In the typical residential real estate sales transaction, a buyer offers to purchase property from a seller. After negotiating the price and terms, the buyer and seller sign an offer to purchase and contract, and the buyer gives the seller (or the seller’s broker) an earnest money deposit to show good faith in the transaction. Under the standard form Offer to Purchase and Contract, the buyer may also give the seller a “due diligence fee”for the buyer’s right to conduct due diligence, including any inspections, loan applications, and appraisals, for a negotiated period of time (the “due diligence period”). Prior to the expiration of the due diligence period, the buyer may terminate the contract for any reason. After the expiration of the due diligence period, the buyer’s right to terminate is severely limited.
A real estate “closing” is the final step in the transaction. At closing, the buyer pays the purchase price to the seller (usuallywith the proceeds from a loan), and the seller gives the buyer a deed transferring title to the property to the buyer. Also, funds are paid to an appraiser, home inspector, and/or other service providers, and to pay off banks or others who may have claims against the property. This pamphlet focuses on questions frequently asked about residential real estate closings.
The questions raised are of special concern to real estate purchasers. Consequently, they are posed from the standpoint of the purchaser
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