Recording-2025-03-10T12:42:24.182Z

Home Inspection Contingency

• Right to Walk Away: Homebuyers can back out of a purchase if they find issues during a home inspection that they don't want to fix or can't afford.

• Request for Repairs: Buyers can ask the seller to address issues, such as repairing a leaking roof or HVAC system, or provide a credit toward these repairs at closing.

Market Conditions and Contingencies

• Hot Real Estate Market: In competitive markets with many offers, buyers may decide to waive contingencies, making their offers more attractive to sellers.

• Appraisal Contingency: If a property is appraised below the contract price (e.g., $390,000 instead of $400,000), buyers can request a price reduction or walk away with their deposit.

• Waiving Appraisal Contingency: Buyers assume the risk of paying the difference if the property appraises lower than the contract price. For instance, a buyer would need to pay an additional $10,000 out of pocket if the appraisal comes in low.

Buyer Scenarios

• Considerations When Waiving Contingencies: It may be safe for buyers with significant down payments to waive appraisals, unlike first-time homebuyers relying on low or no down payment loans, who should typically never waive notification.

Home Warranties

• Purpose of a Home Warranty: Sellers may offer home warranties, but these do not absolve them from disclosure requirements regarding the home’s condition.

• Coverage: Home warranties often cover major appliances and may ease buyer concerns over repairs while still leaving the seller accountable for property disclosures.

Foreclosure and Short Sales

• Foreclosure: Occurs when a borrower defaults on a loan, with lenders reclaiming the property.

• Short Sale: When sellers owe more on the mortgage than the house is worth, they can negotiate with the lender to sell at a loss, avoiding foreclosure.

Legal Structure of Ownership

• Title Theory vs. Lien Theory States: In a lien theory state, the borrower holds title during the loan term, while a title theory state means the lender holds legal title until the mortgage is paid off.

• Equity and Redemption Rights: Borrowers in lien theory states often retain rights to redeem their equity during foreclosure proceedings.

Wills and Estates

• Types of Wills:

  • Simple Will: Outlines straightforward distribution of assets.

  • Testamentary Will: Established after someone's death, determining asset distribution via family decisions.

  • Holographic Will: Handwritten and lacks witnesses.

  • Oral Will: Not valid for real estate transactions.

• Living Will: Outlines medical instructions; a medical power of attorney is needed for healthcare decisions in emergencies.

Intestate vs. Testate Succession

• Testate: Dying with a valid will, where an executor is appointed.

• Intestate: Dying without a valid will, leading to the state's control of asset distribution.

Probate Process

• Definition: The legal process that administers a deceased person's estate, paying off debts before asset distribution.

• Claims Against Estate: Creditor claims can affect asset availability for heirs; this does not occur with trusts.

Property Taxes

• Ad Valorem Taxes: Based on the assessed property value; calculated by local governments for revenue purposes.

• Special Assessments: One-time fees for specific projects that directly benefit property owners, like repairs to sidewalks or roads.

Capital Gains and Deductions

• Capital Gains Tax: Home sellers can exclude up to $250,000 ($500,000 for married couples) on primary residence sales, provided they meet ownership criteria.

• Tax Deductions for Homeowners: Includes mortgage interest (up to $750,000), property taxes (up to $10,000), and specific home modifications for medical purposes.

Home Equity Lines of Credit (HELOC)

• Function: Allows homeowners to borrow against accumulated equity in their property, often used for home improvements or emergencies.

Real Estate Transactions and Costs

• Discount Points: Buyers can purchase points to lower their mortgage interest rates (1 point = 1% of the loan amount), which can affect long-term costs; usually advised against in high-rate scenarios.

• Closing Costs: Typically around 3% of the total home price, may include required points.

Foreign Investment in Real Estate

• Conditions for Foreign Buyers: Must demonstrate income and employment history; a 15% withholding tax may apply on sales.