| Simplicity
Is The Key To A Successful Offer
Just as the weather is heating
up, so is the homes sales market in most cities. Sales volume
is robust, thanks to a booming economy and low mortgage interest
rates. Some realtors are complaining about a shortage of realistically
priced listings. Many home buyers are caught without enough supply
of new homes for sale, Partly because of a shortage of skilled
workers. Some communities are even in a seller's market, which
means there are more home buyers than there are houses for sale.
It's a great time to be a home seller, but if you're a buyer,
you can't be too picky or another buyer will grab the home you
want to purchase. Who was it who said, "A confused mind says
no"? He or She must have been involved in home sales. If
your purchase offer is confusing, it probably won't be accepted.
Smart home buyers however, by keeping offers clean and simple,
fare far better at getting their offers accepted. To keep your
home purchase offer simple enough to protect yourself, two or
three contingency clauses are often all you need.
The
Mortgage Finance Contingency
If you need a mortgage to purchase your home, be sure to include
a mortgage finance contingency clause. Even if you are pre-approved
for a home loan (You did get pre-approved for a home loan before
shopping for a home, didn't you?) this contingency clause is needed
because an appraisal is required to confirm that the home is worth
your offer price. If the home doesn't appraise for at least the
price you agreed to pay, this contingency lets you cancel and
get your deposit refunded.
The
Professional Home Inspection
Most Realtors encourage their home buyers to get a professional
home inspection. Although home sellers are supposed to disclose
all known defects, sometimes they "forget". Others try
to conceal problems with the home. A professional inspection report
will usually reveal any undisclosed defects. Buyers and their
agents should always accompany the inspector to discuss any problems
discovered. If an undisclosed defect is serious and the seller
won't pay for repairs, the buyer can then cancel the sale and
get a deposit refund.
Termite
And Pest Control Inspection
In areas with termite or other infestation problems, the
third contingency is for a termite or pest control inspection
clearance. If the home seller won't pay for necessary repairs,
the buyer can then cancel the sale and obtain a deposit refund.
Beside the contingency clauses explained above, a home purchase
offer contains many other essentials. Many years ago, a wise old
realtor told me that he pretends a judge is looking over his shoulder
when he prepares a purchase offer. That means keep your purchase
offer so simple even a judge can understand if court litigation
becomes necessary. Bearing in mind that there's competition for
the best homes that are realistically priced, here are the home
purchase contract essentials:
Names
Of The Buyer And Seller
Be sure the names and signatures of all buyers are on
the purchase offer. If you need a cosigner, such as your parents,
their signature should be on the purchase offer too. Otherwise,
if they back out, you're still obligated to buy. You could lose
your earnest money deposit if you don't complete the purchase.
Similarly insist that all sellers sign when accepting your purchase
offer. Your agent should check the title to be sure all the sellers
have signed. One holdout seller could ruin the sale.
Property
Description
A street address is usually sufficient. If rural property
or a vacant parcel is included, be sure to include the legal description
and make your offer contingent on a survey to be insured by an
owner's title insurance policy.
Good
Faith Earnest-Money Deposit
The larger the home buyer's good faith earnest money deposit,
the greater the possibility (a) the offer will be accepted by
the seller and (b) the sale will be successfully closed on schedule.
Realty agents and sellers know this. Typical deposits range from
1% to 10% of the offered price. Sometimes a buyer offers a small
deposit with the offer, to be increased upon removal of the contingencies.
Be sure that the deposit is held in the realty agent's trust account,
or by a third party such as a title or escrow firm, bank, or attorney
in a trust account. Never give the deposit to the seller until
the sale closes.
Be
Exact About Sales Price And Terms
If your purchase offer says "all cash to the seller",
be sure you can buy without a mortgage. Don't make promises in
your purchase offer you can't keep, not only will you lose your
earnest money deposit if you don't perform, you could be subjected
to a lawsuit for damages by the seller.
Seller
Disclosures
Smart Home buyers insist on receiving a disclosure form
signed by the seller listing all known defects in the residence.
