Whether you're buying or selling a property, you're likely to encounter a variety of different property sale agreements. Some of the most common include clauses that detail the seller's obligations and representations, as well as taxes that are 1 rule rental property levied on the buyer. There are also different options for securing a deposit. Here are some things you should know about the terms and conditions of these agreements.
Closing date
Choosing a reasonable closing date is important to the smooth operation of a real estate transaction. There are a variety of factors that can affect the closing date. These include the timing of the sale of a current property and the purchase of a new property.
For most attorneys, a reasonable time frame is about 30 days. However, this depends on the experience and conduct of the parties involved. Some of these factors can be out of the seller's control, such as the timing of mortgage payments.
In some states, a closing can take place at the office of a title agent. Other states require a home buyer to attend the actual closing. The title agent will do a thorough review of the property's history and will ensure the seller has the right to sell the property.
Escrow agent's deposit
During the process of buying a home, an escrow agent will hold an earnest money deposit. The earnest money is a small amount of money (usually 1% or 2% of the sales price) which is put into an escrow account. This money will be released to the seller at settlement.
The earnest money deposit is a show of good faith from the buyer. It is used to cover expenses related to the purchase of the home. The escrow agent will release the deposit to the buyer at the settlement. It is usually held in an FDIC-insured account.
The amount of the escrow deposit is determined by the terms of the purchase agreement. The deposit is also used to cover costs associated with the closing.
Seller's representations and obligations
Typically, seller representations and obligations are negotiated during a price negotiating process. This is often a time when parties will try to limit the scope of representations. However, these documents can have an impact on the transaction before closing.
Representations are made by a seller in order to assure the buyer of a certain status. These may include assurances of the condition of the property, the status of the parties, and the ability of the seller to carry out the agreement. These assurances can also affect the operation and maintenance of the property.
The seller's representations and obligations are normally included in the purchase and sale agreement. However, this is not always the case. This is because the representations and warranties are often overlapping.
Taxes levied by Seller
Whether you are buying or selling a property, you are responsible for paying both real estate taxes and special assessments. However, your responsibility for paying these two taxes may vary depending on your state. You should learn about these issues to protect yourself.
The property tax act of Michigan provides specific instructions on how to prorate taxes at closing. Typically, the tax on the sale is computed by applying the appropriate tax rate to the total sales price. In other words, the price includes the amount of the purchase money mortgage, lien, discharge of obligation, option to purchase the real property, and other encumbrances. Then, you can arrive at a fair cost for the purchase.
A special assessment is a special real estate tax paid for street improvements. These are often paid over a number of years. If a seller is required to pay an unpaid balance on a special assessment, it is often treated as a lien on the property.