No matter the size of the property, buying a property or selling a house or a parcel of land is a transaction that needs to be taken seriously. Since large sums of money and valuable assets are being exchanged, there are necessary documents that need to be filled out correctly. Preparing the required documents is essential to protect the interests of both the seller and the buyer.
So, what are the documents that one should prepare when buying or selling a real estate property? You better read this blog post to know the answer to the question.
Letter of Intent to Purchase the Property
After the property buyer has examined the property and has found it to meet their buying criteria, he/she can now submit a Letter of Intent to buy the property to the seller. It’s a non-binding letter that sets forth the purchaser’s tentative price, amount of initial deposit, mode of payment, due diligence period, and financing details.
The buyer can also include the features of the property that grab his/her attention. The Letter of Intent is like a handshake with the owner of the property. Aside from the details mentioned, it’s a must that the buyer will set a date when the seller should sign the Letter of Intent, providing that the seller will agree to the terms and conditions set by the buyer.
The Reservation Agreement is a document indicating that the seller has agreed to reserve the property to the buyer for a period of time. It also means that the land or house will no longer be available to other potential buyers during the reservation period. The buyer will have to provide a fee for the reservation.
This document states the details of the property, the reservation fee amount, the agreed purchase price, and the period in which the agreed-upon price remains valid. Additionally, it can outline the expiration date of the reservation period if the buyer doesn’t proceed with the purchase and the amount that will be deducted from the reservation fee if the buyer fails to follow through with the deal.
Contract of Sale
The Contract of Sale specifies the final terms and conditions regarding the sale of a real estate property. The seller issues this notarized document to the purchaser once the down payment has been made. The seller, of course, still holds the ownership until the buyer has paid the total price of the property.
Letter of Guarantee From the Bank
The buyer must secure the Letter of Guarantee from the bank where he/she has obtained the loan to finance the purchase of the property. Then, the buyer should submit this document to the seller to guarantee that any costs will be paid by the bank even if the buyer defaults.
Warranty or Grant Deed
The seller, with the help of an attorney or a title company, must prepare the deed after the purchaser has paid the full property price, registration fees, documentary stamp taxes, and other related expenses.
Once the deed has been filed with the county where their property is located, ownership of the property then transfers to the “grantee.”
The warranty or grant deed is a legally binding document that proves that the property owner has transferred the title of the property to the buyer without conditions. This deed is a legal paper that must be signed in front of a notary to verify the identity of the seller.
Certificate of Title
A Certificate of Title is a municipal or state-issued document that proves the right of ownership to a real estate property. The buyer should get a certified copy of this document to authenticate that he/she is the new owner of a house or a piece of land. It also serves as protection of his/her exclusive rights against any third-party claims.
If you’re interested in buying land or a house, you should also request the seller for a Certificate of Title to make sure that the seller is not selling a property that he/she doesn’t own. In this way, you’ll have a hassle-free transaction when going through the process of buying the property.
The new owner of the real estate property must now ask for a Tax Declaration at the local government level. For the appropriate authorities to process this request, the new owner must submit the new title and photos of the property.
After getting the Tax Declaration document, the tax obligations attached to the property will now be under the name of the new owner.
It’s a must for an owner of a real estate property to pay taxes to the government. It’s advisable to hire a tax accountant to make sure that you get the most advantageous tax treatment possible.
If you’re buying or selling a real estate property, make sure to obtain the necessary documents. Check closely to verify the information is correct and that all documents are genuine and notarized when needed. Most importantly, read the information on the documents carefully to protect your interest.