Steps To Take To Purchase Real Estate In A Private Transaction
After determining the property you are going to buy, you should enter into a written contract with the seller.
In Missouri, a real estate agreement is not enforceable if it is not written. You and the seller will need to agree upon the following items and they should be included in your real estate purchase contract. You may have other items that you want to include.
Legal Description. You will need to determine the legal description of the property. This might be as easy as getting a copy of the deed the seller received when they purchased the property. This might be as difficult as ordering and paying for a new survey of the property.
Survey. Whether you need a survey will depend greatly on various factors, such as how long it has been since the property was surveyed, if you are purchasing the whole tract purchased by the seller, if the property is subdivided, etc.
Price. Obviously, you and the seller need to agree on the price of the property that you are going to pay.
Seller Financing. Usually the seller requires full payment at the closing of the transaction, but sometimes a seller is willing or even prefers to provide seller financing wherein you will pay the seller part of the purchase price later.
Payment Terms. Again, usually the full purchase price is paid at closing. But sometimes other arrangements are agreed upon.
Title Insurance. The buyer has the choice of whether to require title insurance. If you are obtaining financing for a bank or similar lender, they will require title insurance. We at Birk Law Firm recommend that you always obtain title insurance. You can name a specific title insurance company in your contract if you have a preference.
Real Estate Taxes. Unless you purchase the property on December 31 or January 1, you and the seller will need to agree on how much each of you pays for the property tax during the year of the sale. Usually the taxes are prorated and allocated to each party based on the number of days in the years that each party owned the property.
Who pays for what?You and the seller will have to agree on which of you pays for which costs that are incurred in the transaction. There are always some costs even if there is not a broker involved. Some of the costs to be allocated between buyer and seller are:
- Escrow Agent Fees
- Attorney Fees
- Closing fees
- Recording charges
- Other charges
Buyer’s and Seller’s conditions. These would be other conditions that the buyer or seller need to meet before the other party is obligated to close the transaction.
Casualty loss between time of signing contract and closing. You need to agree on what will happen if the property is significantly damaged after you sign the contract but before you close the transaction.
Representations and warranties of buyer and seller. The buyer and seller always have to make standard representations and warranties; sometimes additional ones are added.
Delivery of the property. Typically the buyer gets to occupy the property immediately after closing, but sometimes this occurs before or after closing if you agree.
Restrictions. Sometimes the seller will require restrictions on the future use of transfer of the property, such as a right of first refusal or no subdividing. The buyer may not agree to these restrictions if they hinder the buyer’s use of the property. Also, some restrictions will cause problems for the buyer to obtain financing.
Inspection of the property. What are the terms for the seller to inspect the property before closing?
Assignability. Can the buyer assign (transfer) his rights in the contract to another person or does the buyer have to be the one to close on the property?
ALL YOUR LEGAL NEEDS
Why Choose Birk Law?
Birk Law Firm is a small firm by choice that is big on client services. Attorney Kelvin Birk and his team are responsive to their clients’ needs. When we sign on as your law firm, you can count on us for strong legal counsel, from negotiations to settlement to trial.
Our clients benefit from the intertwining of Kelvin Birk’s legal and CPA background and experience. We provide well-rounded advice to solve both legal and financial issues and to come up with creative solutions. We use modern technology to deliver legal services in a more efficient and client-focused manner than was previously possible.
We provide personalized and compassionate service. We believe that each client’s matter is the most important matter in the world to them, and we strive to treat it that way.