Real estate column: Preparing for your real estate transaction
It’s the season for the real estate market to get rolling. When it’s time for you to buy or sell this season, you will see some language on your contracts that you may or may not quite understand.
Of course, if you have any questions of what something means in your contract, you should consult with your broker or attorney. However, this little guide will help you get started:
Contract to buy and sell real estate: This is the Colorado Approved Real Estate Form that is used to negotiate the sale of a property from one person to another.
Property disclosure: This form is used for you to disclose to the buyer what you know about your property. By law, you need to disclose any material defects known by you.
Inclusions: Inclusions in a real estate transaction are typically anything that is attached to the property. Be sure to exclude your favorite chandelier if you intend to swap it out before a sale.
Personal property: This is property owned by the seller that is not “attached.”
Seller concessions: These are funds that the seller will credit at closing to help the buyer use to assist with a loan.
Earnest money: A good-faith deposit that is typically refundable during your due diligence period.
Title company: Is the combined agent of the insurance company, the buyer, the seller and mortgage lenders. It will review the title, issue insurance policies, facilitate closing, and file and record paperwork.
Off record matters: Anything not shown by public records.
ILC versus improvement survey: An ILC is a representation of the improvements on the property as they relate to the property boundaries and easements and is not certified. A survey is a certified boundary survey that also surveys the improvements.
Lead-based paint: Paint that contains lead. If the improvements on the property include one or more residential dwellings for which a building permit was issued prior to Jan. 1, 1978, a lead-based paint disclosure will be required, otherwise the contract is void.
Deeds: A general warranty deed — seller guarantees that he or she holds clear title to a piece of real estate and has a right to sell it to the buyer. Special warranty deed — seller only warrants or guarantees the title against defects in clear title that may have arisen during the period of its tenure or ownership of the property.
A real estate transaction has many, many, many more details to it. It’s best to always ask your agent if you are ever in doubt or don’t fully understand details of your contract. That’s what they are there for. Happy buying and selling this season.
Sean de Moraes’ real estate column appears on the first Friday of each month. He is an agent with Roaring Fork Sotheby’s.
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