A home purchase agreement is a binding contract between two parties or more with legal capacity and based on legal consideration. Before buying a property, you must know and understand the contract’s contents. Below are the uses of home purchase agreement:
- Purchase price and condition of payment – this includes cash wherein the purchased price is paid in full at the time closing the sale. Cash is subject to new mortgage, subject to existing mortgage and cash with assumption of existing mortgage and sale by land contract.
- Earnest money deposit – this is considered as a deposit. Writing a check proves that you are eligible in buying a house.
- Real estate taxes, adjustments and assessments – seller will pay all due taxes allotted to property. For instance, rent, all rent deposit should be transferred to purchaser.
- Title warranty – the contract should stipulate that the seller will provide a clear and clean title to the homeowner upon sale.
- Risk of loss – use a damage clause to explain who will be responsible for payment in case there are damages of the house while it is under the contract.
- Improvement and fixtures – this purchase shall include all improvement and fixtures on the real estate including but not limited to gas, air conditioning, electrical, heating, built-in appliances, plumbing equipment, screen, storm doors and windows.
- Statement of default to protect each other if others backs out – if the buyers backs out, the earnest money will be kept by the seller.
- Support a closing date – any contract in buying a house must indicate the schedule as to when the buyer will close the sale.
Before signing any purchase agreement, make sure that you read every single detail in it. Never sign anything that you do not understand. Make clarifications and ask if you find any info that is confusing. Now you know the different uses of a home purchase agreement and you will want to take note of them.