Essential Terms of the Offer

Massachusetts housing inventory remains low and projections for 2014 suggest that it will remain a Seller’s Market. Buyers need to be prepared to make an offer as soon as possible once they have found a property they love. In the current, time sensitive real estate market, Buyer’s are submitting offer’s without consulting with an experienced real estate attorney. Before you make an offer, please ensure that at least the following provisions are included:

1. Home Inspection: Buyer’s should ensure that a provision provides that the purchase is subject to at least a satisfactory home inspection before a certain date. However, depending on the nature of the property the Buyer may wish to include other inspection provisions. The date should be at least 7 days after acceptance of the offer.

2. Safe Harbor: If a Buyer or Seller does not wish to be bound by the terms of an offer if a Purchase and Sale Agreement (P&S) is not executed. They should ensure that there is a provision which specifies that the intent of the offer is to memorialize business points, creates only the obligation to negotiate in good faith towards a P&S by a certain date and that the offer does not create any other legally binding obligation on the part of either party.

Critical: This is an ESSENTIAL TERM as this will protect each party in the event that a P&S cannot be effectively negotiated after the offer is accepted.

3. Financing Commitment: Buyer should ensure that he has a sufficient period in which he can obtain a written commitment for financing (at least 30 days). However a Buyer should investigate funding and determine, at least preliminary, what they qualify for before an offer is submitted.

The P&S supersedes an offer and it is therefore not necessary to duplicate the terms of the P&S within the offer. However the terms of the offer should provide enough structure and protection to each party so that they can truly negotiate in good faith and work towards finalizing the transaction.

I wish you all the best,

Josh Robbins

Of Counsel

Scafidi, Juliano & Hurd, LLP

310 Washington Street, Suite 201

Wellesley, Massachusetts 02481

(T): 781-210-4710

(F): 781-210-4711

(E): jrobbins@sjh-law.com

Disclaimer:

This Blog/Website is made available for educational purposes only as well as to give you general information and a general understanding of the law, not to provide specific legal advice (or any legal advice).  This blog is for general informational purposes only. Joshua N. Robbins, Esq. does not offer or dispense legal advise through this blog or by emails to or from this site. By using this Blog / Website you understand that there is no attorney-client relationship between you and the Blog/Website publisher.  The Blog/Website should not be used as a substitute for competent legal advice from a licensed professional attorney in your state or jurisdiction. This blog is not published for advertising or solicitation purposes. Regardless, the hiring of a lawyer is an important decision that should not be based solely upon a Blog / Website. The information on the blog may be changed without notice and is not guaranteed to be complete, correct or up-to-date. While the blog is revised on a regular basis, it may not reflect the most current legal developments. The opinions expressed at or through the blog are the opinions of the individual author and may not reflect the opinions of the firm or any individual attorney.

To ensure compliance with requirements imposed by the U.S. Internal Revenue Service in Circular 230, we inform you that any tax advice contained on this site (including any links provided) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the U.S. Internal Revenue Code or (ii) promoting, marketing, or recommending to another party any transaction or matter addressed in this communication.

Beyond the Home Inspection: Additional Inspection Issues

My last post discussed the importance of Buyers hiring a licensed professional to perform a home inspection after they have signed the Purchase and Sale Agreement. However, depending on the property, it may be appropriate to perform other inspections. Below is a list of other inspections / issues that Buyers and Realtor’s should consider when purchasing a home:

1. Pest Inspection:  All properties should be inspected for pests. Termites, carpenter ants and powder post beetles all pose a threat to homes. If a Buyer is obtaining financing through government sponsored loan program they will likely need to perform such an inspection as a condition of obtaining funding.

BEWARE: Evidence of pest infestation may be difficult to find during the winter or if portions of the building are inaccessible.

2. Potable Water Test: If the home is served by a private well the Buyer should obtain a water quality analysis and pressure test. Such a test will help determine whether the home has “hard” or “soft” water, verify the level of bacteria is within the limits set by state and federal government and reveal the chemical composition of the water.

BEWARE: Water testing may take ten (10) days or more so your attorney should include a water test contingency to the purchase and sale agreement.

3. Septic System: The Seller is responsible for obtaining a septic system report. The local board of health maintains a list of individuals licensed to perform such inspections.

BEWARE: A septic system or cesspool that passes inspection during favorable conditions may not be adequate for the Buyer’s purposes.

4. Lead Paint: Buyer’s purchasing homes built before 1978 should have the property tested for lead paint; especially when children under the age of six will be living in the home. The Seller or Broker is required to provide potential Buyer’s with notification packets prepared by the Massachusetts Department of Public Health (DPH).

5. Accessory Structures: The condition of garages, elaborate landscaping, tennis courts, pools, and docks should be carefully examined as a home inspection may not address the conditions of such facilities. The condition of such facilities may not alter the price of the property but the subsequent replacement or repair work should be ascertained so that the Buyer can determine if they truly wish to move forward with the purchase.

I wish you all the best,

Josh Robbins

Of Counsel

Scafidi, Juliano & Hurd, LLP

310 Washington Street, Suite 201

Wellesley, Massachusetts 02481

(T): 781-210-4710

(F): 781-210-4711

(E): jrobbins@sjh-law.com

Disclaimer:

This Blog/Website is made available for educational purposes only as well as to give you general information and a general understanding of the law, not to provide specific legal advice (or any legal advice).  This blog is for general informational purposes only. Joshua N. Robbins, Esq. does not offer or dispense legal advise through this blog or by emails to or from this site. By using this Blog / Website you understand that there is no attorney-client relationship between you and the Blog/Website publisher.  The Blog/Website should not be used as a substitute for competent legal advice from a licensed professional attorney in your state or jurisdiction. This blog is not published for advertising or solicitation purposes. Regardless, the hiring of a lawyer is an important decision that should not be based solely upon a Blog / Website. The information on the blog may be changed without notice and is not guaranteed to be complete, correct or up-to-date. While the blog is revised on a regular basis, it may not reflect the most current legal developments. The opinions expressed at or through the blog are the opinions of the individual author and may not reflect the opinions of the firm or any individual attorney.

To ensure compliance with requirements imposed by the U.S. Internal Revenue Service in Circular 230, we inform you that any tax advice contained on this site (including any links provided) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the U.S. Internal Revenue Code or (ii) promoting, marketing, or recommending to another party any transaction or matter addressed in this communication.