EP 17 - Real Estate Purchase Contract Part 4 - a podcast by Brian Cook And Kindra Cox

On the March 26, 2020 episode of The Brian and Kindra show, they discussed parts of the residential real estate purchase contract they use for the majority of their transactions. 
  In the spring time in the great state of Oklahoma, buyers often ask “what happens of the house we just made an offer obtains severe storm damage?”  The contract Brian and Kindra use addresses the risk of loss and states that risks continues to rest on the seller until transfer of title or transfer of possession.  Buyers are strongly advised to have their insurance in place the day of closing and funding and are typically required to do when obtaining a loan.  
  Next on the Oklahoma Residential Purchase contract deals with title work and abstracting.  The seller pays for the abstract to be brought up to date.  (The abstract is the history of the property from statehood.)  Once the abstract is updated, it is sent to a title attorney who will review it and determine if the title is clear and marketable.  From this clear title opinion, a title insurance policy can be issued.  Title insurance guarantees the attorney’s title opinion until the day that you take ownership of it.   There are owner policies and lender policies.  Brian and Kindra suggest verifying that the buyer is obtaining their own policy as well as the lender so that their coverage is still in place when they pay off their mortgage. 
 Obviously, a property is unlikely to sell if there are any title defects.  The contract recognized this and places the burden to clear any defects on the seller.  When this happens, it is helpful to have a Realtor and a closing company to assist you as many defects are common and someone with some experience generally has knowledge of the path to make the corrections.  The contract allows for a delay in closing to correct any title defects.  A 30 day delay is very common.
 The contract then allows for the buyer to choose if they will have a survey or a mortgage inspection report to be completed and added to the abstract for title purposes.  Brian and Kindra have noticed that not all title companies require this, so it is important to do a little research before one makes a decision.  Brian recommends filing a survey any time one is completed.
  Also addressed in the contract is how assessments, taxes and prorations are to be handled.  On almost every settlement statement you will find the sellers giving a credit to the buyer for their portion of the year's taxes.  Some buyer may not notice this proration as they have their taxes escrowed  with their mortgage company.  Also prorated can be special assessments, home owner association dues, rents, etc.
 The contract also gives opportunity for the purchase of a residential service agreement and who is responsible for the purchase.  Most buyers find the term ‘home warranty’ more understandable than ‘residential service agreement’.    A home warranty can provide coverage on systems in the home such as heating and air, water heaters, some plumbing issues.  Then, when a covered problem occurs, the owner of the policy can pay a deductible instead of the entire repair invoice.  These policies can vary greatly in what they cover and coverage amounts, so it is wise to review them carefully before choosing one.
  Also addressed in the purchase agreement are how to handle a dispute.  The contract says the parties will attempt to mediate the dispute instead of going directly to the court system.
  Brian and Kindra recognize this a lot of information to process!   Buying or selling real estate can be very intimidating, but one step at a time and it’s all quite manageable!  As always, ask your Real Estate Professional to assist you as you navigate the search for your new home purchase or sale.

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