The Utah Real Estate Contract Explained

Posted on Apr 17, 2012
The Utah Real Estate Contract Explained

The Real Estate Purchase Contract is a six-page document we use when we write an offer to buy a home. It consists of two sections: 1) The Offer to Purchase and Earnest Money Deposit and 2) Other Provisions. The Other Provisions section contains 25 items that are addressed. The most important parts of these two sections will be highlighted for you below. This should help you gain a firm grasp on your rights and obligations when offering to purchase a home.

Earnest Money Deposit

Each time you offer to purchase a home, you will place a deposit with our brokerage as collateral to your offer. This assures both parties that they will abide by the terms of the contract or forfeit the amount money put down. If you cancel for any reason other than those which we will discuss next, you will lose this money. Conversely, if the seller cancels for any reason whatsoever, they will owe you your money back and an additional sum of money equal to yours.

• This money is placed in a trust account at Urban Utah and must be delivered no later than four days after our contract is accepted.

• The amount should be around one percent of the offer price.

• This money does go toward the purchase of the home.

Appliances and Other Items

Anything in the home can be asked for when we offer to purchase. The seller may automatically include all the appliances, some of them, or none of them. We can ask for what we want and see if they will oblige.

Settlement and Closing

Settlement occurs when we sign all of the loan documents at the title company and all monies have been delivered by buyer and/or seller. Closing occurs when the documents have been approved by the lender, all proceeds have been dispersed and the deed has been recorded at the county.

Possession

The soonest you can move into your new home is when the documents have been recorded by the lender. Sometimes, the seller may need more time. This will all be negotiated at the beginning.

Buyer’s Conditions of Purchase

There are three reasons we can cancel a contract and keep our earnest money. They are due diligence, appraisal, and financing. Each of these sections has a date in which they need to be completed by and accepted or cancelled.

Due Diligence

If anything we research causes us want to cancel the purchase, we have until the Due Diligence Deadline to cancel the contract. We can cancel based on the seller disclosures, our home inspection, zoning, or any other number of items and retain our earnest money deposit. We may also ask the seller to rectify any of these items by this date and continue with the purchase. If we cannot come to an agreement, we are welcome to cancel the contract still.

Appraisal

The home must appraise for at least our purchase price or more. If the home appraises for less than the purchase price we have three options:

1) have the seller agree to lower the purchase price to the appraised amount;

2) bring the cash in at closing;

3) cancel the contract and retain our earnest money.

This must be done by the Financing and Appraisal Deadline.

Financing

We have until the Financing and Appraisal Deadline to make sure you are going to be approved for your loan. If you are denied your loan for any reason the lender gives you, or if you are unsatisfied with the terms of your loan, we have until this deadline to cancel the contract and keep our earnest money deposit.

Home Warranty

We can ask the seller to pay for a one-year home warranty that will cover anything that breaks the first year you own the property. This warranty may be renewed subsequent years at your own expense.

As-Is Condition

Every home is sold as-is. There is nothing the seller is required to repair or warrant. The seller does agree however, that the home will be in the same condition at possession as it was on acceptance.

Walk-Through Inspection

No earlier than a week before, we can walk through the home and verify that any repairs were completed and the home is in the same general condition as it was when the contract was accepted. If things are not as they should be, the seller agrees to fix them prior to settlement. This is automatic.

The terms of our contract will most likely not be accepted right from the start. Most contracts are countered by the seller on an addendum. Any terms they wish to change, they will present to us and we can either accept them, or change them further. We don’t have to accept anything we don’t wish. Once terms have been agreed upon, the contract will be accepted, the home will show pending sale on the MLS and you will be on your way to owning a new home.