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Contingencies

The home buyer's first priority to planning for the Closing is to hire an attorney skilled in real estate practice. The attorney will be an advocate to represent the home buyer's interests in the event of any unforeseen circumstances and to ensure that all contingencies of the property transfer be met. Some of the tasks attorneys perform for home buyers include writing/reviewing the Purchase & Sale Agreement or leases and options, holding earnest money in escrow, qualifying buyers or getting a copy of the lender's pre approval letter, dealing with environmental issues like radon and lead paint, requesting a municipal lien certificate and Smoke Detectors certificate, conducting a title search and remedying any defects in the title, handling any legal matter that could prevent your closing, managing the closing, recording the deed and mortgage at the Registry of Deeds and representing you in any actions you may have to take against a buyer.

Most real estate experts and consumer advocates feel that home buyers should use an attorney. Home buyers should ask family, friends, coworkers, and real estate professionals for their recommendations of attorneys and not be shy about discussing fees during interviews. It is important to understand how much it will cost for their services and what services they will perform.

The three basic contingencies home buyers and sellers encounter concern financing, inspection and attorney approval but you may also come across one or more of the following common contingencies:

-sale of current residence of buyer
-purchase of new home by seller
-approval by condominium boards
-pest inspection
-radon inspection
-lead paint inspection
-water inspection
-compliance with building codes.

Monitoring dates on the 'countdown to the close' is very important. Use a calendar and jot down each deadline date for the home inspection, attorney approval, and mortgage financing contingencies specified. Use the Closing Checklist to keep track of the paperwork. Here are some of the common forms which are part of the closing paperwork:

BUYER'S TIP: Skilled buyer agents have improved the standard language in offers to provide more protection for homebuyers. An example of one such modification is to state "if an inspection proves to be unsatisfactory to the buyer due to any defects, buyer may, at buyer's election, terminate this offer....." The term any defects replaces the standard of "material defects". This replacement provides language to get the deposit back without a hassle, in the case of this particular offer agreement as follows: "then the buyer will receive an immediate refund of all deposits held by the escrow agent..." It is important to note, though, that as soon as you determine you want to walk from the deal that you minimize the loss of time to the seller by acting immediately.

DEED - A legal description prepared by an attorney to transfer ownership of property is recorded at the Registry of Deeds.

TITLE INSURANCE POLICY & CERTIFICATE OF TITLE - This coverage is issued by the title company after completion of the title search. They check to see if there are any judgments, liens or attachments that need to be taken care of to `clear' the title. After checking on unpaid taxes and assessments (e.g., sidewalks or sewer), the attorney provides a certificate of title to the lender and the buyer.

HOMEOWNER'S INSURANCE POLICY - New home buyers must obtain a `binder' for new coverage on the home, and the seller is generally required to keep the property insured against loss or damage prior to the Closing to protect the new buyer's interests.

MORTGAGE - A mortgage contract gets recorded at the Registry of Deeds to protect the mortgage lender's interests. If you are lucky enough to pay off your mortgage, you will receive a copy of your ``satisfaction of mortgage" which is a document that indicates you have paid your mortgage in full.

PRIVATE MORTGAGE INSURANCE (PMI) - Not everyone has to purchase private mortgage insurance. You may avoid it by putting a certain amount down (e.g., 20%) or build up enough equity to have it canceled. The Private Mortgage Insurance Protection Act passed in 1999 requires the percentage amount placed on statement and that the PMI be automatically cancelled when your equity reaches 20%. Visit www.privatemi.com or order a consumer guide to canceling PMI by calling (202) 393-5566 or writing to:
Mortgage Insurance Companies of America
727 15th Street NW
Washington, DC 20005

PROPERTY TAX BILL - Many homeowners will supply a copy of their property tax bill to the buyers; if not, a copy can be obtained from the town or city hall Assessor's office.

WARRANTIES and SERVICE RECORDS - Home buyers appreciate these records, if available from the home sellers, as they can aid in obtaining satisfaction if a product or service fails within the given time or usage limits. It is also helpful to know what service people the sellers have used in the past as they experience, sometimes for the first time, the maintenance of a home (furnace cleaning, snow plowing, plumbers, etc.)

PLOT PLANS and SURVEYS - An up-to-date survey will be required for the closing. You can look up a the current plot plan at the town hall and obtain a copy for a nominal fee.

WATER & SEWER BILLS - Proof of payment by the seller will probably be required for the Closing.

UTILITIES RECORDS - Homebuyers generally arrange for services to be changed the day of or day after your Closing. Check with each service provider to determine how they handle requests and what is required for final readings and new service setups.

Contingencies that the home sellers expect to met by the home buyers include obtaining a mortgage and performing all of the requested inspections (home, pest, radon, etc.). In turn, the home buyer expects that any and all renegotiated items such as repairs or monetary credits for repairs will be taken care of before the closing. The final walk-through provides an opportunity for the the buyers to verify that everything is as they expected. Home buyers will generally stipulate that the home is delivered "broom clean" as well.