Q. What is a purchase and sales agreement?
A purchase and sales agreement is a contract to buy and sell real estate. The agreement should contain the terms and conditions of the deal (i.e. buyer, seller and property information, sales price, closing date, deposit information, mortgage contingencies, property inspection, etc.).
Q. Do I need a real estate attorney to review the purchase and sales agreement before I sign it?
Often a standard Realtor’s purchase and sales agreement is used for the conveyance of residential properties in Rhode Island. These agreements are well written and balanced for all parties. Most purchase and sales agreement are packed with important dates, terms, and conditions, which require the attention of both parties. It is important to have a real estate attorney review the agreement prior to signing it.
Q. What steps must the buyer take prior to the real estate closing?
There are many issues that need to be addressed by both parties prior to the closing. The buyer must: apply for a mortgage; notify the seller if the buyer cannot obtain a mortgage; conduct the agreed upon inspections; notify the seller of any material deficiencies discovered by the inspections; choose an attorney for the closing; obtain insurance; contact the electric and gas company(s) contact other service providers (i.e. telephone, cable, etc.); and inspect the property prior to the closing.
Q. Does a buyer of real estate need a survey of the real estate?
The buyer of real estate in Rhode Island is not required to survey the property before the closing. However, our office always recommends that a buyer of real estate have the property surveyed and purchase the necessary title insurance endorsement to cover any errors with the survey.
Q. What information will my real estate attorney need to prepare for the closing?
The following information should be forwarded to the closing attorney by the buyer as soon as the purchase and sales agreement is signed: purchase and sales agreement; seller’s disclosures; seller’s and seller’s attorney’s information, buyer’s and realtor(s) information including address and telephone numbers; and other relative information. The buyer should immediately provide the closing attorney’s contact information to the lender.
Q. What will my closing attorney do before the real estate closing?
Your closing attorney will have to obtain a municipal lien certificate (MLC); conduct a title search; review the title search and recorded maps; draft a title commitment; obtain a title closing protection letter; prepare lender required information (i.e. wiring instructions, etc.); obtain the final water and sewer bills; prepare the HUD; prepare and review closing documents; review the loan documents; and other pre-closing tasks.
Q. What steps must the seller take prior to the real estate closing?
The seller of real estate is responsible to maintain insurance coverage until after the closing; maintain the home as described in the purchase and sales agreement; obtain a smoke detector certificate; provide the buyer with a water meter reading; allow the buyer access to the property for home inspections; provide proof of compliance with RIGL 44-30-71.3 either by a seller’s residency affidavit (Rhode Island resident seller) or by a certificate of no taxes due (non Rhode Island resident seller) or the closing attorney must withhold 6% of the total sale amount at the time of the closing; prepare the deed to convey the real estate to the buyer; obtain and forward to the closing attorney an invoice from the seller’s attorney; obtain and forward to the closing attorney a commission statement from any involved realtors; and other related tasks.
Q. What is a real estate closing? What will occur at the closing?
The real estate closing is a final gathering of all of the parties involved in the real estate transaction (i.e. the Buyer, Seller, and Lender). Attorneys for the parties will meet with the parties to sign and officially transfer title to the buyer. The closing attorney will facilitate the transfer of title and is responsible for recording the new deed. Rhode Island buyers of residential real estate have the right (in accordance with state law) to choose the closing or title attorney.
Q. What should the buyer do immediately prior to the closing?
Before arriving at the closing, the buyer should walk the property to assure that everything is in the agreed upon condition. The buyer should also have all the necessary paperwork and certified checks for the seller and for various closing costs.
Q. What does my real estate closing attorney do after the real estate closing?
There are a number of post closing issues including the following: updating of the title; recording of the deed, mortgage, and other related documents; payment of city taxes, water, sewer, tax stamps and recording fees; payoff of any existing mortgages; other payments (i.e. seller’s attorney, realtor commissions, title insurance, etc.); disbursement of funds to the seller; and generating the title insurance.
The author of this article, Richard E. Palumbo, Jr. is a member of the Rhode Island, the Massachusetts, and Federal Bar. The Law Offices of Richard Palumbo is a highly focused firm concentrating on the following related areas of law: real estate law (including residential real estate closings); business law; and estate planning (wills, trusts and probate).
For information about our firm and the legal services that our firm provides, kindly visit our website at http://www.richardpalumbo.com or call our office at 401.490.0994
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