The Connecticut Real Estate Purchase Contract
The first step in the legal process of purchasing a home is the contract or the purchase and sales agreement. The realtor usually prepares the contract. Some purchasers prefer to put down a small binder prior to signing the contract. A binder holds the property for the buyer until the parties prepare a final contract. In many cases, particularly in New Haven County, the realtors prepare the final contract. In Fairfield County the attorneys prepare the final contract.
When the parties prepare the contract they must agree to a deposit amount that the purchaser gives to the seller’s attorney. The amount of the deposit can be as little as no money down to ten percent of the purchase price. After the parties have agreed to a purchase price and deposit amount, the parties must agree to certain dates set in the contract.
The inspection contingency date is an important provision in the contract. This is the date that the purchaser has to conduct a home inspection of the property. If the purchaser does not inspect the house prior to this date then the purchaser cannot make any subsequent inspections unless the seller agrees otherwise. If an inspection is made and the purchaser discovers a problem with the house, then the purchaser can either ask the seller to fix the problem or ask the seller for a price reduction, or credit at the closing for the problem. If the purchaser failed to inspect the house, due to whatever reason, and later finds a major problem with the foundation, or some structural defect that the seller should have been aware but failed to disclose to the purchaser, then the purchaser would have the right to bring a lawsuit against the seller for such failure to disclose. In Connecticut the seller of a home must sign a disclosure form, which is attached to the contract, indicating whether or not the seller is aware of any defects in the house, such as the presence of lead paint.
Another important provision in the contract is the mortgage contingency date. The mortgage contingency date allows the purchaser to rescind the contract and obtain his deposit if he cannot obtain a mortgage commitment letter from a bank. It is common for a purchaser to request that the seller extend this date if there are delays in obtaining this commitment letter from the bank. If the seller refuses to extend this date, and the purchaser still has not obtained a commitment letter, the purchaser can obtain his deposit back and rescind the contract. If the purchaser, for whatever reason, fails to request an extension of the commitment date and fails to obtain a commitment letter, then the purchaser must close on the closing date, or within a reasonable time thereafter. If the purchaser cannot obtain financing and cannot close on the closing date, the purchaser will forfeit his deposit.
The date set on the contract as the closing date is a provision that the purchaser and the seller must agree to. If the purchaser is unable to close on this date, he has a reasonable time after this date to close, unless the contract specifies that “time is of the essence.” If the closing date is a date where “time is of the essence” then the purchaser will lose his deposit if he cannot close on the closing date, or some time prior to the closing date.
At the closing the purchaser will usually have to sign numerous mortgage documents and may have to bring additional monies to close. This will depend on the amount of the mortgage that the purchaser has applied for. There are other adjustments that must be paid back to the seller on the closing date for items that the seller paid in advance. For example, the seller is entitled to a credit for oil left in his oil tank. The seller is also entitled to property taxes that he has paid prior to the closing, as taxes are usually paid in six month intervals. If the seller made a January payment of taxes, this payment would cover the months of January through July. So if the closing is in April, the seller would receive a tax credit for the months of April, May, June and July.
At the closing the purchaser’s attorney will provide the seller’s attorney with a certified bank check for the purchase price, subject to any adjustments or credits. The purchaser’s attorney will receive a deed from the seller’s attorney, and the deed will be recorded on the land records usually on the day of the closing. At this time the purchaser officially is the owner of the residence.
Complements of:
Attorney Lawrence S. Dressler
667 State Street
New Haven, CT 06516
If you have any additional legal questions that you would like answered or need legal representation please email Attorney Dressler at legalinfo@cthomebuyer.com
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