RE: Contracts and Closing

Elements of Contracts in Real Estate
Offer and acceptance - Only happens when both parties agree to exactly the same terms
Consideration - Something of value given up by each party
Capacity to contract - Legally competent, No undue influence
Legal purpose

Real estate sales contracts are subject to the statute of frauds meaning that they must be in writing to be enforceable.

Real Estate Contracts outline the following provisions:
Names of buyer and seller
Description of the property - Legal Description
Fixtures

Purchase price and terms of financing - Earnest money

Type of interest to be transferred and the type of deed to be conveyed
Date and time of closing and possession
Agency disclosure
Contingencies - Inspection, financing, selling other property, buying new property, entitlements

Seller obligations - maintain property, insurance, keep current on mortgage and taxes, title evidence, deliver deed

Escrow arrangements -for taxes and reserves
Provisions should the property be deestroyed or damaged prior to closing
Remedies incase of default
Broker's commission
Signature of all parties

From contract to closing
Truth in lending act (TILA) disclosure within 3 days
3 day right of recission
Good faith estimate of settlement costs - 3 business days
Appraisal - Lender "owns" the appraisal. Borrower has the right to a copy
Loan commitment - conditional on nothing major changing (eg: job loss, property condition, major purchases by borrower or change in credit worthiness)

Due Dilligence - whole house; pest; well and septic; radon and mold

Commercial property considerations
- Environmental value assessement
- Entitlements

Insurance commitments - Property, Mortgage, Title

Removal of contingencies

The Closing Process
Real Estate Settlement Procedures Act (RESPA)
GFE
Prohibits kickbacks and referral fees
Allows borrower copy of appraisal
Limits $ to be held in escrow accounts
HUD-1 settlement statement

Signing paperwork and transferring deed
Transfer of possession