Purchase Agreement
PRDS Real Estate Purchase Agreement
The opening paragraph offers a summary of the purchase agreement:
· (Buyer): Robert Smith and Mary Smith, not Mr. and Mrs. Robert Smith
· sum $1,200,000
· located at: 1234 Able Street,
· City of: San Jose
1. Financing Terms
a. Deposit: usually 1% in the form of a personal check written to the title company. Deposited three business days within acceptance into escrow.
b. Additional Deposit: Usually 2% in the form of a personal check written to the title company. Upon removal of all contingencies by default, but usually written in as, “upon removal of financing contingency”
c. Balance of down payment: usually completes the 10% down payment including the deposit and additional deposit. This is deposited into escrow through the bank in time to close escrow on the agreed upon date.
d. Loan: The amount the bank is loaning.
· Is/is not contingent upon the Buyer obtaining financing
· Principle and interest loan or interest only
· Rate of not more than (give a little cushion)
· Length of loan: 30 years
· maximum rate of: (give a little cushion), leave blank if a fixed rate.
· Pre-approval or pre-qualification letter
· Within 5 days or ____ days for the pre-approval letter
e. Additional Financing
f. Total Purchase Price:
2. Source of Funds: Obtaining the funds for the deposit and down payment is not a contingency of this contract.
3. Intent to Occupy: Buyer does or does not intend to occupy.
4. Fixtures and Personal Property. Explain what a fixture is to the sellers and buyers, any questions, state it here.
Note: Items mentioned in advertisements, fact sheets, MLS, TDS, etc. are not included nor excluded unless expressly provided for in this contract.
a. Items Excluded:
b. Items Included:
5. Liquidated Damages: initial to authorize. Advise talking to a lawyer. This paragraph limits the seller to retaining 3% of the purchase price.
6. Mediation: This paragraph is not optional and binds both parties to agree to mediation before court.
7. Arbitration: initial to authorize. Advise talking to a lawyer.
8. Real Estate Transfer Disclosure Statement (TDS), Lead-Base Paint Disclosure, Natural Hazard Disclosure Statement (NHDS), and PRDS Supplemental Seller Checklist (SSC) : Seller must deliver to Buyer within 5 days or ___ days of acceptance.
· Or check each one that was delivered already
· Check 5 days or ___ days for sign and return if Buyer elects to terminate the contract based on these disclosures
9. Property Disclosures (environmental, natural hazard, earthquake, tax assessment, tax status, booklets, FIRPTA): Seller shall provide
10. Property Condition, Insurance, Property Disclosures, Lead, Contingencies: These disclosures are made part of this contract. Buyer shall approve as part of this contract.
a. Property condition
b. Homeowners insurance coverage, CLUE report
c. Property Disclosures
d. Lead Disclosures
11. Structural Pest Report (SPC)
a. ___Buyer or ___Seller shall within 5 days or ___ days engage a …… at ___Buyer’s or ___ Seller’s expense. Note: If seller has already completed, the buyer may want to provide their own and decide whether or not to include it in the contract.
b. Section 1 work must be completed prior to closing.
c. Inaccessible areas to be paid by buyer if no damage. Within 5 days or ___ days.
d. Personal property interference may cause additional inspection costs. Garages with storage are the typical problem.
e. Fumigation requirements. Damage to roof tiles and landscaping is typical. Before or after?
12. Seller’s Repair/ Maintenance Obligations; Risk of Loss: limited to known or discovered before close of escrow.
a. Condition of roofs, skylights, appliances, plumbing, heating, etc.
b. Broom clean condition of the remainder of the property
c. Risk of Loss: material damage to property prior to close of escrow may terminate this contract, all monies returned.
13. Repairs/Walk through Inspection: All repairs must be made prior to close of escrow by a licensed contractor. Note: the CAR form allows unlicensed workers.
