Real Estate with Dallice: You owe it to yourself to complete your Due Diligence
You are under contract and heading for Closing. But between now and then, there is some homework to be done. We built into the Contract to Buy, a bunch of contingencies. Items such as Inspection, Title, Insurance, Survey, Homeowners Association Documents, existing leases are all up for review. And if you don’t like what you find, then let’s chat. It’s possible to terminate the Contract to Buy if you find a deal breaker and notify the Seller in writing on or before the deadline associated with it. It’s also possible that rather than terminate, the Seller can negotiate a timely correction or concession in lieu of termination.
You are welcome to bring in a general inspector, structural engineer, architect, well inspector, soil analyst, sewer scope specialist, lead paint sampler, mold tester or anyone else! As long it’s completed before the Inspection Objection Deadline or the Inspection Termination Deadline. At your sole discretion, if you find a “deal breaker” then we can terminate, take your EM and go find another property. Don’t dilly dally on this though… it’s possible your testing will lead to more questions and you’ll need extra time to find the answers you need. For instance: Get a quote for a new roof.
The title company is hard at work researching the “past” that your property might have. They are searching for liens, broken chains of title, easements and more. They hit us up with the info and assuming they find no issues, this deadline will pass uneventfully. But should they find the seller’s divorce lead to a Quitclaim Deed that was never recorded accurately, or something else untoward, you have options… terminate the Contract to Buy, if it can’t be corrected in time, is one of them.
You’ll simply call your insurance agent, give them the address and ask for a quote for homeowners insurance. They will research the property and let you know if there are insurance complications. For instance; It’s in a flood plain. Your insurance broker will quote you for certain coverage and you’ll decide for yourself if the coverage and cost is acceptable to you.
Homeowners Association Documents
If the property is part of a homeowners association, you will receive the following, courtesy of the Seller:
- meeting minutes
Give them a GOOD read before deciding if this is the right community for you. Some HOA’s have rules about air drying clothes outside. Others have pet restrictions, restrictions on parking recreational vehicles or even smoking outside of the property. These days one of the hot topics is short term leasing. If you are planning on renting your condo out using Airbnb or similar, check to make sure the HOA is cool with it. Once the HOA Document Objection Deadline has passed, you will not be able to terminate the Contract to Buy based on these restrictions.
Once upon a time, surveys were a normal part of every buy-sell transaction. They were required by lenders. Now… not so much! In the event you are buying a condo, I might see how a survey is a waste of money. But a horse property? An old house in town, where the fence has been pulled down and rebuilt? Any situation where you’ll be subdividing, using the space close to the property lines, erecting new structures, or have concerns that the neighbors are suspiciously close, warrants one. There is a second reason why a survey might be useful too. I have heard that its a double check on the legal description. A second set of eyes to make sure the Contract description of the property you are buying, is the same as the actual property.
Our next post is set to talk about the importance of deadlines. You wont want to miss that, trust me!