Real Estate - Land Transactions

Question 1

Steps for buying property

Answer 1

1) Offer to Purchase Document
2) Purchase and Sale Agreement
3) Closing

Question 2

What is entailed in an offer to purchase document?

Answer 2

Usually a short document that is just an offer to purchase the property. Includes a small percentage of the total purchase price as a down payment. This acts as an assurance to the seller that they can take the property off the market.

Question 3

What is entailed in a Purchase and Sale Agreement?

Answer 3

Much more complex than the offer to purchase. Also requires “earnest money.” Also contains multiple contingencies. Lists the disclosures of the seller. Lists the purchase price. Pretty much works out the kinks of the deal.

Question 4

Define: Earnest Money

Answer 4

Usually about 10-20% of the purchase price to show you are invested in the transaction.

Question 5

Define: Inspection contingency

Answer 5

Allows for the buyer to hire an inspector to look over the property and inspect for problems. If a problem is found, it allows for a recession of the contract.

Question 6

What disclosures must be made in the Purchase and Sale Agreement?

Answer 6

Flooded basement, leaky roof, etc. Anything MATERIAL to the sale.

Question 7

What is Material to a real estate sale?

Answer 7

Anything that has an effect on:

1) Price
2) Terms and conditions of the deal
3) A buyers willingness to pay

Question 8

Define: Closing

Answer 8

Lists the type of deed being sold and finalizes the agreement.

Question 9

Remedies if the buyer breaches the contract to purchase real estate:

Answer 9

1) Relief in Equity
2) Specific Performance
3) Damages