Attorney Review and Contracts

Happy New Year to all!  I hope that your holidays were enjoyable and memorable.

When we last left off, I was discussing the property inspection.  Once that is complete, the Seller’s Realtor® will fax a Purchase Memo to the attorneys representing the Sellers and the Buyers, outlining the details of the transaction. This one page – 8.5 x 11, one-sided document – contains all of the following information:

v  The property address and Tax Identification Number

v  The names of the Buyers, Sellers and their perspective attorneys

v  The price and terms of the deal (including the closing date, mortgage, etc.)

v  Items included or excluded in the sale (light fixtures, etc.)

v  Any other information (occupancy agreements, repairs, etc.)

v  The Realtors® involved in the transaction

Along with the Purchase Memo, the Executed Disclosures (signed previously by the Sellers and Buyers), a survey – if applicable – and any other pertinent information (test results, repair documentation, etc.) will be included. At that point, the Seller’s attorney will draft three or four original copies of a Contract-of-Sale and then send it (we recommend by email, fax or overnight delivery!) to the Buyer’s attorney. Along with the Contract-of-Sale, the attorney will include any applicable disclosures and a survey – if available on a house or ‘PUD’. And for a property in a ‘homeowners association’, the Prospectus and two years financials of the complex will be included.

The two attorneys will negotiate any changes to the contracts to finalize all the legal language, in advance of any signatures. The buyers will then go to their attorney’s office, sign the contract and write a down-payment check – usually in the amount of 10% or any other amount negotiated previously by your Realtor®. The purchaser’s attorney will then send the contracts (again, we recommend by overnight delivery!), with the down-payment check to the Seller’s attorney. The Sellers will then countersign the contract. Lastly, the Seller’s attorney will send two original copies of the Contract-of-Sale back to the Buyer’s attorney. Once the Buyer’s attorney receives the fully-signed Contracts-of-Sale, at that time, and only at that time, the contracts and the deal are considered EXECUTED!

Therefore at that point, and only at that point, your transaction is protected. The Seller’s attorney will hold the down-payment in an escrow account.

NOTE: This deposit does not obligate the Seller to the Contract-of-Sale! If the check was cashed, but the contracts are never executed, the Seller’s attorney simply sends a new check back to the Buyer’s attorney, with no damages or obligation! After executed contracts, these funds will only be released to the Seller at the closing and be applied toward the total cash the Buyers are putting down on the transaction.

Remember; until contracts are executed, Sellers and Buyers may pull-out of the deal at any time, for any or no reason!

NOTE: Inspection costs, lock-in fees, mortgage application fees, attorney fees, etc. do not legally have to be reimbursed by either party if a deal is cancelled by either side prior to execution. Therefore, we recommend working as swiftly and efficiently as possible to ensure your deal is completed and executed, and that you do not lose any money for fees paid on a deal that never becomes executed.

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