MICHAEL R. KADOCH PA.
PREMIER LAW FIRM
What To Expect In A Residential Transaction
Buying a home involves several stages. Below is a list of the more common steps during a residential transaction.
Your situation may vary and it is best to contact your real estate professional for more information.
Common Steps for Buying a Home
- Select real estate agent
- Determine needs and wants
- Determine financial eligibility
- Discuss finances
- Obtain prequalification
Find a Home
- Select an affordable property that fits your needs
- Discuss offer with agent
- Buyer reviews contract with agent
- Agent presents offer to selling side
Present and Negotiate Offer
- Buyer prepares “earnest money” deposit (typically, 1 to 3% of purchase price)
- Seller accepts offer (Seller can accept your offer, counter your offer, or reject your offer)
- Deposit “earnest money” into escrow
- Escrow will order Preliminary Report
Submit Loan Application
- Conduct Physical Inspection of property by a qualified inspector
- Approve seller’s Transfer Disclosure Statement
- Approve Preliminary Report
- Conduct property appraisal
- Obtain loan approval from lender
- Perform termite inspection and certification
Obtain Homeowners Insurance
- Select insurance company and coverage
- Insurance will be in effect at close of escrow
If applicable, obtain Home Warranty insurance Sign Documents
- Michael Kadoch receives signed documents
- Need cashier’s check or money transfer prior to closing date
Closing the Escrow
- Deposit down payment and closing costs to escrow
- Lender sends balance of purchase price
- Deed is recorded with County Recorder’s office
- Get your keys and move in!
What Is Title?
Land is as old as time itself. Like the structures built on it, land is “real property”, meaning that it can’t be moved or hidden. Because real property is valuable, many people want to claim ownership. “Titles” came about as a means of legally proving who owns the property.
Through the year, a parcel of property may change hands dozens of times. At any point along the chain of ownership, problems may arise that cast a “cloud” over a title, putting a claim of ownership in doubt. Examples include:
- Long lost relatives or past owners could show up, sometimes from long ago, with a claim to the property that supersedes yours.
- Sometimes people fraudulently sell houses that don’t belong to them. For example, the husband of a divorcing couple could forge the signature of his wife, and abscond with the proceeds of the sale. In a court of law, the rights of the wife could be upheld and the property could go to her, no matter how much money an unsuspecting purchaser had placed in the house.
- To obtain loans, people often use property as collateral (security against nonpayment). If someone doesn’t pay back a loan, the lender holding the lien has a legal right to sell the property to get the money to repay the loan—even if the house has since sold to a new owner. The lien on the house if the lender’s claim to the property as payment on the debt. Unless the debt is repaid and the lien released, the lien stays with the house even when it changes ownership.
- With today’s booming refinance and home equity markets, lenders’ interest in properties has increased exponentially and both lenders and county recorders are challenged to keep up with the documentation. It’s more likely than ever that an unrecorded or unreleased interest in your property could be out there, making title insurance more important now than ever.
- An easement is a right to use the land of another for a special purpose. For example, the city may have plans to build a sewer line sometime in the future. If the sewer line runs through the back of your yard, and if the city has an easement on the underground portion of your property, this might cause you to lose your prize roses, or prevent you from building a pool in your back yard.
- If a homeowner fails to pay property taxes, local, state or federal tax authorities can obtain a lien on the home, which gives the government a claim to that property in case of nonpayment of debt. If the owner sells the home without settling the tax lien, the tax authority can legally ask the new homeowner to pay the original homeowner’s back taxes. And if the new homeowner fails to comply, he could lose his new home.
How do you protect yourself from mistakes, fraud and other complications?
Through title insurance. It protects your claim to your property from potential problems caused by irregularities that may have occurred in the past. Dollar for dollar, it’s one of the most cost-efficient forms of insurance for home-owners. A one-time premium covers you against legal problems that could cost tens of thousands of dollars—and even the loss of your home.—for as long as you own your property.
What Is a Title Search?
A title search is a means of ascertaining that the person who is selling the property really has the right to sell it, and that the buyer is receiving all of the rights to the property that he or she is paying for.
Here are some of the items examined during a title search.
- Chain of Title — A history of the ownership of a particular piece of property, the chain of title describes who bought it from whom, and when. The information may be derived from public records—usually a County Clerk’s or Recorder’s Office—or obtained from title plants privately owned and maintained by a title company. Because the history of title goes back many decades, these records can take the form of index cards, punch cards, tract books, or one of today’s digital formats. Throught the years, our title plants capture the data from these various sources to create records that show the title histories on hundreds of thousands of properties.
- Tax Search — To determine the present status of general real estate taxes against the property we conduct a tax search. If a buyer purchases property with unpaid and past due taxes or assessments against it, he or she is likely to find a government body —the village, county or state—placing the property up for sale to pay those taxes or assessments. Title insurance protects the buyer against loss from unpaid and past due taxes and assessments.
- Report on Possession — We often send inspectors to look at the property to verify the lot size, check the location of improvements, look for evidence of easements that are not shown of record and check on who is living there.
This eyewitness account supplements the information learned from the title search. For example, the inspector might detect an unrecorded easement or other evidence of outstanding rights that could affect the owner’s title and possibly the value and intended use of the property.
