The process of buying a home not only involves a significant investment, but also the formalization of a long-term commitment. To ensure that this process is carried out effectively and securely, it is essential to have adequate documentation to support the transaction.
The main purpose of all documentation in the home buying process is to avoid possible conflicts in the future. Clarity in the agreements reached is essential to ensure that both parties fulfill their obligations.
Initial purchase documents: the basis of the agreement
When the purchase process begins, it is essential to have the proper documentation to formalize the transaction. The parties involved, i.e. buyer and seller, must understand the different types of documents that can be used to establish the terms of the transaction. Here, we will highlight four of the most common documents:
The reservation document is a tool that allows you to secure the property you wish to purchase for a specific period of time. This is achieved through the delivery of a fixed amount, which will later be deducted from the final purchase price.
The reservation document is especially useful when you have found the property you want and want to guarantee its availability for the time necessary to complete the formalities.
The earnest money contract is usually signed when you are interested in a property and you want to prevent another potential buyer from getting ahead of you and acquiring the property. On many occasions, we may be in search of a mortgage or in the negotiation phase with banks.
When you sign the earnest money contract, the property is no longer available on the market, which allows you to concentrate on the financial procedures with greater security. There are different types of arras:
- Penitential pledges: these grant both parties the option not to formalize the purchase contract in the future. In the event that the seller is the one who withdraws from the transaction, he will be obliged to return to you the economic amount of the deposit, multiplied by two. On the other hand, if it is you as the buyer who decides not to complete the purchase of the property, you will lose the amount paid as earnest money as compensation for your withdrawal.
- Confirmatory Deposits: money given on account of the final price of the property, whereby both parties confirm their intention, and the money given is part of the final price.
- Penalty Deposits: their main purpose is to guarantee the purchase and sale of a real estate property. In this modality, if any of the parties involved in the purchase contract does not comply with its obligations, in addition to the economic compensation that is also contemplated in the penitential deposit, the injured party has the right to demand the performance of the contract and compensation for the damages suffered.
Other documents required for the purchase of a home
In addition to the documents related to the purchase, there are additional documents that are necessary to ensure a safe and secure purchase without surprises.
The Nota Simple that is requested at the Land Registry contains relevant information about the property you are going to buy. This document includes information such as the ownership of the property, existing encumbrances, and any legal limitations or restrictions on the use of the property.
The Nota Simple is crucial to understand the legal situation of the property and to make sure that there are no legal impediments to the purchase.
Certificate of the community of owners
The certificate of the homeowner’s association reveals whether there are any outstanding dues or fees to be paid. This document is very important so that before signing any contract you are aware of the financial obligations associated with the property.
Real Estate Tax (IBI)
IBI is a local property tax. To ensure that you do not inherit unwanted tax debts, it is important to ask the owner for a certificate from the town hall confirming that all IBI receipts have been paid, not just the last receipt.
Minutes of the community of owners
With the minutes of the community of owners you can know the agreements on the distribution of expenses, the approval of payments, projects of future works, problems of coexistence, you can anticipate possible problems.
It is essential to have a list of supplies, such as water, electricity… This detail is crucial to ensure that there is no outstanding debt with the supplying companies.
The order note is a document that allows to verify if there are abusive clauses in the contracts related to the purchase of the house. In this way, you will be protecting your interests, as it gives you the opportunity to carefully review and analyze all the terms and conditions of the agreement.
At this point it is important to understand that, as a buyer, you should not take any unnecessary risk. The formalization of a purchase contract is best done under the guidance and supervision of a professional in real estate transactions.
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