You're Under Agreement, Now What?

Congratulations, you are on your way to owning your very own home! Follow these suggestions (and your realtor's advice) so that settlement with go as smooth as possible.

During this period of purchasing your home, you are going to need a title or settlement company to act as an independent third party so that you know when and who to give your money to get the deed to your new home. The title or settlement company will hold your deposit and coordinate much of the activity that goes on during the settlement. This deposit check may also be held by an attorney or in the listing broker's escrow account.

The deposit check will be cashed. Assuming the sale goes through, this money will be applied to the purchase price of the home.  If for any reason the sale is not consummated, you may be entitled to receive all of your deposit back.  In certain instances, the seller may be able to retain this money as liquidated damages. Prior to executing an Agreement of Sale, it would be wise to speak with your counsel regarding whether or not it is your best interest to have a liquidated damages clause as part of the contract.

The Under Agreement time period varies in duration.  During this time, each item specified in the contract must be completed satisfactorily. By the time you have opened escrow, you have come to an agreement with the seller on the closing date and the contingencies. Each contract is different, but the following is typical:

1. Inspection contingency: typically completed within 15 days +/- after the execution of the Agreement of Sale.  Unsatisfactory results of the inspection may mean that you will want to cancel the contract.
2. Financing contingency: once the contract is signed, you have a period of time to secure funding. If, for any reason, you are unable to secure funding during the period of time granted to you by the contract (and the seller will not provide a written extension of time), you must decide whether you want to remove the contingency and take your chances on getting a loan or you may choose to cancel the purchase contract.
3. A requirement that the seller must provide marketable title.
4. Insurance contingency: timeframe in which the Buyers pursue insurance under reasonable rates and terms.  It is in your best interest to apply for insurance as soon as possible after the contract is signed.  Special requirements such as Historic Reproduction or flood insurance may require more time. 

With an attorney or title officer, review the title report. The title must be "clear" to ensure that you do not have legal issues regarding your ownership.

Check into local and state ordinances regarding property transfer, moving permits and certificates of occupancy and make sure that you and/or the seller have complied with them.

Contact local utility companies to schedule to have service turned on when you settle.

Schedule the final walk-through inspection. At this time, you should make sure that the property is exactly as the contract says it should be. What you thought to be a "permanently attached" chandelier that would come with the property might have been removed by the seller and replaced with a different fixture entirely.

You've made it! Once the sale has closed, you're the proud owner of a new home. Congratulations!

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