Yes, but be careful. If a contract provision is to survive the deed, make sure it is stated so in the contract (i.e., the merger doctrine may bar an obligation or duty of the Seller if not stated that it survives the deed).
Author Archives: John Elliott
I want to sell my current home and purchase a larger one. Which closing costs should I expect to pay?
Certainly, everyone wants to limit what they pay in closings costs. There are no set rules as to which party pays certain expenses, as everything is negotiable. Typically, the contract will state that the Seller’s closing expenses are capped at a certain amount, such as “Seller will pay up to $2,000 in closing costs and all other closing costs shall be paid by the Buyer.”
Also, if the Buyer is getting an FHA loan, make sure it is clear that the Seller is only paying what is stated in the contract. FHA loans require Sellers to pay certain expenses, so you should ask the lender for this information before entering into a contract.
If I enter into a contract and later decide I do not want to purchase the property, will I lose my earnest money?
Each contract is unique and it depends on the situation. Before entering into a contract, think about what you need for the property to meet your needs. As the Buyer, you want to provide as many “outs” as possible, such as:
The Buyer may declare this contract null and void and have the full amount of his earnest money returned to him if:
- Property is not zoned for his particular use, development, etc.
- Buyer finds the property’s soil to be unsuitable.
- Buyer cannot secure a loan in the amount $____ or more, amortized over ____ years, with interest not to exceed ___% per annum.
- (Anything else you can think of that is important to you as the Buyer, insert as a contingency.)
I’m selling my house. What kind of down payment or earnest money should I request from the Buyer?
A contract must have consideration, even if it is “but a peppercorn.” The earnest money amount is negotiable and can be whatever the parties agree upon. As a rule of thumb, 1-2% of the purchase price is common.
I’m purchasing a house and need to insert a property description on the contract. Should I use the property address?
If the property is in a subdivision, you should use the legal description, such as Lot ______, Castlewoods, Phase __________, Rankin County, MS.
If the property has a metes and bounds description, you may attach a copy of the legal description as an Exhibit to the contract and have the parties sign the legal description agreeing to incorporate it into the contract.
If you do not have either of the above descriptions, then an address or parcel number will usually suffice. However, DO NOT, for example, use a generic description like “two (2) acres subdivided from the Seller’s ten (10) acres,” as this is not specific enough to show a meeting of the minds.
What are policy types?
The Owner’s Policy insures the new home owner/buyer, and a lender’s policy insures the priority of the lender’s security interest.
Who needs title insurance?
Purchasers and lenders need title insurance in order to be insured against various possible title defects. The buyer, seller and lender all benefit from the issuance of title insurance.
What does title insurance cover?
Title insurance protects against claims from defects. Defects are things such as another person claiming an ownership interest, improperly recorded documents, fraud, forgery, liens, encroachments, easements and other items that are specified in the actual policy.
How does title insurance differ from other insurance?
Insurance such as car, life, health, etc., protects against potential future events and is paid for with monthly or annual premiums. A title policy insures against events that occurred in the past of the real property and the people who owned it, for a one-time premium paid at the close of the escrow.
What is title insurance?
Title insurance protects real estate owners and lenders against any property loss or damage they might experience because of liens, encumbrances or the defects in the title to the property. Each title insurance policy is subject to specific terms, conditions and exclusions.
