Articles   Things to know when selling your home written by the members of the Real Estate team This article is designed to help homeowners understand the steps involved in selling their home. Whenever you have a question it is best to discuss issues with your realtor or attorney. You listed your home – what now? You made the decision to sell your home and have taken the first step by listing it with a local realtor who will help you with the sale of probably your biggest investment. The next step is choosing an experienced real estate attorney who will guide you through the legal maze and help make the sales transaction proceed smoothly. The Binder (or Memorandum of Sale) A Binder, also referred to as Memorandum of Sale, is a document presented by the buyers’ realtor to outline an offer. It customarily includes information like the names of the sellers and the buyers, their attorneys, the purchase price, proposed closing date, any contingencies, including mortgage contingency date, if applicable, inclusions and exclusions, and any inspections required. The general purpose of a Binder or Memorandum is to confirm the agreed terms and provide information to all parties including the sellers’ attorney who will prepare a contract for delivery to the buyers’ attorney. Please be aware that a Binder or Memorandum of Sale may be considered a legally binding contract. Mortgage Contingency A mortgage contingency clause in the contract allows the purchasers to terminate the deal without penalty if they cannot secure a mortgage commitment by a specific date. There may be a small fee of $250 to $350 payable by the buyers for the sellers’ preparation of the contract. Contract The contract is a formal agreement describing the terms and conditions of a sale in greater specificity with protections for the buyers’ and sellers’ legal rights. It is typically drawn up by the sellers’ attorney and revised by the purchasers’ attorney. The final contract should include any negotiated items. Down Payment It is customary in this area of the country to pay 1% of the purchase price when making the offer and to pay an additional 9% at signing of the contract. Generally, the deposit checks can be personal. The disposition of the down payment should be discussed with your attorney. Timing Once an offer is made there are no specific requirements as to when a seller must respond, although it may be spelled out in the binder or memorandum. Once an offer is accepted, a contract is drawn up and signed by both parties. The date for the closing is mutually agreed upon between buyers and sellers. Existing Survey The sellers might be asked if they had a survey done during their ownership. If so, be prepared to provide your attorney with it. Owners’ Affidavits at Closing At closing your attorney will prepare a number of affidavits and forms including assurance that you are not a “foreign person” (who will be subject to special tax withholding), that no one can claim a mechanic’s lien on your property, and that you have provided your social security number. Oil Tank (in-ground) Even though there is no legal requirement in Connecticut to do so, most buyers want to make sure that there is no contamination from an in-ground oil tank on the property (abandoned or still in use). Most sellers, therefore, have in-ground oil tanks removed and a soil test conducted before putting their home on the market. Otherwise, the issue is likely to be a subject of negotiation. Conveyance Taxes A conveyance tax is a tax imposed on each conveyance when the consideration for the interest or property conveyed equals or exceeds two thousand dollars. Conveyance taxes are paid by the sellers upon recording of the deed within the town in which the real property, or any part thereof, is situated, no later than ten days following the conveyance. Furthermore, as property is located in both a municipality and the state, there are two conveyance taxes - municipal and state; each tax, however, is computed differently. Consult your attorney to find out how much taxes you will have to pay at closing. Sale Proceeds After the closing your attorney will pay off any outstanding mortgages, state and town conveyance taxes, and brokers’ commissions from the proceeds of sale. The amount of real estate brokers’ commissions will have been specified in your listing agreement. Adjustments at closing Adjustments for real estate taxes, sewer assessments and service, water, oil and propane are included in the closing costs. Final Walk-Through After you have vacated the premises the buyers will conduct a final walk-through with the realtor before the actual closing takes place. This walk-through assures the buyers that the property is in the same condition it was when the offer to purchase was made or the building inspection was completed. The closing The closing customarily takes place at the sellers’ attorney’s office on the date agreed to in the contract. The deed conveying your interest in the property is exchanged for the sale price, as adjusted, paid in good bank funds. As soon as this transaction has taken place and the deed has been recorded by the buyer’s attorney (generally the same or the very next day) at the town clerk’s office the transaction has been completed. _______________________________________________ This article is not intended as legal advice. We encourage you to consult with your attorney in connection with any real estate decision.