By educating buyers and sellers about what they can expect, you can manage their expectations and avoid misunderstandings that can lead to disputes. Assist your clients in becoming more informed by educating them about the following documents involved in a real estate transaction.
- Purchase Contract: Provide your client with a sample copy of the purchase contract early in the relationship. In a resale transaction using the AAR Resale Contract, point out important provisions, such as the fixtures and personal property that will be conveyed with the home, the seller’s warranties, and the buyer’s financing obligations and disapproval rights. In a new home transaction, emphasize to the buyer that new home contracts are not standardized and generally do not allow the buyer an opportunity to disapprove items or to cancel.
- Public Report: Explain the importance of the Public Report to the buyer of a new home and explain that the Public Report should be read before signing a new home contract. Although some of the Public Report information becomes outdated, subsequent buyers may also benefit from reviewing the Public Report.
- Seller’s Property Disclosure Statement (“SPDS”): Use the SPDS Seller Advisory to educate the seller about the importance of the SPDS. Explain to the buyer that the SPDS is a disclosure of what the seller actually knows; it is not a representation of every possible defect. Inform the buyer to carefully review the SPDS and verify any important information during the Inspection Period.
- Homeowners Association (“HOA”) Documents: Explain to the buyer that the Covenants, Conditions and Restrictions (“CC&Rs”) may impact the buyer’s use of the property. Tell the new home buyer to read the CC&Rs before signing the purchase contract. In a resale transaction using the AAR Resale Contract, inform the buyer that the CC&Rs must be reviewed within five days after receipt.
- Title Commitment: Tell the buyer to closely review the title commitment, paying particular attention to the Schedule B Exceptions. Refer the buyer to the escrow officer or an attorney if there are questions or concerns about the title commitment.