Adventures in House Hunting
A few more contract items to finish upBy Dianne HaynesIf you’ve survived the inspection, you can breathe a sigh of relief. Your destination (a new home!) is in sight. We’re in the home stretch, and today we’ll finish up the contract with just a few more items. Another disclosure that is part of the contract and seems innocuous at first glance is the square footage disclosure. Why on earth do you need a piece of paper telling you the square footage? Some years ago, this disclosure did not exist. But square footage was one of the features buyers wanted to know about, and so this figure found its way into brochures, fliers and the MLS. The problem was that the information was obtained from sources that weren’t always reliable or accurate. Buyers would purchase a 1,500-square-foot home, decide they wanted to replace the burnt-orange shag carpeting, and call up their local carpet shop. When the carpet shop came to measure the rooms and get the total amount of carpeting needed … surprise! The buyers found out that their home was 1,400 square feet, not the 1,500 that they thought they were getting. Was this a big deal? For most buyers, it was. Let’s say other homes that are 1,500 square feet are selling for $150,000. That’s $100 a square foot. You purchase your home at that price and that square footage and later discover that your home is only 1,400 square feet. Your price per square footage is now $107. Did you pay too much for the home? Probably.Lawsuits followed, of course, so now this disclosure is part of the purchase contract. Today when a home is listed, the seller’s agent fills out the form, stating the square footage and where this figure was obtained from – a prior appraisal, building plans, or the assessor’s office. In bold letters, the disclosure states that the measurement is for the purpose of marketing only, and may not be exact. Your buyer’s agent should get this disclosure from the listing agent and give it to you soon after going under contract so that you can review it before you sign it.Who pays for whatOther items in the contract spell out who is paying for what. The seller must pay for all “encumbrances” or loans, and any liens against the property. This includes their mortgage, interest, taxes, and any assessments.Who pays the title company to perform the closing and make sure all documents are legally prepared? The custom is for the buyer and seller to split these costs, usually about $150.One interesting note on repairs: If, say, the stove dies after the inspection, but before closing, what happens? The contract states that it is the seller’s obligation to repair it. If it can’t be repaired, the seller must replace it with one of “like value.” How on earth can they find a 7-year-old stove? The seller can’t, so the usual remedy is to give the buyer a check for the replacement value.What if you or your home inspector damages the home during an inspection? You, the buyer, must pay for repairs, so leave the little kids at home and make sure you’re hiring a reputable inspector who is licensed, bonded and insured. Time for the sellers to leaveAnd here’s a scene you don’t want to see – the sellers are still in their home, haven’t finished packing, and your moving truck is in their/your driveway. Yes, it has happened (thankfully not to any of my buyers) but there is a remedy in the contract for just such a nightmare. Under the section called “possession,” there is a space for you, the buyer, to assess the sellers a daily fine for every day they stay in your house. Think of it as extremely expensive rent – I personally like the nice round figure of $200 a day. If this isn’t enough motivation, you can have them evicted. One last item: What happens if either side breaches the contract? Unless there is a contingency that causes the contract to be voided, it’s a binding, legal document. Buyers who fail to perform can lose their deposit, the earnest money. Sellers who try to back out can be sued for “specific performance,” which forces the sale of the home to the buyer. Colorado contracts specify that disputes must first go to mediation. When that fails, lawyers can and usually do get involved.Still want to buy a home? The reality is, things almost always go as planned, and you end up owning a wonderful, new home. The provisions of the contract are there to protect you and give you an “out” if they don’t.Still want to buy a home? The reality is, things almost always go as planned, and you end up owning a wonderful, new home. The provisions of the contract are there to protect you and give you an “out” if they don’t.
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