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For Sale By Owner Contract - Continental Title Company Form

Music everybody welcome back to another fantastic episode of title Tuesdays my name's Kevin Hatcher the founder and CEO here at Independence title also known as your title King today we are talking about the real estate contract we're gonna talk about the contract that was dated April 2017 that is the most recent contract that we have a lot of questions on people call our office every single day to ask questions about how to properly fill out or how to understand the contract so I just want to go through the contract of what we look for as a title company on the contract to make sure that you are filling it out properly but also a couple of tips and tricks to make it a little bit easier for the settlement company or the lender that is reviewing this contract in order to get ready for closing but first what I'd like you to always do is click the thumbs up button give me a like below because this video is going to be amazing I'm going to take you onto my computer and we are going to go through the most recent contract and all of the fill-in-the-blank sections remember the contracts here in the state of Florida are fill in the blank it's not drafted by an attorney they are fill in the blank Realtors will typically help you fill out these contracts if you're hiring one to facilitate your closing so let's go on the computer check it out and I'll walk you through line by line how to make sure you're doing it properly so as you see here this is the as is residential contract for sale and purchase down at the bottom of page one you're going to see the date this is the revision of April 2017 so that's the most recent contract that we are going to be reviewing as you see here line one that is going to be the seller one of the common mistakes that we see with this section is that people are putting owner of record as seller all that means is now somebody else has to do the work to find out who actually owns the property but I'm gonna give you a little tip if you go to your local property appraiser site you are going to see someone listed on there that is typically the legal title holder of the property unless something else was done that was not recorded in public record so what I want you to do is that name match up with your seller the person that is going to be signing the contract if not you should ask the question as to what is different why is it different and and we can hopefully get get ahead of the game by getting this information so you're going to put the sellers name and what I always tell people is put if it's individuals put their marital status that is going to help the title company handle this transaction much easier they do not have to keep asking are you single are you married it will make it very easy so if you have two people and they're married husband and wife wife and husband maybe two single people a single man and a single man a single woman a single woman whatever their marital status is put that on the contract too to make it a little bit easier for everyone that is reviewing it then we go to the buyer this is going to be the buyer of the property again it seems very simple but you want to put the buyer you want to put their marital status and most importantly make sure the names are correct because a lot of times we see misspellings so make sure the names are correct on there because that is the information that will flow through onto the loan documents will flow through on to the title commitment and on to all of the closing documents so if it's wrong from the beginning and nobody catches it we may have a problem once we get to the closing table so you want to make sure you have the name spelled properly and put the marital status there then we move down to line number seven that is the street address pretty self-explanatory line eight is the county that the property is located in plus to the right is the property tax ID number which you know you can get from the property appraisers site or the tax collector site the legal description again this is where you can copy and paste the short legal that is on the property appraisers website this is the only time you can do that we know that on the closing documents and on loan documents we need to have the actual full legal description which you saw in a previous video how to find the full legal description of the property but in this case you can copy and paste that short legal for the purposes of the real estate contract only next we're gonna go down to line number 20 these are going to be personal property items that are included in the purchase anything that is personal property that is included in the purchase some hums it's listed in the MLS you will put that on the contract in this section and then the next section right below it 23 are items that are excluded from the purchase price and when the title companies and attorneys prepare the bill of sale this is a lot of times the the section that they're going to reference remember this is all hand in hand we need to review the contract just as much as you need to help the client draft the contract to make sure all of the terms are outlined in there so we know what to follow so that's where you're going to put any items that are excluded maybe a washer and dryer a chandelier that maybe the sellers inherited there's a lot of things on there that sometimes are included and excluded from the purchase and these are the two sections that you want to make sure you fill out properly so now we're going to move to line number 26 that is the purchase price of the property again very very important to make sure we have this as accurate as possible this is going to be the price that the seller is going to be receiving and the buyer is going to be paying for the property then line number 27 is the initial deposit so it could be $10 could be $1,000 could be 10% whatever the initial deposit required for the contract the good-faith deposit remember for the contract to be valid there has to be some consideration so as little as $10 but a lot of times we see one thousand twenty-five hundred five thousand or sometimes a little bit more depending on who the seller is and what they require then you're going to check here does the deposit accompany the offer meaning it's being put up now or is it going to be put up within three days of effective date of the contracts in other words do they need to put it in escrow today or do they have three days to get that deposit wired or sent over to the escrow agent now remember there's a difference here next line we're going to talk about the escrow agent information this is the person that's holding the deposit not the title company necessarily it could be the real estate brokerage it could be the attorney for the buyer or the seller this is the person that will be holding the escort apposite you can put later on in additional terms who will handle the closing a lot of times it is the title company but it's not necessarily the title company so here's where you want to put the escrow agent information of who's holding the escort deposit then we're going to go down to line number 35 that's the