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What is an Earnest Money Agreement and does it have to be in writing?
An earnest money agreement is a written contract between a buyer and a seller of real estate. It is sometimes called a real estate purchase and sale agreement. An earnest money agreement must be in writing, and should include all provisions the buyer and seller think are important and which are required by Washington law. Oral agreements regarding sale of real estate are not enforceable.
Where can I get a form for an Earnest Money Agreement or other Agreements or addenda?
Many buyers and sellers use preprinted forms of earnest money agreements. Forms printed by local real estate agents' associations are frequently used. The preprinted forms can be a good starting point, but you will want to customize the form to your best advantage.
Can I change the language of the preprinted forms?
Yes, you may, and generally should, customize the forms.
Should I have an attorney customize or review my Earnest Money Agreement before I sign it?
Yes. Any purchase or sale of real estate involves a large sum of money. You should be certain you understand all of the language before you sign. Writing clear and enforceable language takes legal expertise.
Doesn't a seller have to give me a form telling me about problems in the house before I buy?
Yes. Most sellers of residential real property in Washington must complete the Real Property Transfer Disclosure Statement. Sellers of vacant land and Personal Representatives of estates are exempt from completing the Statement.
What does the Real Property Transfer Disclosure Statement tell me?
The Statement is a series of questions that the seller answers about the property, including issues related to title, water, sewer and septic systems, structural conditions, electrical and plumbing systems, appliances, heating and cooling systems, homeowners' associations, soil conditions, susceptibility to flooding, and hazardous or toxic substances, including underground storage tanks.
What sort of issues arise when unmarried people buy property together?
Unmarried persons buying property together should consider a written partnership agreement which identifies their rights and duties with regard to the property. Common questions include: Will you have equal or unequal ownership interests in the property? Will your ownership interests change over time? Who pays the loan payments, taxes, and insurance? Who can live in the property? If one party wants to sell their ownership interest, must they first offer to sell to the other partner? What rights does the survivor have in the property if one party dies? If there is a legal dispute, should the party who prevails be allowed to recover their attorneys' fees? If the property is rented, how should rental income and tax deductions be divided?
What is closing and what does a closing agent do?
Closing is the completion of a sale of real estate. Usually closing occurs when the buyer pays the sale price to the seller and the seller delivers a deed to the buyer and the deed is recorded with the County. Usually, a closing agent (often called an "escrow agent") collects the sale price from the buyer and the deed from the seller. When the deed is recorded, the escrow agent pays the sale price to the seller, less the seller's closing costs, such as real estate agents' commissions, Washington real estate excise tax, recording fees, title insurance, and escrow fees.
What documents do I sign at closing?
You will sign many documents prior to closing. Buyers and sellers should ask the escrow agent to email a copy of all closing papers to them and their attorneys several days prior to signing the documents. This allows time to review the documents carefully.
What is title insurance and what does the title insurance report tell me?
Title Insurance is a title company's guarantee that title to a parcel of real estate is affected only by matters shown on a written report. A title company reports only matters shown in the public records of the county where the real estate is located. These matters are called exceptions to title, and include easements, deeds of trust, mortgages, Superior Court judgments, mechanic's and materialmen's liens, and government liens, such as those filed by the Internal Revenue Service, Washington's Department of Revenue, and Washington's Department of Social and Health Services.
What is a deed?
A deed is a legal document used to transfer title to real estate. A deed must be in writing and must be signed by the title holder in the presence of a Notary Public, and the notary's seal must be placed on the deed. The deed must then be delivered to the person who is entitled to receive it. In Washington, the most common deeds are a "statutory warranty deed" and a "quit claim deed." Always consult an attorney before you sign a deed.
What is a "statutory warranty deed"?
A statutory warranty deed is the most common type of deed. By this deed, the grantor (seller) warrants that his or her title to the property is clear of all liens and claims except those stated on the deed, and promises to defend the grantee's (buyer's) title against any other claims against that title made by anyone else.
What is a "quit claim deed"?
A quit claim deed has no warranties of title and no promises to defend title. It says, in effect, that the grantor may or may not have any title to the real estate, but whatever the grantor might have is conveyed to the grantee.
What is a lien?
A lien is a claim against another person's real estate for money owed. Deeds of Trust and mortgages are examples of liens. Tax authorities also have either automatic liens against property for unpaid taxes or have the right to file liens. A County's lien for unpaid property taxes is an automatic lien.
What is a "deed of trust"?
A deed of trust is a type of mortgage. Typically, it is used together with a promissory note signed by the owner of real estate. The owner of the real estate is called "the grantor" of the deed of trust. By signing the deed of trust, the grantor gives an independent party, who is called "the trustee," a power of sale over the real estate. If the grantor does not make payments or perform other obligations due to the lender, who is called "the beneficiary," the beneficiary can direct the trustee to foreclose the deed of trust.
What is the difference between "judicial foreclosure" and "nonjudicial foreclosure"?
A deed of trust can be foreclosed by the Trustee using a power of sale. This is called "nonjudicial foreclosure." A deed of trust can also be foreclosed by bringing a lawsuit against the grantor and other parties with interests in and claims to the real estate, and this is called "judicial foreclosure."