- Judgment and Name Search — One of the most important parts of the title search is to determine if there are any unsatisfied judgments against the seller or previous owners which were in existence while they owned the property. A judgment is a general lien against the debtor’s real estate and constitutes security for any money owed under the judgment. The real estate can be sold to satisfy the judgment.
It is extremely important to be sure that a title is not subject to judgments against the seller or previous owners. Title insurance provides this protection. A judgment against a person named Smith may affect the title of a seller named Smith, depending on whether or not they are the same person. So we examine all possible variations of the name.
For example, the name Smith might be spelled Schmidt, Schmid, Schmidtt, Schmidz, Schmied, Schmiedt, Smid, Smythe, and so on.
The task is to determine which of these applies to the owner in question. First names have to be checked, too. There are 25 foreign forms of John, including Johann, Jehan, Hans, Shaun, Gudi, and Efom.
- Commitment — When these searches have been completed, Commonwealth Title issues a commitment to insure, stating the conditions under which we will insure the title. The buyer and seller and the mortgage lender can proceed with the closing of the transaction after clearing up any defects in the title which may have been uncovered by the title search and examination.
What Is Escrow?
An escrow is an arrangement in which an objective third party, called an escrow holder, holds legal documents and funds on behalf of a buyer and seller, and distributes them according to the buyer’s and seller’s instructions.
People buying, selling and refinancing real estate often open an escrow for their protection and convenience. The buyer can instruct the escrow holder to disburse the purchase price only upon the satisfaction of certain prerequisites and conditions. The seller can instruct the escrow holder to retain possession of the deed to the property until the seller’s requirements, including receipt of the purchase price, are met. Both rely on the escrow holder to carry out faithfully their instructions relating to the transaction and to advise them if any of their instructions are not mutually consistent or cannot be carried out.
An escrow is convenient for the buyer and seller because both can move forward separately but simultaneously in providing inspections, reports, loan commitments and funds, deeds, and many other items, using the escrow holder as the central point of contact. If the instructions from all parties to an escrow are clearly drafted, fully detailed and mutually consistent, the escrow holder can take many actions on their behalf without further consultation. This saves much time and facilitates the closing of the transaction.
Buyer's Financial Responsibilities
Purchasing Your Home: Costs and Fees
There are various costs and fees involved in purchasing a home. The following list depicts an example of the costs you may need to cover. Keep in mind that responsibility for some of these charges can be negotiable and the responsible party may vary from area to area. Ask your real estate agent about applicable costs in your area.
- Title insurance premium (according to contract)
- Escrow fees (according to contract)
- Document preparation (if applicable)
- Notary fees
- Recording charges for all documents in buyer’s names
- Termite inspection (according to contract)
- Tax proration (from date of acquisition)
- Homeowner’s transfer fee
- All new loan charges (except those required by lender for seller to pay)
- Interest on new loan from date of funding to 30 days prior to first payment date
- Assumption/change of records fees for takeover of existing loan (if applicable)
- Beneficiary statement fee for assumption of existing loan
- Inspection fees (roofing, property inspection, geological, etc.)
- Home warranty (according to contract)
- City transfer/conveyance tax (according to contract)
- Fire insurance premium for first year
Relocation - Moving Check List
|The following check list will assist in making the relocation process more organized. An important aspect of a successful move is pre-planning.Find out what to do before the move and things you may overlook on moving day. Also, prepare yourself with the minimal necessities during the moving process. Finally, plan ahead and prepare your new residence for your arrival.|
What to do before moving day
Specific Tasks You Don’t Want to Overlook
Last Minute Tasks for the Day of the Move
Responsibilities at your future address
Keep Your Children Safe in Their New Environment
- Educate Your Children Encourage your children to memorize their new address and phone number prior to the move. Make sure you practice with them every opportunity you have and reward them. Visit their new school the day before their first day to familiarize them. As a result, they will feel more comfortable on their first day.
- Become Familiar with the Area It is important to familiarize your children with surrounding streets, stores, parks, playgrounds etc. Walk through the neighborhood to show them acceptable routes they are allowed to travel and acceptable places they may visit, such as a park or a playground. To help them learn quickly, practice the name of the streets and pick a landmark to associate the street with. Discourage your children from taking shortcuts. Encourage them to always stay on the main roads. Finally, establish a safe place or person they can go to for help in case you are not available to assist them.
- Meet the Neighbors Introduce yourself and your kids to the new neighbors. By doing this, you establish a favorable beginning relationship and create the opportunity of introducing your kids to their kids.
- Instruct Your Children to Check First Your kids will most likely make friends in the area. Instruct them to ask permission before they go anywhere with their new friends, including in their homes.
- Establish an Emergency Plan Create a list of emergency phone numbers and place in a designated area. Include emergency numbers such as fire, police, poison control, hospital, etc. Also create a list of your pager, work, and cellular phone numbers. Designate two other people to contact for help if your children cannot contact you.
- Reinforce “Home Alone” Rules Your kids should never open the door for someone you don’t know, whether or not you are home. In addition, they should make sure that all doors and windows remain locked.
- If a stranger should telephone and ask for personal information, warn your children against revealing any personal information. Instruct them to tell the caller you are not available and take a message.
- Reinforce the Rules Your children will follow these rules if they are reminded on a regular basis. Walk the neighborhood with your kids now and then. Have them recite and spell their name, address and phone number a few times a week. Have them point out the location of emergency numbers.
As long as these rules are adhered to, your family will enjoy a safe and comfortable environment!