additional deposit that is typically done ten days after effective date which we know is the last date all parties signed and deliver the contract to the other party so we want to make sure that within 10 days you get your second deposit in a lot of times it's a little bit more than the first deposit could be the same as the first deposit it could be no second deposit so if there's a second deposit that's where you want to add that line number 38 is financing so this is where we are going to talk about how much financing are you getting is it 80% is it a dollar amount 200,000 100,000 whatever the financing amount is so if it's 80 percent you take the purchase price times 80% and you will get yourself your loan amount this is the section that you want to add that to other would be maybe if you're getting a seller held second mortgage any other types of credits maybe a city grant or something that the borrower or the buyer will not have to come to closing with so it could be maybe a city grant that you're getting a second loan that's where you're going to add that information and then we are going to move down to line number 40 this is the balance to close so this is simple math you take the purchase price up at the top and then you are going to subtract the first deposit the second deposit the loan amount any additional credits that are going to be given and that will then leave you with the balance to close obviously plus reasonable and customary closing costs which you can get from our title calculator or you can call the tum of the title company doing the closing to get that information from them directly now we move down to line 44 and 45 this is time for acceptance of the offer so this is how long are you giving the seller to accept your offer 24 hours 48 hours 72 hours maybe the sellers out of the country and it's 5 days whatever it is here if you do not put anything it is going to be within two days after it is delivered so you want to make sure time time is of the essence you want to make sure you put a date in there it makes it clear I always tell people if it says if left blank just put something in there even if you put the same amount that it says if left because you leave yourself room for someone to put information in there so if you fill it out you'll never have any questions closing date very very important on line 52 that is going to be the day we are going to close the transaction as I told you in previous videos it's good to get the proper training to make sure if the buyer is getting a loan you want to try not to do it on the 15th of the 30th of the month because the lenders are busy the brokers are busy the title companies are busy it's one of the busiest two days of the month so you want to try and maybe do it a week before two days before so it doesn't stop your closing from happening because a lot of times it gets delayed they send the package late they don't send the wire in time and now we have a seller at the closing table thinking they're going to get money but then the transaction doesn't really fund until the following day so it's very important to properly plan now to prevent problems later so now let's move down we're going to talk about line number 68 this is if you are an investor buying a property subject to a lease someone is staying in the property attendant you are going to check this box and we make sure that we have rents prorated deposits prorated we look at that as a title company to say oh there's a tendon in place we need to prorate rents or prorate deposits we'll get a tenant estoppel from the seller they'll provide one to us showing what's been paid and what we need to collect that closing because you know that closing statement is a balance sheet it's a checks and balances of that deposits and rent that are have already been paid by the tenant living in the property line number 77 number seven very very important for those investors out there either the buyer may assign or may not assign the contract and then the second option is if the buyer is able to sign the contract if they can assign it to another buyer are they released from liability or not released from liability a lot of times we see this where investors say well I assign the contract I want my money my initial deposit back because the other person put up their deposit and I say well if you're not released from liability we can't release your deposit to you because you may have to step back in and close if your buyer decides to cancel so it's very important to know whether the contract is a sign or not assignable and then it's important to know whether you as the initial buyer are released from liability or if you're not released from liability now let's move down to financing this is one of the most important parts in the contract that has changed with the new contract you can go back to previous videos where we talked about the two significant changes in the contract one being the financing the financing approval period so here you're gonna see line 82 it's either very simple the buyer is going to pay cash or they get a private loan for the property and then line 86 is its contingent upon a buyer getting approved for a conventional FHA or VA mortgage and you will ask the mortgage lender the person who provided your buyer with the pre-approval the terms of the loan is it fixed or adjustable what is the interest rate and the terms of the loan very important for buyers line number 91 that is the time you have to make application pre-approval is not an application pre-approval just means you submitted information they ran your credit and your income and they said you are a prove pre-approved to buy a house approximately for this amount you need to file an official application with the lender and in this case if it's left blank you have five days five days may not be enough so you want to make sure you get that application in as soon as possible per the terms of your contract all right now we're gonna go to the closing cost section of the contract this is what is going to be reasonable and customary closing costs as a title company we look at this to know who pays for what so you're going to go down here to line number 145 that's title evidence usually it's 15 days people leave it blank just put 15 days in there it's not a problem you can leave it blank and then you can look at checking one item line number 158 162 and 164 check one box one of the three options many times you see people they do not check anything or they check the wrong box or they check multiple boxes seller pays for title company in box 158 letter 1 then you go to 2 which is line 162 it talks about buyer shall designate closing agent and pay for owners policy and charges and then the seller will pay for certain other charges and then you go down to the third line which talks about the Broward miami-dade regional provisional this is the section that if you are in Browder miami-dade you'll check this section that is in the best interest of all the parties that tells us exactly who to charge what - as far as the lien search title search title insurance and who is selecting the title company line number 173 we're talking about home warranty if you're an agent that provides a