Important Clauses in Residential Purchase

Important clauses that are typically included in a residential purchase agreement include:

1. The purchase price: This clause states the amount of money that the buyer agrees to pay the seller for the property.

2. The closing date: This clause states the date on which the sale will be completed and the property will be transferred to the buyer.

3. The contingencies: These clauses outline any conditions that must be met before the sale can be completed. For example, a common contingency is that the buyer must obtain financing from a lender before the sale can be completed.

Other important clauses include:

• Inspection and repair
• Title and survey
• Mortgage contingencies
• Homeowner association (HOA) documentation

Mortgage contingencies are clauses in a residential purchase agreement that state that the sale of the property is contingent on the buyer obtaining financing from a lender. This means that if the buyer is unable to obtain a mortgage loan, they have the option to cancel the contract and receive their earnest money deposit back. Mortgage contingencies typically include the following:

1. Loan application: The buyer must submit a loan application and provide all necessary documentation to the lender.

2. Appraisal: The lender will typically require an appraisal of the property to ensure that the purchase price is in line with the property’s value.

3. Loan approval: The lender must approve the loan before the sale can be completed.

4. Interest rate: The mortgage contingencies will often have a deadline by which the interest rate must be locked in, and the lender must provide a clear to close, which means that the lender is satisfied that the buyer is qualified for the loan and the property is in good condition.

5. Financing conditions: The contingencies may include other conditions that the buyer must meet in order to obtain financing, such as a certain credit score or debt-to-income ratio.

These are some common mortgage contingencies that are included in a residential purchase agreement. It’s important to make sure that you understand these contingencies and that you are comfortable with the terms before signing the contract.

Inspection and repair contingencies are clauses in a residential purchase agreement that allow the buyer to have the property inspected by a professional inspector, and to request repairs from the seller based on the inspection results. These contingencies typically include the following:

1. Inspection period: The contract will specify a period of time, usually a few days to a week, during which the buyer can have the property inspected.

2. Types of inspections: The contract will usually specify the types of inspections that the buyer is allowed to have performed, such as a general home inspection, termite inspection, and/or specific inspections such as roof, HVAC, etc.

3. Repair request: If the inspection reveals any issues with the property, the buyer can request that the seller make repairs or offer a credit towards closing costs to address them.

4. Time frame for repairs: The contract will specify a time frame within which the seller must complete the repairs or provide a credit

5. Right to terminate: The inspection and repair contingencies also typically include a provision that allows the buyer to terminate the contract if they are not satisfied with the inspection results or if the seller is unwilling to make the requested repairs.

It’s important to note that the inspection and repair contingencies are a way for the buyer to protect themselves from purchasing a home that has undisclosed issues. However, it’s also important for buyers to understand that the inspection is not a guarantee of the home’s condition and that sellers are not obligated to make all repairs or credits requested by the buyer. Therefore, it’s important to discuss with your real estate agent, attorney and inspector to make sure you’re comfortable with the terms of the inspection and repair contingencies before signing the contract.

Title and survey clauses in a residential purchase agreement are used to ensure that the property being sold is free and clear of any liens or encumbrances, and that the property’s boundaries are accurately described. These clauses typically include the following:

1. Title insurance: The buyer will typically be required to purchase title insurance, which will protect them against any claims that may be made against the property’s title after the sale.

2. Title search: The seller is usually responsible for providing the buyer with a title search report, which will show any liens or encumbrances on the property’s title.

3. Survey: The contract will usually require the seller to provide the buyer with a survey of the property, which will show the property’s boundaries and any structures or improvements on the property.

4. Right to terminate: The title and survey contingencies also typically include a provision that allows the buyer to terminate the contract if any issues are discovered with the title or survey, such as outstanding liens or encumbrances, or if the property’s boundaries are not as described.

It’s important to note that title and survey are important steps in the purchase process, as they ensure that the buyer knows what they are buying and that they will have clear title to the property after the sale. Therefore, it’s important to review the title and survey with your attorney or real estate agent to ensure that everything is in order before closing.

Homeowner association (HOA) documentation is an important clause in a residential purchase agreement when the property is located in a neighborhood that is governed by a homeowners association (HOA). These clauses typically include the following:

1. HOA fees: The contract will specify the current HOA fees and when they are due.

2. HOA rules and regulations: The contract will usually require the seller to provide the buyer with a copy of the HOA’s rules and regulations, which outline the rules and guidelines that homeowners are expected to follow while living in the community.

3. HOA documents: The contract will usually require the seller to provide the buyer with a copy of the HOA’s governing documents, such as the bylaws, covenants, conditions, and restrictions (CC&Rs) which are the legal documents that establish the HOA and set out its powers and responsibilities.

4. Right to terminate: The HOA documentation contingencies also typically include a provision that allows the buyer to terminate the contract if they are not satisfied with the HOA’s rules and regulations or if the HOA is not in good standing.

It’s important to note that HOA’s can have a big impact on the property ownership experience, and therefore it’s important for buyers to understand the HOA’s rules and regulations and the financial commitment that comes with it. Therefore, it’s important to review the HOA documentation with your attorney or real estate agent to ensure that everything is in order before closing.