More than 30 states, including California, have mandatory disclosure
forms for this purpose. Your agent can provide details on what
is required in the state where you are now buying.
Liquidated
Damage Clause
Many pre-printed home purchase offers contain a clause
whereby the buyer and seller agree, in advance, on the damages
that the seller will receive if the buyer fails to complete the
purchase. This Liquidated damage clause, if signed by the buyer
and seller, limits the buyers loss in the event the buyer defaults.
Arbitration
Of Disputes Clause
Many pre-printed home purchase contracts contain a clause
requiring the buyer and seller to arbitrate any disputes that
arise. If you sign this clause, you give up your rights to a jury
trial, court rules of evidence, and appeal of the arbitrator's
decision. Many real estate attorneys recommend not signing an
arbitration clause, but if a dispute arises, arbitration can be
agreed upon later. In today's active home sales market, keeping
home purchase offers as simple as possible increases the chance
that the seller will accept your offer. However, home buyers need
protection, provided by mortgage finance and home inspection contingency
clauses. Please consult a real estate attorney before signing
any purchase offer you don't fully understand.
Reprinted from LA Times
5/16/99
Types
Of Ownership
Title to real property in California,
may be held by individuals, either in SOLE OWNERSHIP or in CO-OWNERSHIP.
Co-ownership of real property is where title is held by two or
more persons. There are several variations as to how title may
be held in each type of ownership. The following brief summaries
are six of the more common examples of sole ownership and co-ownership.
SOLE
OWNERSHIP
| 1. |
|
A SINGLE MAN/WOMAN:
A man or woman who are not legally married.
i.e.. JOHN DOE, A single man |
| 2. |
|
AN UNMARRIED MAN/WOMAN:
A man or woman, who having been married, are legally divorced.
i.e. JOHN DOE, An unmarried man |
| 3. |
|
A MARRIED MAN/WOMAN, AS
HIS/HER SOLE AND SEPARATE PROPERTY:
When a married man or woman wishes to acquire title in his
or her name alone, the spouse must consent, by quitclaim
deed or otherwise, to transfer thereby relinquishing all
right, title, and interest in the property.
i.e. JOHN DOE, A married man, as his sole and separate property |
CO-OWNERSHIP
| 1. |
|
COMMUNITY PROPERTY:
The California Civil Code defines community property as
property acquired by husband and wife, or either, during
marriage, when not acquired as the separate property of
either.
Real property conveyed to a married man or woman is presumed
to be community property, unless otherwise stated.
Under community property, both spouses have the right by
will, to dispose of one half of the community property,
but all of it will go to the surviving spouse without administration
if the other spouse dies without a will. If a spouse exercises
His/Her right to dispose of one half, that half is subject
to administration in the estate.
i.e. JOHN DOE and MARY DOE, Husband and wife, as community
property
i.e. JOHN DOE and MARY DOE, Husband and wife
i.e. JOHN DOE, A married man |
| 2. |
|
JOINT TENANCY:
A joint tenancy estate is defined in the Civil Code as follows:
"A joint interest is one owned by two or more persons
in equal shares, by a title created by a single will or
transfer, when expressly declared in the will or transfer
to be a joint tenancy."
The chief characteristic of joint tenancy property is the
right of survivorship. When a joint tenant dies, title to
the property immediately vests in the survivor or surviving
joint tenants. As a consequence, joint tenancy property
is not subject to disposition by will.
i.e. JOHN DOE and MARY DOE, Husband and wife, as joint tenants |
| 3. |
|
TENANCY IN COMMON:
Under tenancy in common, the co-owners own undivided interest,
but unlike joint tenancy, these interests need not be equal
in quantity or duration, and may arise from different times.
There is no right of survivorship; each tenant owns an interest
which on his or her death vests in his or her heirs or devisees.
i.e. JOHN DOE, A single man, as to an undivided 3/4ths interest,
and GEORGE SMITH, A single man, as to an undivided 1/4ths
interest, as tenants in common. |
The preceding summaries, are a few of the
more common ways to take title to real property in California.
For a more comprehensive understanding of the legal and tax consequences,
appropriate consultation is recommended. |
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