home warranty to a client or maybe the seller provides a home warranty to the buyer this is the section you want to fill out to make sure the home warranty is addressed in the contract so we know when we're preparing it there's going to be a home warranty we need to ask for an invoice for the home warranty and we'll have the paperwork at closing to show to the buyer about the home warranty that they will be getting then we're going to move down to special assessments these are not condominium and homeowners association special assessments these are municipal special assessments it could be through the taxes it could be through one of the cities of the municipalities it will tell us how we address these special assessments sometimes they assess something and then there's payments over the next 10 years to pay the assessment off sometimes that closing the assessment is paid in full by the seller so you need to check one of the two boxes and this says here if neither box is checked and option a shall be deemed selected which means the seller will pay installments do prior to closing and then the buyer will assume the assessments after closing so if you know there are assessments address them in this section and we know that the homeowners and the condominium association assistance will be addressed later on in the additional addendum the condo and HOA addendum the rest we're going to basically be moving down through the rest of the contract down to line number 250 on page 5 which talks about right to cancel property inspection again this is the second change in the contract where we know that permits and code matters need to be uncovered within the inspection period it says that at the last part of this bulb where it talks about pirates the physical condition of the property in any violation of governmental building environmental and safety code restrictions or requirements so we need to make sure that you are getting your lien searched in within the inspection period or going down to the city to check for these matters because if a permit matter comes up later you as the buyer may not be able to cancel the contract the alternative is you can use the language that we've had drafted by an attorney that excludes the permanent code issues from the standard inspection period and has them do prior to closing the seller will remedy any issues that may come up which is the way it used to be many years ago now it's it's slightly different they've clarified in here a little bit more so you want to make sure that you are ordering your lien search or getting that data within your inspection period and if the buyer wishes to cancel the contract make sure you do so before the inspection period is expired now we're gonna move down the rest is just standard terms and conditions you can read through and always call our office if you need any clarification on anything or if you're a real estate agent you can call your local board they could be happy to explain the contract to you the rest we are going to get down to the bottom line number 568 on page 11 these are the addendums and additional terms some of the standards are a condominium rider if there's a condominium a homeowner's association may be the seller is providing financing if it's an FHA or VA loans you'll the check box number II short sale homeowners insurance if the buyer or seller I'd need an attorney to approve the contract if you're a real estate agent and you have a personal interest in the property if you are licensed and selling or buying you want to make sure you're selecting trip double hey if there's someone staying in the property pre closing or post occupancy or maybe if you're a seller and you have to the contract is contingent if the buyer is buying it's contingent upon that buyer selling their other property this is the area that you want to check to make sure that all of your items are covered a lot of the items are covered in the additional terms you do not need to add additional language that you're worried may or may not be correct so use the addendums that's why they were drafted that's why they explain a lot of the additional terms in the contract anything additional line 20 that you need to add maybe the buyer or seller need to pay a processing fee or or some type of additional Commission or something this is where you want to put that if you want to exclude permit matters and code matters from your inspection period this is where you are going to put it remember anything included in the addendum Trump's the items that are in the contract so if you modify it in the addendum that will supersede so a lot of the banks the contract says it's assignable but the addendum says it's not assignable and that means that the addendum will win so you want to make sure that this is where you put any additional terms that you need to add to the contract or that either party would like added in you know for the actual closing then we go down to the last page very important buyer and seller both need to sign and date that's how we know the effective date of the contract so make sure the buyers both sign and date and the sellers both sign and date all buyers and all sellers should be completing this information buyers address and sellers address is very important for the settlement agent and the lender it's good to put the buyers name which we have the address full address maybe a phone number and an email address it helps us communicate with them if we need to go back and reach out to them later on we look at the contract and it's there as opposed to us having to keep asking for it just include it in the contract buyers name buyers address buyers phone number and email address then if you're a real estate agent getting a commission this is where you want to put your Commission you want to put your name your brokerage name because remember commissions are payable to the brokerage and then you want to put the percentage of your commission a lot of times you'll see commissions were off because we assumed it was 6% and maybe it was 5% or maybe it was 7% so here's where you want to clarify that because if you miss it on the closing statement then you may have a problem collecting that money later so you want to make sure if it's a 6% Commission you put 3% and 3% and that's what will follow when we prepare our preliminary closing disclosure and that's about it that's a wrap for the contract I hope you learned something new in today's video is a little lengthy hopefully you were able to learn something by following along in this contract when you're filling out the contract if you're a real estate agent a buyer or seller you have a question give our office a call we'll be happy to guide you through some of the common things that we see when filling out a real estate contract here in the state of Florida so give me a thumbs up if you learned something new I always love comments below if you liked the video give me a comment if you have a idea for a future video leave me a comment I'd always love to hear that information so I can help produce better videos for next week's episode so thanks for watching title Tuesday's my name's Kevin tatra signing off I look forward to seeing you at the closing table Music