Whether purchasing your first home, second home, or a vacation home there are certain steps that take place when purchasing a property.
First you will typically have to find a real estate agent to help facilitate the purchase of your home. The agent is required to provide you with an agency notice that describes the scope of their assistance in the process.
Next you will put an offer in on a home. Once that offer is accepted a contract is signed. This contract is then forwarded to the purchaser’s and seller’s prospective attorneys for their review. During the attorney review period, each attorney can request changes to the contract.
How long does Attorney Review last?
Attorney review must begin within 3 days of the contract being signed by both parties, or else it is waived. Once either attorney requests changes to the contract, attorney review has officially begun. Typically, from start to finish, attorney review will last 2-3 days. However, it can last longer given the complexity of the transaction. During this period the attorneys will negotiate the contraction representing their party’s position as to the purchase of the home. Until all revisions are complete the contract is not final and either party may cancel the contract.
What happens after Attorney Review is concluded?
Once attorney review is concluded the contract to purchase is given valid legal effect and you will typically have 45 days to provide a mortgage commitment to the seller. You will want to stay in contact with your mortgage lender to make sure you are providing all requested documents to them in a timely manner. Title insurance will also need to be ordered for the property. You will want to have a home inspection done as well.
What does ordering Title mean?
This means that a title company will search the history of the property for any judgments, liens, delinquent taxes, encumbrances, issues with the seller’s ownership, or anything else that could materially affect your use of the property. If there are any liens on the property, they will need to be paid off before the purchase. You will also obtain title insurance.
What is Title Insurance?
This insures your title if issues crop up down the line. The insurance company will pay litigation costs and they reimburse you if you end up losing the property due to title not being clear. This is a very important step in the process.
Do I need a Survey?
It is highly recommended when buying a property that you also receive a survey of the property. This is an extra expense separate from ordering title, but it is very informative in telling you exactly where your property lines are, just in case there is any dispute in the future. A survey lets you know if everything on the property is included within the property line. As an example, if there was a shed that was on the property and was not within the property line, you would want the Sellers to move the shed prior to closing. Title insurance also guarantees the survey.
Next we will discuss inspections.
What are inspections and when do they need to be completed by?
It is highly recommended to obtain inspections on the property that you are planning to purchase. Home inspections protect a buyer’s investment. Most inspections will need to be completed within 10 or 14 days of the end of attorney review. Inspections will let you know of any defects of the property so that issues may be fixed before the purchase of the property is complete. Although a seller is not required to make repairs, most sellers work in good faith to remediate reasonable requests. This can either be done by a credit from the seller, where the seller credits you money during the closing so that you may complete the necessary repairs on your own post-purchase. It can also be done by the seller completing the necessary repairs prior to the closing.
Getting a Certificate of Occupancy
Each Township has its own set of rules for obtaining a CO. Some townships only require a smoke certificate. This ensures that there are working smoke/ CO detectors in the home and that there is a fire extinguisher near the kitchen. Other townships will inspect the entire home, including looking for repairs or upgrades that were made without permits.
When will the closing take place?
The closing will take place usually within 60 days after attorney review. You will have 45 days to receive a mortgage commitment. At the closing you will sign documents for your mortgage and receive a copy of the signed deed which transfers the home to you.
Are there tax benefits or tax disadvantages I should be aware of when purchasing a home?
You may want to consult an accountant or tax specialist to inform you of certain tax benefits or disadvantages that involve the purchase of your new home. Your closing attorney and real estate agent will typically not be able to advise you regarding taxes associated with the purchase of your home.