FAQ topics for which you might want to receive advice from an attorney, tax consultant, inspector or property management company.
Arbitration
When the purchase agreement is written, Buyer and Seller will be given an Arbitration Disclosure and Residential Real Property Arbitration Agreement to read to determine whether or not to sign. By signing this disclosure Buyer/Seller agrees to binding arbitration under Residential Real Property Arbitration System administered by Construction Arbitration Services, Inc. The Arbitration Agreement is enforceable only if it is signed by buyers, sellers and licensees representing assisting the buyers and the sellers. The arbitration system is an alternative to the court system. If buyers discover a problem with the home that wasn’t disclosed, they can file a request for arbitration within 24 months of the date of the closing on the property. The administrative fee for the Arbitration system varies depending on the amount of the claim, but it is more than initial court filing fees. The maximum claim allowed in conciliation court is $7,500. Arbitration hearings are usually held at the home. A party may be represented by a lawyer at the hearing, if he/she gives 5 days advance notice to the other party and to CAS. For more information, www.cas-usa.org
Association Managed Properties
In most situations when an association fee and common interest is involved, Seller is required to furnish Buyer with the following documents relating to the Association or to the Master Association. The Association may charge a fee for providing these documents.
1. Copies of the declaration, the articles or incorporation, bylaws, rules and regulations amendments or supplemental declarations
2. The organizational and operating documents relating to the Master Association, if any
3. A Resale Disclosure Certificate which must be dated not more than 90 days prior to the date of the Purchase Agreement or the date of closing, whichever is earlier.
Buyer has the right to cancel the purchase agreement within 10 days of receipt of these documents. After 3 days Buyer can waive the right of rescission in writing and remove this contingency.
Inspections
Purchase agreements typically include an inspection contingency with the inspection completed at buyer expense within 5 business days of acceptance of the purchase agreement. If a home was built prior to 1978, a Lead Based Paint Addendum will be included as part of the purchase agreement. Sellers are required to disclose if they have any knowledge or results from lead based paint testing. Standard home inspections do not include lead-based paint, radon, asbestos or mold testing. Buyers can discuss the scope and costs of additional testing prior to scheduling the inspection. Many inspectors provide a printed report at the inspection or email the same day. Payment is expected at the inspection which usually lasts 2 ½ -3 hours. If the subject property has a well and/or septic system, the seller should provide a disclosure form. The buyer can request that the seller perform testing and that the purchase be subject to satisfactory results.
Real Estate Title
At the closing, you will be asked how you want to take title. We are providing this information so that you are prepared with an answer and have time to seek legal or tax counsel should you have questions.
Joint tenancy and tenancy in common are the two most common forms of joint ownership of real estate. Both forms describe ownership by more than one person of the same real estate. They differ, though, in how ownership transfers upon the death of one of those owners.
When a joint tenant dies, the surviving joint tenant(s) are then the owners of the deceased owners' share. "Joint Tenancy" means that if one of the owners dies, the remaining owners acquire the share of the deceased owner automatically. Joint tenants have a "right of survivorship."
A judgment or a bankruptcy of one joint tenant will cause a lien against the property, which can be satisfied from the entire property. If one joint tenant has financial difficulties, the entire parcel of property can be utilized to satisfy the judgment.
Upon the sale by two joint tenants of their interest in real estate, the proceeds of the sale are taxed on ½ of the gain and each will be entitled to ½ of the cash distributed. The proceeds will be distributed equally regardless of the original down payment and the costs incurred during ownership of the real estate; unless the parties mutually agree or it is legally stipulated otherwise. The jointly held property cannot be disposed of without the consent of the other joint tenant.
When a tenant in common dies, the deceased owners' share passes to heirs or creditors according to the laws of inheritance. The surviving owners do not automatically acquire the deceased owners' share. Tenants in common do not have a right of survivorship.
Titling Assets in a Living Trust. It is possible to avoid probate by creating a living trust. In such event, in order to avoid probate, it is necessary to title the real estate in the living trust.
Joint tenancy is the most common form of joint ownership among spouses, especially when neither spouse have children from prior relationships. Tenancy in common may be more appropriate for non family joint ownership or when spouses have children from prior relationships.
Title Insurance – Owner's And Lender's Policies
A lenders policy of title insurance is required by lenders prior to the issuance of a loan, even on a refinance, to assure that the title is clear. Before a policy is issued, an extensive search is conducted to locate problems so they can be rectified and the transfer of property and/or loan can proceed.
Unlike other forms of insurance, title insurance is purchased for a one-time fee at closing and protects against loss arising from title hazards and defects that already exist. Title companies often search back 50 years through manual records to find and clear up problems, usually without involving the homebuyer or borrower.
Purchase of an owner’s policy of title insurance is optional at closing or within one month of closing. The cost of the policy is based on the sales price. A buyer should ask whether gap coverage is included. Gap coverage insures for problems recorded between the title search and the public recording of the purchase. In the event An Owner’s policy protects the homeowner for as long as they (or their heirs) have an interest in the property.
Once an owner’s policy of insurance has been purchased on a property, a re-issue credit should be available for subsequent homebuyers. The homeseller should provide a copy of the owner’s policy to the closing company.