The Contract of Sale (Purchase Agreement) becomes valid when, and only when, it is fully executed by you and the seller. In the average case, you, the buyer, will sign the Contract of Sale (Purchase Agreement) first, but it becomes a valid “contract” only on the date that it is counter-signed by the seller or sellers. This date is important because it starts the clock running on several items, such as the time for you, as buyer, to obtain approval for a mortgage loan.
In fact, after both you and the seller sign the Contract of Sale (Purchase Agreement), there are three items that must be addressed immediately:
(1) Termite Inspection – There should be a provision in the Contract of Sale (Purchase Agreement) permitting you, as buyer, a certain period of time – usually two weeks or less – within which to have the house inspected for wood-destroying insects. As Chapter 7 urges, have the termite inspection done because it is important. Do not play cheapskate at this point in the game. It’s akin to checking under the hood before buying a used car.
(2) Mortgage Application – Although it is highly recommended that you start applying for a mortgage loan before you find a suitable house, if you have not already done so, this would be the time to begin the process. If you intend to finance the purchase of the house with a mortgage loan, you or your attorney should have had a mortgage contingency clause drawn into the Contract of Sale (Purchase Agreement). This means that the sale of the house to you depends upon you obtaining a loan for a specific amount and within a specific time. All these “specifics” should be put into the Contract of Sale (Purchase Agreement). Chapter 8 outlines today’s typical mortgage application process.
(3) Ordering a Title Report – If you have an attorney, your attorney will be very familiar with this step and will be able to order a title report for you from a company she knows and trusts. If the termite inspection and mortgage application steps seem self-explanatory, this title report business may seem a bit sketchy to the inexperienced buyer. It’s really less complicated than you may think. The goal of buying a house is to acquire a measured-off piece of property from the seller, free of judgments, liens and other interests of third parties. The purpose of the title report is to make sure that the seller is really the owner of the property, that he or she has the right to transfer the property, that the property to be transferred is exactly the property that both parties mean to be transferred and that the property is being transferred free and clear of judgments, liens and other interests that a third party may have against the property. More on the title report can be found in Chapter 9. There usually is no contractual time constraint on obtaining a title report. However, a lender will not loan you money for your purchase until it has a chance to review and approve what it finds in the title report. Hint-Hint.
With many moving pieces involved in nearly every new business venture, it can be monetarily beneficial to speak with your Milwaukee Business Formation Lawyer.