Decor Portfolio

1. What is a real estate contract and what should it state?

A real estate contract is a legally enforceable agreement to buy and sell a particular piece of real estate. The following is a list of some of the most important common terms: 1) the purchase price; 2) the mount of the down payment; 3) a mortgage contingency; 4) the anticipated sate and place of the closing; 5) a description of the property; 6) a list of all the personal property, appliances and fixtures included in the sale; 7) clauses concerning the ownership and permissible use of the property; and the responsibilities of the seller. In most cases, unless otherwise agreed, the seller’s attorney usually prepares the first draft of the contract of sale. Your local attorney prepares the rider provisions (attached to the contract) to protect you.

2. How much of a down payment is required?

The down payment or earnest money is a tangible indication of the buyers intent and may be a source of compensation to the seller in the even the buyer doesn”t carry out his promises. Generally 10% of the purchase price is acceptable to the seller, which is held by the seller’s attorney in escrow until closing. Any interest earned on the escrow goes to the seller unless the down payment is returned to the buyer.

3. What happens if I cant get a mortgage?

Many real estate contracts include a mortgage contingency where, rather than risk losing your deposit money, you make your offer to buy subject to obtaining a loan. If you do not see this contingency in the contract, make sure you bring this to your attorney’s attention so it may be added. To further protect yourself against having to accept a loan “at any price”, the terms on which you will accept a mortgage should be stated in the contract. If you cannot obtain such financing, the seller will have to return your deposit and begin searching for another buyer. Sometimes an “all cash” offer (i.e. No mortgage contingency) is a way to purchase property, especially in a case where there is more than one bidder. If you make an “all cash” offer, make sure you can close title without a mortgage. If you cant close because you do not have liquid assets, you would lose you contract deposit.

4. What can I expect about the condition of the house at the time of closing?

The condition of the house should be the same as it was when you signed the contract of sale. In addition, the contract should provide that on the sate of closing all electrical, plumbing, heating systems and appliance should be in working order and that the roof and basement be free of leaks. Just prior to the closing, the house should be in broom clean condition. An important aspect of closing is that prior to the closing, you should make an appointment to inspect the property for any changes and detects. If anything is out of order, you should let your attorney know before or at the closing.

5. Is a termite report necessary?

A termite inspection and report are necessary to detect any signs of termites and/or wood-eating insects. The contract should provide that a termite inspection can be performed within ten days of the contract date and the sale should be contingent upon a satisfactory report from a licensed pest control inspector. If the report does show infestation or damage, the contract should have a provision stating that the seller will pay for any treatment deemed necessary by the report (up to a certain amount) or the purchase can cancel the contract.

6. When is a water quality report necessary?

If you are purchasing a property that has a private water supply such as well, it is important that you obtain a water-quality report. The cost of such a report is minimal and will determine if the water is suitable for human consumption. The requirement should be addressed in the contract of sale.

7. Why do I need the seller to supply a current Certificate of Occupant?

The most important reason to get a certificate of occupancy is to make certain there are no illegal decks, additions, pool or other structures on the premises. If there are, the contract should provide that the seller has to take the necessary steps to legalize these improvements.

8. Can I put a kitchen in my pool house?

Most local ordinances prohibit living quarters, usually defined as areas with cooking and/or sleeping facilities, in pool houses. However, some accessory structures pre-date the code requirements and are therefore exempt or “grand fathered”. In some cases, a “wet bar” is permitted allowing a sink and refrigerator (but no cooking range).

9. Can I use my garage as a guest cottage?

Most local zoning ordinances prohibit the creating on guesthouses or guest cottages in accessory structures, such as a detached garage. However, most will permit improvements of an attached garage, either on a first or second floor, to accommodate guest rooms with a bathroom. Some detached garages may be grand fathered as guest cottages.