Home Buyers Guide

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The contract is the formal purchase agreement that the sellers' attorney will draw up to finalize the terms of the sale. Once the contract is drawn, it is sent over to the buyers' attorney for review. Usually, the buyers will make an appointment to meet with their attorney to review the contract, and if everything is acceptable, they will sign it at their attorney's office. The contract is then mailed back to the sellers' attorney for review of any changes that may have been made, and the sellers then meet with their attorney, and execute the contract. Sometimes, there will be a "sit down contract, " where all of the parties meet to discuss the details and sign the contract at one meeting.

For the contract you'll need:

Your checkbook for the downpayment. The downpayment can be a personal check, which is written to the seller's attorney and will be held in the attorney's escrow account until closing.

A list of your questions. Bring a list of any questions you may have concerning the purchase of the premises to the contract. This will be your last opportunity to obtain information that may be critical to the purchase before you enter into the formal agreement.

Terms you'll need to know:

Downpayment: The portion of the purchase price, which is generally required to be paid at the time the Contract of Sale, is signed. The downpayment is generally paid by personal check and held by the seller's attorney in escrow, or by an escrow agent pending the closing. If the buyer defaults, the seller's remedy shall be to retain the downpayment as liquidated damages.

Escrow Agent: The individual who holds the downpayment, most commonly the seller's attorney.

Mortgage Contingency: The obligation of the buyer to purchase the premises is conditioned upon the buyer obtaining a written commitment from any lender within a specified time and other terms set forth in the Contract of Sale.

As-is Condition: Generally, the sellers or their representatives make no representation as to the physical condition, state of repair, use, cost of operation or other matter related to the premises or property included in the sale. However, there are exceptions for the plumbing, heating, electrical systems and appliances that they will be in working order on the day of closing or possession, whichever is later. Additionally, the seller generally makes a representation that the roof will be free of leaks on the day of closing or possession whichever is later.

Adjustments: At the time of closing certain adjustments or apportionments are made as of midnight of the day before the closing or possession whichever is later. The most common adjustments made are for real estate taxes, fuel, water, and interim interest on the buyer's mortgage.

Title Insurance: Insurance against loss or damage resulting from a later claim that someone else owns your house or has a claim against your property for an unpaid mortgage or judgement against the seller, or has a right to use part of your property. While title defects are rare, the cost of this insurance is relatively inexpensive as opposed to the cost of curing a problem. If you are borrowing money from a mortgage lender to purchase a house, the lender will require you to obtain title insurance.

Deed: The document, which, like a bill of sale, gives you ownership of the house.

Closing: The time and place where you pay for the house and the seller turns over ownership to you. The closing usually takes place at the lending institution on the lender's attorney's office.

What are your rights?

The buyer and its authorized representatives shall have the right to inspect the premises before the Closing. This gives the buyer an opportunity to insure that the condition of the premises has not changed significantly, except for reasonable wear, tear and natural deterioration between the date of the Contract of Sale and the date of Closing or possession whichever is later. At this time, the buyer should re-inspect the plumbing, heating, electrical systems and appliances to insure that they are in working order, and that the roof is free of leaks. Remember, New York follows the maxim of "Caveat Emptor; Let the Buyer beware, for he ought not to be ignorant that he is purchasing the rights of another." This maxim summarizes the rule that a buyer must examine, judge and test for himself.

In most instances, the buyer shall have the right to have the house inspected for the purpose of determination of the existence of termites or other wood destroying insect infestation or damage. Unless the buyer executes a written waiver, the buyer has the right to have the premises inspected for presence of lead-based paint and/or lead-based paint hazard's at the buyer's expense.

In the event the seller defaults, or is otherwise unable to transfer title to the buyer in accordance with the terms and provisions of the Contract of Sale, the seller shall refund the down payment to the buyer, and reimburse the buyer for any title fees, including any appropriate charges related thereto.

From The Homebuyers' Guide, by Laurie J. Bloom,
© 1999 The Multiple Listing Service of Long Island, Inc. All rights reserved.