When you buy a home in Indiana, you will sign a real estate purchase agreement. This legally binding contract will have several provisions in it.
According to Realtor.com, it is crucial for you to read and understand the terms of the purchase agreement to prevent any unwelcome surprises down the road.
Escrow
A third party will retain custody of certain funds and documents in the escrow account, and will distribute the funds when appropriate. For example, the escrow account will hold the earnest money, which is the amount you pay to the sellers to show that you are serious about the purchase. The third party is typically a representative from the holding company, an agent from the title company or an attorney.
Your purchase agreement will tell you who has to pay escrow. It could be you or the seller, or you may split the costs. The expense is usually around 1 percent to 2 percent of the purchase price of the home. If you decide you want to back out of the deal, any money you have paid into escrow will be forfeited to the seller.
Contingencies
You may have to take some action before the sale can go forward. This will be defined in a contingency clause in the agreement, along with the deadline you must meet. For example, you may need to sell your current house before you can complete the deal on the new one. If you are not able to sell your house before the deadline, you may be able to get out of the deal on the new one and get back your earnest money.
Settlement and possession dates
You have probably heard about closing, or settlement date. This is the day everyone involved in the sale do their part to complete the sale. Before you can close on the house, you need to have the home inspection and appraisal done, as well as meet contingencies included in the agreement. So, you want to make sure you set the settlement date far enough in advance that you can take care of all these responsibilities.
The possession date is the day that you can move into the home. You may expect that you will get the keys as soon as you sign the closing papers, but the date could be subject to negotiation. It is typically within 30 days of the closing date, though.
The purchase agreement may contain many other terms and conditions that you will need to review and understand. Therefore, this information should not be interpreted as legal advice.
