.