WHAT ARE A BUYER’S RIGHTS IN A REAL ESTATE TRANSACTION . . .
You must be an informed consumer when you are in the real estate market as it is one of the most complicated and expensive purchases you will ever make. Before you make a written offer, know exactly what you are buying and what the costs will be after you own it.
You need to make a deposit also referred to as earnest money to show the seller that you are serious about buying the house when making an offer. The deposit is considered a down payment on the price of the home. In some instances you may have to increase your deposit or increase your offer, especially if there are multiple offers on the home. The deposit is usually deposited in escrow upon the acceptance of your offer. You submit a written offer on a form known as the Residential Purchase Agreement and Receipt for Deposit. This form sets out the terms upon which you are willing to purchase the property.
If your offer is accepted and for some reason you do not purchase your home that is not a condition of the purchase you will loose your deposit. For example, if the purchase of your home is contingent on you obtaining a loan or selling your current home your purchase agreement must state that provision. A contingency provision will also work for other matters as well. For example, one of my clients recently put a $5,000.00 deposit on a commercial property and the contingency was an appraisal of the rental marketability of the area – he advised his real estate agent of the condition. However, his real estate agent failed to put the provision in the purchase agreement. In this case, my client lost the deposit when the appraisal came back at a low value and he no longer was interested in the property. To avoid these types of situations, you must read all contracts as they are binding.
Remember this agreement is an offer which, upon acceptance by the seller, results in a binding contract. It should cover all of the important terms of the sale. Please understand, however, the more conditions you have, the less likely the seller is to accept your offer.
Also, the seller must provide you with a Real Estate Transfer Disclosure Statement. This is a pre-printed form that lists many features or conditions about the home, the land, and the area where the home is located. The seller must list on this form any possible problems he or she is aware of that might affect your interest to purchase the home. This includes any and all possible easements, rights of others to control how you use the property, environmental problems, nonfunctioning equipment, zoning and building violations, and special assessments. The seller’s agent must visually inspect the home and report all facts that he or she feels might affect your decision to buy this property. If you want information that is not covered in the Real Estate Disclosure Statement or additional information that is disclosed, put your questions in writing and ask the seller to respond in writing.
You should review the Disclosure Statement immediately. In most instances, you will have a limited period of time to decide whether you wish to proceed with the purchase despite the stated disclosures. Depending upon your purchase agreement, some sellers will require a written acceptance of the conditions contained in the statement. Other sellers will consider your silence as acceptance of all of the conditions contained in the Disclosure Statement. DO NOT SIGN the written acceptance unless you truly accept the condition of the house – this is binding.
If the home is a condominium, the seller must give you copies of the homeowners association’s rules and bylaws, and financial statements, and must inform you if there are any unpaid assessments. You should also ask to see the past minutes of the association board meetings to ensure full disclosure of all problems such as possible lawsuits, defects, easements, etc. – which would affect the value of what you are buying.
Keep in mind that while the seller has to tell you everything he is aware of that is wrong with the house, he is not insuring the quality of the house; for this reason, an inspection by a trained specialist is almost mandatory. If you are obtaining a loan from a bank, this will be a definite requirement. Go over every detail of the inspection, and if reports are claimed to be cleared or repairs previously made, request copies of all documentation to support a clean bill of health for the property.
If you are not sure that you understand all of your rights and responsibilities, it is advisable to see an attorney who is experienced in the purchase of residential real estate. An attorney can help you with questions that come up during the purchase of the home, and can assist you in reviewing all of the documents and reports that will be provided to you in the process of purchasing the home.
This column is produced by Mary Der-Parseghian, Esq. of Der-Parseghian Law Group. For questions or comments, please send your message to 4727 Wilshire Blvd., Ste. 301, Los Angeles, CA 90010; E-mail: Mary@MaryDLaw.com or call at 323-937-2727. For additional articles please visit our webpage at www.MaryDLaw.com.
© 2011. Der-Parseghian Law Group