The year 2020 has brought significant changes to the real estate industry, and one of the most important aspects of this industry is the purchase agreement. It is essential to have a clear understanding of the purchase agreement to ensure a smooth and successful transaction.
The 2020 real estate purchase agreement has some notable changes that buyers and sellers should be aware of. Here are the key points to keep in mind when preparing or reviewing a purchase agreement:
1. Contingencies: Purchase agreements typically have contingencies that protect the buyer in case certain conditions are not met. The 2020 purchase agreement now includes a contingency for pandemics, such as COVID-19, that could affect the buyer`s ability to obtain financing or close the sale. This contingency allows for an extension of the closing date or cancellation of the agreement without financial penalty.
2. Closing Costs: The 2020 purchase agreement clarifies who is responsible for paying various closing costs, such as title insurance, appraisal fees, and recording fees. Buyers and sellers should review this section carefully, as it can affect the final amount due at closing.
3. Title Issues: The purchase agreement also addresses potential title issues, such as liens or boundary disputes. The agreement states that the seller must clear any outstanding liens and provide the buyer with a clear title before closing. Buyers should consider purchasing title insurance to protect themselves against any unforeseen issues that may arise.
4. Earnest Money Deposit: The 2020 purchase agreement includes stricter rules regarding the earnest money deposit. The deposit, typically 1-2% of the home`s purchase price, is held in an escrow account until the transaction is complete. If the buyer backs out of the deal without a valid reason, they may forfeit the earnest money deposit.
5. Due Diligence: The 2020 purchase agreement includes a due diligence period, during which the buyer can investigate the property, including conducting inspections and reviewing any necessary documents. The due diligence period typically lasts between 10-14 days and allows the buyer to back out of the deal without penalty if they find any issues with the property.
In conclusion, the 2020 real estate purchase agreement has some notable changes that reflect the current state of the industry. Buyers and sellers should carefully review and understand all of the terms and conditions to ensure a smooth and successful transaction. It is also recommended to work with a qualified and experienced real estate agent or attorney to guide you through the purchase process.