The real estate industry is full of terms whose meanings aren't necessarily clear to outsiders. If you are buying a home, you will undoubtedly meet some f these terms, for example, in the purchase contract. Here are some of those terms, their meanings, as well as significance:
The effective date is the date on which the last party has communicated their acceptance of the terms to the other party. Once the last party has agreed to the terms and communicated their wishes, then the countdown to various deadlines begins. For example, if you agree to the terms on the contract on 20th of May but doesn't actually inform the buyer or sign the forms until the 26th of May, the effective date is the 26th May and not the 20th of May. Thus, the effective date can also be termed as the date on which the countdown to the various deadlines of the transaction officially commences. For example, if you have 3 days to deposit the earnest money, then the three days will be counted from the effective date.
The kick-out-clause is a clause that allows the seller to "kick out a buyer" and look for other potential buyers if the first buyer doesn't meet some specific terms. It is typically used by property sellers when they encounter a buyer who wants to sell their current home before buying another one. The kick-out-clause gives the buyer a deadline (say 60 days) within which they will lose the right to buy the house if they can't sell their current home. This ensures the seller isn't inconvenienced by a buyer who cannot sell their current home.
A title search is the process of determining who owns (legally) the property; this is the person who can actually give you the title of the property. A title search is necessary because there are properties with multiple owners, missing owners, owners who are minors or liens. These things are not always apparent to potential buyers; the title search gives you an opportunity to find out if the property you want to buy is encumbered by such issues.
Maybe the seller inherited the property from their parents, but the parents also had other kids who also have a claim on the same property. Buying such a property without dealing with all its owners can lead to expensive lawsuits somewhere down the road. Carrying out a title search is the only way to avoid such complications.
The good news is that real estate agents are used to these terms because they meet them in their daily work. Therefore, you don't have anything to worry about as far as understanding your contract is concerned if you have hired an agent.Share
15 December 2017
I have never been one of those people who loves to shop, which is probably one of the reasons I had such a difficult time choosing a house. I wanted to find the perfect little place for my family to grow up, but that was easier said than done. I knew that I wanted to work with a professional who could really grasp my vision and put me in a place that I would love, so I started focusing on finding the right professional. After a brief search, I was able to find a team of real estate brokers that I knew would do a great job. This blog is all about choosing the best real estate agent for your personality.