Safeguards are in place when purchasing new construction
Q. We are purchasing our first home, which is a new house being built by a local builder. We are not using an attorney. We are close to the closing and we see many things that still need to be finished. It doesn't look like everything will be done before the closing. How do we make sure these things will eventually be addressed by the builder?
A. Most new builders will invite you to participate in a pre-closing walk-through. During the walk-through, you and the builder's representative will note all items that need to be either completed or repaired. This is often referred to as the punchlist. These items often include paint issues, defects with walls and trim, issues with fixtures, etc. Most builders will attempt to resolve all punchlist items within 30 days after closing.
It's important to take your time and be thorough during this walk-through. If you spot a dent in the wall after you move in and it's not on the punchlist, the builder may claim you caused the damage during your move and will refuse to repair it.
If a major item cannot be completed prior to closing, such as landscaping or cement pouring, often money is held back from the seller to guarantee these items will be completed. In some instances, if the uncompleted item is significant enough, the closing will be delayed either because the village won't issue a certificate of occupancy or the lender will refuse to fund the loan.
Q. About 10 years ago, I borrowed a fairly large sum of money from a relative to complete some much needed repairs on my home. He insisted I sign a note and mortgage before he would lend me the money.
It's taken awhile, but I have finally paid him off. Is there something I need to do now to prove the loan is paid off?
A. Two things. One, you want your relative to write "Paid in Full" across the original note, sign it and return the original note to you. Two, presuming the mortgage was recorded, you want your relative to return the original mortgage to you and to prepare and execute a Release Deed. A Release Deed is a document that is recorded against your property that removes the mortgage lien that was recorded when the loan was made.
I would suggest contacting a real estate attorney to ensure this is handled properly. Failure to properly document your satisfaction of this loan could cause you major headaches down the road when you attempt to refinance or sell your home.
Q. We have made it known we will be selling our house soon, though we still have not decided where we will go. A neighbor came to our door a couple days ago and told us her niece is looking for a home in this area and would be very interested if we were ready to sell. We spoke to the niece; it appears she is financially qualified and that we will be able to agree on a price.
This is all great as we would avoid the sales commission but my wife is scared to death that we won't be able to find somewhere to live by the time we have to move. Is there some way to structure the contract to state that if we can't find a suitable property, we can back out of the deal?
A. Sure. Include a contingency in the contract that states just what you suggest. "In the event seller is unable to find a suitable property within X days of the acceptance date, seller may serve notice of this fact on purchaser, the contract will terminate and all deposits will be returned to purchaser."
• Send your questions to attorney Tom Resnick, 345 N. Quentin Road, Palatine, IL 60067, by email to tdr100@hotmail.com or call (847) 359-8983.