14. Home Protection Plan: A plan shall be ordered by __Buyer or __Seller or is __ waived, not to exceed $____ (usually $275) and shall be paid for __Buyer or __Seller or ___split 50/50
15. Conditions Relating to Title; Disclosures and Reports:
a. Title: usually paid for by Seller
b. Public Improvement Bonds and Assessments Disclosure: must be paid current by Seller
c. Property Taxes: must be paid current by Seller
16. Contingency Removal:
a. Financing Contingency: Buyer shall have ___ days
b. Lead Inspection: Buyer shall have 10 or ___ days…. Note: enter “0” if the Buyer wishes to waive this. 10 to 14 days is recommended.
c. Homeowners Insurance: Buyer shall have ___ days…. Note: 10 to 14 days is recommended.
d. Other Contingencies: Buyer shall have 7 or ___ days…. Note: 10 to 14 days is recommended. Also, this is a good place to add the CLUE report.
· Note: During competitive times, enter “0” days for 16 (a,b,c) and 3 days for 16 (d).
e. Documents delivered by Seller within 5 or __ days. Note: Leave at 5 usually.
f. Repairs not otherwise required by this contract must be in writing and Seller shall have 5 or ___ days to complete.
g. If Buyer exercises the right of cancellation under this section, Buyer shall be entitled to all monies.
17. Legal Nature of Agreement:
a. Entire Agreement: this is the full and final agreement. No alterations except in writing.
b. Binding Agreement: binding upon heirs, assignees, etc. until close of escrow.
c. Attorney’s fees: Prevailing shall be entitled to attorney’s fees.
d. Dissemination of Information: MLS must be notified within 48 hours of closing.
e. Legal, Tax, Title, and Other Advice: consult an attorney
f. Governing Law: State of California
18. Default and Remedies: Liable for the other’s damages pursuant to Paragraph 5
19. Escrow:
a. Close of Escrow: State the exact date for close and delivery of the keys.
b. Prorations and Transfer Tax: taxes, interest on assumable loan, HOA dues, rents.
· Seller pays county transfer tax, $1.10 per $1,000
· Buyer and Seller split the cost of city transfer, $3.30 per $1,000 for San Jose, Palo Alto, and Mountain View.
· Inspect the property one week before closing
· Have the escrow office fax the closing statement ahead of time to review before meeting with the client
· Cashiers check the day before closing
· 8:00 AM records, 10:00 AM notification
· Rent Back problems: Buyer wants the keys and to re-key, seller wants to keep keys.
· Tues, Wed, Thurs are best days to close, because funding has to occur the day before, so Mon for Tuesday. Friday is a good backup day for Thursday should problems occur.
20. Additional Contract Docs: Check off:
· PRDS Seller and Other Financing
· PRDS Common Interest Development
· Interim Occupancy Agreement (Buyer in Possession)
· Residential Lease after Sale (Seller in Possession)
· Sale of Property Contingency
· As-Is Addendum
· Other (CLUE Report)
Notes: CID and HOA docs can be overwhelming and can be read by an expert for a fee – look for assessments and deferred maintenance. Also, CB recommends not allowing a “Buyers in Possession” : The Buyers may not like the place suddenly and back out of the deal.
21. Other Terms: Note: Don’t get creative here, addendums may cause fraud.
22. Agency Disclosure: List the brokers
23. Time is of the Essence statement
24. Equal Housing Statement
25. Buyer’s Duty of Care statement
26. Offer: Contract revoked unless signed copy received by Buyer or __________agent by __________ (date) at ______ (time) or ____ upon presentation. Note: NEVER sign this upon presentation, it means it has to be returned instantly after you stop talking about the offer. However, do keep it as short as possible.
27. Brokerage Fee: Has to be what the MLS states. Usually 2.5% or 3%
28. Counter Offer: Seller signs if a counter-offer is made and attached.
29. Acceptance: this section must be completed even if a counter-offer is included
Notes:
- Number one lawsuits: square footages and school districts. Metroscan is not perfect but better than MLS.
- Any single line item change requires a counter-offer.
- Removal of contingencies, try to do all at once for control
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