Choosing to Sell your House by Yourself? Know What Goes into a Real Estate Purchase Agreement

Real Estate Purchase agreement

Choosing to sell your home without an agent or broker can save you lots of money, but the process is not without pitfalls. The elements that come together to create a real estate purchase and sale agreement are often complicated, and having competent lawyers in your corner who can draft a solid legal contract can help to prevent a good deal from going bad.

 

A real estate purchase and sale agreement is the contract that is created after acceptance of an offer by both the buyer and seller. Purchase and sale agreements typically include but are not limited to:

 

Description of Property

The real estate purchase and sale agreement should state both the common residential address of the property and the full legal description of the property.  Any easements or restrictions on the property such as HOA regulations should also be included.

 

Final Sale Price

 

The price may change during negotiations, but the final, agreed-upon sale price must be included in the contract. The purchase and sale agreement should contain very clear language about how and when the purchase price will be paid in full.

 

Earnest Money Deposit

 

When a prospective buyer makes a serious offer, he or she is typically required to put down an earnest money deposit that is usually one to two percent of the purchase price. This deposit is commonly held in escrow until completion of the deal.

 

Closing Date

 

The closing date is also included in the real estate purchase and sale agreement.  On the closing date, the transfer of property is recorded with the local government and you will receive the money for the sale of your home. Your attorney will prepare and review closing documents and accompany you to the closing.

 

Disclosures

 

Some disclosures such as lead-based paint hazards are required by federal law, but state disclosure requirements vary. Carosella & Associates’ knowledgeable lawyers in Delaware and Montgomery counties can advise you on which disclosures are required by Pennsylvania law.

 

Title Condition

 

The seller of any property must provide a clear title of ownership to the buyer. Details about the title company you are using must also be included in the contract.

 

Contingencies

 

The sale and purchase agreement should contain detailed information about all conditions that must be met in order for the purchase to be completed.  Typically, the transaction may be canceled by either party if contingencies are not met.

 

An inspection contingency allows the buyer to have the home inspected before completing the purchase. If any significant problems are found, the buyer may be able to back out of the deal without losing his or her deposit.

 

A financing contingency requires the buyer to get pre-approved for a mortgage and should specify the timeframe that the buyer has to find adequate financing.

 

A title contingency gives the buyer the right to review the home’s title, and may allow the buyer to nix the deal if liens or issues with ownership are found.

 

An appraisal contingency enables the buyer to cancel the transaction if the appraisal of the property reveals that it is not worth as much as the buyer offered to pay for it.

 

Carosella’s experienced attorneys can guide you through the process of selling your home FSBO and ensure that your real estate transaction goes off without a hitch.

 

3 Things you Need to Know about Trusts

A trust is an agreement that outlines how property will be managed and held for a beneficiary such as person or entity. There are many types of trusts that serve different purposes, so seeking the counsel of experienced Trusts attorneys is essential to help you decide which type of trust will best fit your needs.

 

The Goal of a Trust

Types of Trusts

There are various factors that can help you decide whether to create a trust as part of your estate plan. Some trusts can help you more effectively provide for your loved ones and maximize their inheritance by avoiding probate and reducing estate taxes. Putting assets in trust can also be an important part of business succession planning. Certain types of trusts can also prevent the courts from controlling your assets if you are incapacitated.

 

Trust Terminology

The grantor is the creator of the trust and has full control and legal capacity to manage or change the trust at any time.

The trustee is responsible for managing the property in the trust. If you do not want to be your own trustee, you can name an adult child, friend, or institution to manage the trust while you are alive.

The successor trustee manages the assets in the trust after your death or if you should become incapacitated.

The beneficiary is the person(s) or organization benefiting from the trust. Beneficiaries do not have to exist at the time the trust is created.

Property consists of the assets which are put into a trust, and can include any type of asset, including money, investments, jewelry and real estate.

Types of Trusts

A living trust or family trust is revocable, which means that it that can be changed or revoked by the grantor while he or she is alive. With a revocable living trust, ownership of your assets is transferred to the trust but you do not have to relinquish control over the trust. When the grantor dies, the trustee gains control of the assets in the trust. This allows your estate to avoid probate so your assets can be distributed to your loved ones right away. A revocable trust does not protect assets from estate tax, but can help your estate avoid probate court.

If you are incapacitated by an illness or or accident, a living trust can also allow your trustee to handle your financial affairs without the need for a court-appointed guardian.

An irrevocable trust is a trust that cannot be changed or controlled by the grantor once the trust is deemed irrevocable. Assets held in an irrevocable trust are not subject to estate tax after your death. In addition, transferring assets to an irrevocable trust can save on annual income taxes while you are alive.

Testamentary trusts are irrevocable trusts created by a will after the grantor dies. People with large estates often use testamentary trusts to reduce estate taxes and to protect property from creditor claims. Life insurance policies included in testamentary trusts are not subject to federal income or estate taxes.

Many parents use testamentary trusts to provide for their children, and to ensure that gifts left to the children are not distributed as a lump sum or given to the children at too young of an age. A testamentary trust may also be used to make sure a special needs beneficiary is provided for.

 

Carosella & Associates’ experienced attorneys in West Chester can help you decide which type of trust will benefit your family and ensure that your legacy lives on after you’re gone.