For most people, buying a home is the largest (and most stressful) legal transaction of their lives. So, you want to do it right and not make buying your home one of the biggest regrets of your life. That starts before you sign your first offer. Here are three common mistakes that people make in their offers.
First, the Agreement of Purchase and Sale (the "Offer") lists a series of items that the seller must complete prior to closing; for example, they may have to get the carpets professionally cleaned or repair certain appliances. The reality is that if there is no purchase price holdback associated with these items, they may as well be unenforceable at closing if the seller chooses to ignore their contractual obligations. A holdback is where the buyer's lawyer holds back a predetermined amount from the purchase price to ensure that a specific item is completed. For example, if the Offer included a term that required the seller to have the carpet professionally cleaned before closing but had not done so, then the buyer's lawyer would hold back the money to clean the carpet until the seller has professionally cleaned the carpet. If the seller did not arrange for the cleaning by a certain date, then the held back amount of money would be released to the buyer in compensation for the seller not performing their contractual obligations. Consequently, if there is an action item that the seller must complete prior to closing, that is very important to you: holdback, holdback, holdback! Remember to include the amount and the conditions, e.g. timing of the release of the holdback amount and any other important details regarding the action item, to minimize a dispute arising as to whether the action item had been properly dealt with.
Second, the parties (or their realtors) have discussed certain aspects of the property or items on the property and the seller (or their realtor) has assured you that they would be dealt with or taken care of before closing; for example, they have assured you that they have closed the open building permit or work order they have with the city, or they said that the run-down car in the driveway would be removed. Unless these assurances are in writing, they are not helpful. It can seem like a lot of work to constantly have to document assurances, but it can be the difference between having rights and insisting that action be taken or to having nothing.
Third, review the document before signing. It can be easy to click the 'Sign Here' button on DocuSign and completely rely on your realtor; however, you should remember that you are the person who will be legally obligated under the Offer and not your realtor. It is critical that you carefully review the Offer before you sign it and ensure that a) you understand all the terms that are included, and b) you ensure that all the terms you want to be included have been included. For example, if you need a condition in the Offer for financing or to allow you to sell your existing home first, then you need to make sure those critical conditions are included. Once you have signed, you are bound -even if you intended for a certain condition to be included but it was missed.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
