Because it’s the biggest financial investment most people will ever make, buying a property involves a lot of paperwork. That includes the seller, the bank and any authority from whom you’re planning to take a home loan. Thus, you should have all the paperwork in place under the guidance of a real estate lawyer to ensure you don’t miss out on any legal documents. In this way, you not only have written records of all vital information related to your purchase, but you can also fall back on these documents for future reference. Whenever you’re planning to buy a property, prepare a file to keep all your key legal papers in place. To ensure you don’t skip any important documents, here’s a list of the vital papers you should have.
Important Legal Documents When Buying a Home
1. Buyer’s agent agreement
Though some people don’t agree with the concept of hiring real estate agents, they come in handy because they’re aware of the market and can better negotiate a good deal. Hiring an agent requires that you to sign an agreement stating that they’ll represent you in the purchase of your new property. This document also outlines the agent clauses including their commission, the tenure of the agreement and terms for terminating it. Keep it safe and refer to it if your agent in any way acts against your interests when the transaction closes.
2. Purchase agreement
A real estate purchase agreement is the first legal contract signed by the home buyer and seller. It confirms that they have agreed upon a purchase price and other terms including a closing date. The terms stated in this agreement must be followed by both you and the seller; failing to do so can have major legal consequences.
3. Addendums, amendments or riders
These legal documents alter or amend the terms of your purchase contract. For instance, if you discover that your neighbour is building a fence that affects your property, then the sales contract has to be formally amended. Addendums, amendments and riders are usually related to appraisals and home They’re important as they change the original terms in the signed contract between the buyer and seller and can be used later if demands aren’t fulfilled.
4. Seller disclosures
By law, sellers are required to disclose all known problems related to their property. This is the basis for its evaluation which can affect its value. Though laws vary between provinces and territories, these disclosures may include renovations done without a permit, pest infestations and roof leakage. That said, this document is vital because if major issues crop up after you have moved in, you can sue the seller if there was a lack of disclosure.
5. Home inspection report
Unless you plan to build a house, you’ll be moving into an existing one which can have an array of structural problems. That’s why home inspectors play a major role when buying a new property. They prepare a detailed report summarizing the house’s condition and any potential problems. It usually includes photos of any detected issues to be repaired later.
6. Closing disclosure
Do you need to take out a home loan to buy your property of choice? A closing disclosure is the key legal paperwork handed over to you by the mortgage lender. Generally submitted three business days prior to the settlement, this document outlines the loan type, like fixed and adjustable rate; loan term; closing costs; and interest rate. Hence, it lists all the costs involved with both closing and your mortgage. This is particularly useful when you file your taxes.
7. Title insurance policy
Just like life and car insurance, there’s insurance for the title of your property. This is significant because it secures your new property against any competing claims from the previous owner. The insurer will research the title in public records, looking for loose ends like fraudulent signatures on ownership documents or liens against the property.
A property deed is the most important legal document of all these as it is proof of sale from the seller to the buyer. It also signifies the transfer of ownership, making the buyer the sole legal owner. This must be registered in the Sub-Registrar’s office located in the same area where you have your new property. Though this legal paper is given to you in person, the soft copy is usually mailed after the title transfer documents are recorded in the public records office.
Every document related to buying a home is unique, important and can’t be skipped over or misplaced. When you buy a new property, make sure you have all documentation to save yourself any unwanted hassle. These are best completed by consulting a real estate lawyer. They will not only guide you through all the proceedings but protect you from fraud.