If you`re in the market for a new construction home, you`ll need to understand the ins and outs of the purchase agreement and joint escrow instructions. These documents are essential for both the buyer and the seller, and they outline the terms of the sale and the conditions of the escrow account.
The Purchase Agreement
A purchase agreement is a legally binding contract that outlines the terms of the sale between the buyer and the seller. In the case of new construction homes, this agreement will likely contain language specific to the building process.
One important aspect of the purchase agreement for new construction homes is the completion date. This date will be included in the agreement, and it will dictate when the home must be finished and ready for the buyer to move in.
The agreement will also outline any contingencies that must be met before the sale can be completed. For example, the buyer may need to obtain financing or secure homeowner`s insurance before the sale can close.
Additionally, the purchase agreement will contain information about the earnest money deposit. This deposit is typically a small percentage of the purchase price, and it shows the seller that the buyer is serious about the transaction.
Joint Escrow Instructions
Once the purchase agreement has been signed, the next step is to set up an escrow account. An escrow account is a neutral third-party account that holds the deposit until the sale is completed.
The joint escrow instructions outline the conditions for the escrow account and the disbursement of funds. These instructions are prepared by the escrow agent, who is typically chosen by the seller.
The joint escrow instructions will include information about the disbursement of the earnest money deposit, which is typically held in the escrow account until the sale is completed. If the sale falls through, the deposit may be refunded to the buyer.
The instructions will also outline the conditions for the release of funds to the seller. This may include the completion of certain milestones in the building process or the issuance of a certificate of occupancy.
Finally, the joint escrow instructions will contain information about the fees associated with the escrow account. These may include fees for the escrow agent, title search fees, and other related costs.
Buying a new construction home is an exciting process, but it`s important to understand the legal documents that go along with the transaction. The purchase agreement and joint escrow instructions are essential for both the buyer and the seller, and they ensure that the sale goes smoothly. If you`re considering the purchase of a new construction home, be sure to review these documents carefully and seek the advice of a qualified real estate attorney if necessary.