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Get a Satisfactory Sales Contract

This is a major item when you go to buy a house, and a separate checklist is provided for it later in this chapter. Under no circumstances should you sign a sales contract or pay a deposit until the contract is completely satisfactory in all respects. Contracts are long-winded and boring, but take time to read it.

If you do not understand something in a contract, ask someone about it. Since realtors deal with real estate contracts all the time, your realtor should be able to explain any provision of the contract to you. As you will see, a great deal of the contract is not negotiable or particularly important. The checklist about sales contracts will direct you to the points that are essential for you.

Be Sure That the Seller Endorses the Insurance Policy to Cover You as an Additional Insured until Closing

Through a peculiarity of real estate law, the risk of loss or damage to property once it is under contract but before closing falls, in most states, upon the buyer. If you were to do nothing about this, and for some unforeseen reason damage to a house you had signed a contract to buy occurred, you would be responsible for the loss.

There are two ways to address this matter. The easiest way is for there to be a provision in the sales contract stating that the risk of loss will be borne by the seller until closing. The other way to avoid it is for the seller’s liability insurance policy to be endorsed to include the buyer as an additional insured until closing. Insurance companies generally charge nothing for such endorsements.

 

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