Taxes, Inspections and Contingencies, oh my! The basics of a real estate agreement of sale according to the Statute of Frauds, is that all agreements for the sale of real property must be in writing. One question that comes up time and time again is: can we just write an agreement between ourselves? Technically yes, but there are a multitude of issues and items that need to be thought through first.
“…can we just write an agreement between ourselves?”
Here are just a few items to consider:
There are multiple kinds of inspections one can elect. Some are more commonly chosen than others. Inspections can include pest, general home, sewer and water line, and radon. If you do not elect these inspections as part of the agreement, you cannot void the sales agreement or ask for any contribution by the seller if you find there is a problem before your purchase. If you do wish to have inspections, list them in the agreement of sale and contact the inspector immediately upon signing. Inspectors are busy and the agreement usually requires the inspections be done in a specified number of days after signing. If you don’t start early you could lose your ability to do the inspections, even if you elected them.
Your agreement of sale may need to be contingent on other events happening – for example, you may need to sell the house you are in or you want to make sure the home you are buying appraises for an amount equal to what you are paying for it. Some purchases may need to go through subdivision. This can be a lengthy process so a lot additional time for this to occur. All of these items need to be in writing in the sales agreement.
3. Clean and Green Enrolled Properties
If you are buying a property to build a house, is the property enrolled in Clean and Green? Clean and Green is a program where a property larger than ten (10) acres can be enrolled into (subject to additional guidelines) and the property will have decreased taxes so long as the property is void of certain buildings. If you are purchasing a property enrolled in Clean and Green for the purpose of building, you will need to consider whether your actions will roll a portion or all of the property out of Clean and Green. Rolling a property out of the Clean and Green program can trigger seven (7) years of back taxes and penalties so keep this in mind when negotiating a sales price.
4. Public Sewer and Water vs. Private
Properties hooked to public sewer and water will have to pay fees associated with that service. The benefit is that you do not have to be worried about the expense of having to replace or maintain a sand mound or conventional system on your own.
Transfer tax is 2% of the value. Commonly, Buyer and Seller each pay 1% at the time of closing but just one party can pay this fee if that is the agreement. The seller is typically responsible for the cost of deed preparation and any legal fees that may be necessary to clear up the chain of title. The cost of the agreement of sale can also be shared between the parties or allotted to just one party. The buyer is responsible for the cost of the title search and any additional attorney fees to clear up the chain of title. Some other costs that can be allotted through the agreement of sale include the PERC test, surveys, and the preparation of easement or driveway agreements.
6. Proration of Taxes
As part of the closing, the buyer and seller will commonly prorate the amount of county and school district taxes due. This will calculate the amount of taxes credited or due as of the date of closing.
7. Miscellaneous property
Commonly, appliances are included in the sale of real estate. There are also slightly more unusual requests – such as curtains, furniture and garden tractors. All of these requests need to be included in the agreement of sale.
While this is not an exhaustive list of all the items in an agreement of sale, there are certainly many other items to consider when looking to buy or sell your home. Please do not hesitate to contact our office if you are in need of assistance through this process. We’ve handled everything from first-time home purchases to complex commercial transactions so let us put our experience to work for you!
Contact Us Today
Contact the Law Office of Harding, Hill, Turowski & James, LLP, and speak with our experienced attorneys who will be able to help you navigate through your real estate transaction.