July 31, 2022

House Contracts

Whether you are buying or selling a home, there is a contract (otherwise “contracts to sell” or “option to purchase”) that must be signed to legally formalize the sale or purchase. People to whom such documents are not signed usually put themselves at risk, by either losing their purchase, or the sale at a later stage.

The person on whose name the home title is given, and to whose credit the payment is made, is called the buyer. The person from whom the property is taken in exchange for the final installment of money, or to whom it is sold, is called the vendor. These forms take their names as legal entities soon after the value of the property is decided, and the property rights are formally transferred.House-Contract

For example, if you buy a home for $50,000, you will give your name, or tick, as the buyer, immediately on the closing papers. If you purchase a home for $100,000, the buyer gives his name, or the buyer’s agent, and the deed is passed to the vendor, under the vendor’s names. Since the transaction is not really closed until the vendor hands over the deed, which can take several days, the nitty-gritty of the sale and the fees are paid, in advance, often called “closing costs,” penalty fees, by the buyer. These are fees for things like loan disbursements, record fees and documentary stamps, all intended to reduce the amount of time and effort that goes into the buying and selling of a home.

The buyer usually pays the down payment, which is called a “good faith,” and is often taken as a loan from the bank. The bank may even give the buyer a credit, known as “closing money,” which it considers as the amount of money it will give the buyer in order to obtain the mortgage and to pay interest on the loan, which it charges the buyer, as the mortgage amount, plus fees for the other services it provides. Most interest charges are already built into the payments as of the closing.

The buyer also pays the selling costs, which are the property taxes and recording fees and the bank’s closing fees. In each case, a portion of these fees may be paid by the buyer as “seller credits” toward the buyer’s portion of the final payment, called “closing costs.” Closing costs usually range from 3 to 7 percent of the final purchase price, and are paid at escrow along with the final mortgage payments.

The buyer’s agent will only officially receive the final mortgage payment on the day the professional escrow closes, thus the moment the check is received and the title to the property is delivered to the buyer by the closing agent, the transaction is complete. The buyer will now have title in his name and the loan officer or bank will send all documents to the new owners, along with a certificate of occupancy, as proof that the buyers have assumed the payments and the property is clean and marketable.

Prior to this final step, both the seller and the buyer must formally agree to the transaction in writing at a notarized meeting between them. Technically, the sale is then considered complete since both the seller and the buyer have agreed to the terms and has signed all necessary documents.

The final days before final signing are the time when the seller deliver the keys and the buyer gets the keys.