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BUYING A HOME Buying a home will probably be the most important financial decision you will make in your lifetime. It should be a happy and rewarding experience. This pamphlet will provide you with general information about the basics of buying a home and will help you understand how a lawyer can assist you with the complicated legal matters involved in the transaction from beginning to end. The main rule in approaching the purchase of a home is
that you should not sign anything until your attorney, the person trained to
advise you, has explained everything to your understanding. WHO WILL BE INVOLVED? When you buy a home, you will come in contact with a
variety of specially-trained people. In. most cases, the real estate agent will
be your first contact, then your lawyer, your banker and, in some cases, a title
insurance officer. It is important to understand the functions of these people so you can
determine whether you are being treated fairly and properly WHAT IS THE REAL ESTATE
AGENT'S ROLE? Unless you buy directly from the owner, the first
person you will come into contact with will be the real estate agent, who is
trained to help you find a home. You should remember that the agent is a
professional salesperson who is generally under contract with and receives a
commission from the seller. Therefore, the agent is representing the seller's
interests in selling the home to you. The circumstances do not change even if
there is more than one agent involved, because they still receive their share of
the commission from the seller and they will earn it only if the sale takes
place. WHY DO I NEED A LAWYER? Your lawyer should participate in all phases of the
transaction to help you in dealing with the other people involved. Your lawyer
will explain to you the different phases of the transaction. There are many
times when legal documents are prepared by the real estate agent. Remember, the
agent does not represent you. Any document requiring your signature should be
reviewed by your attorney. This is true regardless of what the document is or
how it is described to you. In some instances, your lawyer may also provide
additional services. WHAT IS THE AGREEMENT
OF SALE? The foundation for the purchase of a home is a
document called the Agreement of Sale. It is the most important document that you
will sign in purchasing your home because it sets forth all of the terns and conditions of your
purchase. Frequently a preprinted form is used as the Agreement by the seller's
realtor, and the precise terms are added by completing blanks on the form.
Agreements of sale contain detailed legal language which is often hard to
understand. Your lawyer is specially trained to provide you with the explanation
of these terms, and will be able to point out other factors you should consider. For example, you should be aware of the kind of deed
you will receive. A deed is the evidence of your title to the property. You will
also want to be sure that your obligation to buy is conditioned upon the type
and amount of financing you want, with terms you are sure you can afford. Your
lawyer can make sure that unnecessary charges are eliminated from the
transaction and can also help you avoid the problem of having to move out of
your present residence before you are able to move into the new one. Other terms
which your lawyer will assist you in providing for in the agreement include: · The dates and amount of payment required. * The settlement date. · A list of household items to be included in the sale. A statement about what happens if the property is damaged or destroyed before settlement. ·
Damages to be paid if the agreement is broken by either
party. This list is not complete, but it does show how
important it is to be thorough before the agreement is signed. Remember, once
you sign a document, it is too late. Unfortunately, many times a buyer will sign
without fully understanding the terms of the agreement. Before signing, make
sure you understand everything! WHAT
ABOUT A
MORTGAGE? A mortgage is a loan, which is usually made to you by
a Credit Union, Bank or other financial institution. Unless you
are going to pay cash for your home, a financial institution
will be necessary to obtain the money to purchase your home. Disclosures
required by law will show you what you will actually pay for your
home over the term of the mortgage. Your lawyer can also assist you in obtaining
information about a mortgage that will fit your needs. In general, the mortgage market is competitive. This
means that by shopping around for a mortgage, you may be able to save money. Your lawyer will be able to explain the procedures for
obtaining a mortgage, as well as different types and rates of interest,
"points," and the legal documents involved. You may want to ask your
lawyer or financial institution about alternative means of financing. These
include, among others, seller financing or assuming the seller's current financing.
WHY IS A TITLE EXAMINATION
NECESSARY? Before settlement, the title should be examined to
determine whether there are any liens, encumbrances or other potential clouds on
the title. Also, most institutions providing a mortgage will require that you
purchase title insurance at the time of final settlement. In some areas, the title examination or title search
is done by a lawyer. In other areas, the search is done by a title insurance
company. The buyer pays for the title search and for the title insurance. Your
lawyer will examine it to determine that you will receive proper and legal title
to the property. Only a lawyer is qualified to evaluate the legal implications
which may arise as a result of the title examination. WHAT DOES A TITLE
OFFICER DO? In many parts of Pennsylvania, the title officer, who
works for a title insurance company, is the person who will conduct the closing or
settlement on your new home. It is the practice in other areas, however, for
your attorney to conduct the settlement. WHAT DOES THE SELLER
HAVE TO DISCLOSE? The Real Estate Seller Disclosure Law took effect Aug.
30, 1996. Intended to make potential buyers aware of any material defects, this
law requires a seller to complete a detailed disclosure form regarding the
condition and structural soundness of the property which is for sale. The law
also stipulates that sellers can be held liable for related damages if they fail
to disclose defects they know about. This law applies to properties that are for
sale through the real estate agent or the owner. On the form, sellers are asked to provide detailed
information about such areas as the installation and repair of the roof, gutters
and downspouts; water leakage; termites, dry rot; shifting or movement of walls
and foundations; additions and remodeling jobs; water, sewage and plumbing;
heating and air conditioning, the electrical system; all appliances included in
the sale and many other things including condominium or association assessments
and mine subsidence, if applicable. WHEN DO I RECEIVE TITLE TO
THE PROPERTY? The final stage in the purchase of property is called
the closing or settlement. The closing may be held in the office of the title
insurance company, in your attorney's office, or at the bank or financial
institution which provided the mortgage. At closing, the terms of the agreement
of sale will be carried out, the mortgage documents will be signed, the title
tot the real estate, in
the form of a deed, will be transferred to you, and the seller will be paid the
purchase price. There are many documents to be signed and reviewed. Your lawyer will attend the settlement with you to help you
understand exactly what is taking place and to protect your interests insuring
that you receive everything you are entitled to under the Agreement of Sale and
to render legal advice should any
problems arise prior to or at the settlement. WHAT EXPENSES ARE INVOLVED? Your lawyer can explain to you what expenses are
involved, in addition to the purchase price. Among them are: ·
Cost of title examination and title insurance. State and
local transfer taxes. ·
Adjustments for property taxes and other items already paid
for by the seller. ·
Your lawyer's fees. ·
Charges imposed by the institution providing the mortgage,
including "points" (a percentage charge,usually three points) and fire and
homeowner's insurance, . ·
Recording costs for the deed, mortgage and any other required
filings. Ó 2000 James
W. Pearson, Jr., All Rights Reserved FOR ADDITIONAL INFORMATION CALL THE TOLL FREE HELP LINE 1-800-232-1477 E-mail: lawyer@lawwalk.com JAMES
W. PEARSON, JR. Chair of the Federal & State Credit Union Department & Coordinator of legal consultations under the Family Legal Care Plans offered to credit union members. |
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