Common Paperwork That Can Make or Break Your Property Deal

When selling or buying a home or other property, you can only seal the deal if you have the right real estate forms. In this post, we’ll outline six types of documents that can help you guarantee a successful property deal.

Real Estate Purchase Agreement

This document acts similarly to a bill of sale and lets the seller (you or somebody else) set out a property transaction’s terms and conditions. Even if you’re selling to a family member, you need a document like this to formalize everything.

Here are the basic requirements for any home sale contract:

• The buyer and seller’s basic details
• A full description of the property and land
• The property’s total price
• Contingencies (such as a successful inspection)
• The property’s closing and possession dates

During negotiations, you and the other party might also agree to additional conditions. This can include changing the closing date, specifying third-party financing rules, and using another form to release the deposit.

The agreement should also outline preferred methods for resolving potential disputes, including mediation and arbitration. Use litigation as a last-ditch effort - it may be impossible to come to an agreement at this stage.

Disclosure Statements

Sellers must disclose certain details about a property before putting it on the market. For example, if you’re selling a property with lead-based paint, you must tell the buyer. Many states have additional disclosure requirements, including:

• Any deaths on the property in the past three years (California)
• If the home is allegedly haunted (New Jersey, only if asked)
• Previous roof repairs on the property (Texas)
• Noises/odors that can affect the buyer’s enjoyment (North Carolina)
• If the property comes with kitchen appliances (Michigan)

Always check the rules for your state and make sure you ask questions about any potential dealbreakers.

Warranty Deeds

A warranty deed transfers a home’s ownership from the seller to the buyer, and usually includes specific promises. For example, this document verifies the seller has the legal right to sell the property.

These documents also generally ensure no undisclosed claims on the property, such as a family member who should have inherited it. In providing a warranty deed, the seller promises to be on the buyer’s side against any claims or disputes that may arise.

If you, as a seller, forego a warranty deed, you could run into trouble finding a buyer. They might even question your right to sell it. While a quitclaim deed is generally a fair alternative, warranty deeds often give more peace of mind.

Quitclaim Deeds

These deeds don’t guarantee the seller’s current ownership. This means that no matter what side of the transaction you’re on, you should only use this if you and the other party already trust each other. Here are some scenarios where you might use a quitclaim deed:

• Transferring a home to family members, such as your child
• Adding your new spouse to the property’s deed
• After a divorce, you might similarly remove your ex-spouse
• Correcting a mistake on the title
• Moving the property to a living trust

You should always use a warranty deed when dealing with a stranger. A quitclaim deed may not be enough to keep the sale secure in everyone’s mind. Regardless, if you end up using one, it’s best to still buy separate title insurance.

Inspection or Appraisal Report

Home inspections or appraisals give sellers a way of proving the property’s worth and that it has no hidden issues. Alternatively, buyers can commission these reports; there could be something the seller is hiding or hasn’t noticed.

While many states require sellers to disclose major issues with properties, several have no such rules beyond federal requirements, such as lead-based paint disclosures. These “buyer beware” (or “caveat emptor”) states are:

• Alabama
• Arkansas
• Georgia
• North Dakota
• Virginia
• Wyoming

An inspection is more important than ever when buying property in these states. You need a full idea of the home’s condition; even a viewing won’t tell you everything. These inspections reveal cracked foundations, corroded pipes, hidden pests, mold growth, and more.

Mortgage Documents

Buying a property usually means financing via a bank, such as in the form of a mortgage. You’ll struggle to fund any property if you can’t secure this. In fact, you likely won’t reach the purchase agreement stage.

If buying a property, you’ll likely provide a pre-approval letter. This means the bank has already approved your eligibility for a loan and will almost certainly grant it upon a formal application.

Only accept a buyer if they provide a pre-approval letter or have already secured a full mortgage from the bank. A sudden, unexpected financing refusal can kill the whole sale.

Final Thoughts

Selling or buying property is often a minefield of documents - one you can only navigate with the right templates. With your paperwork in order, you can move on to the next step: carrying out the transaction.