In the Contract to Buy and Sell, the official document binding a property sale between buyer and seller, there are many deadlines. The total number depends on how the contract is written and what type of property is being transferred. However, both buyers and sellers are responsible for certain deadlines throughout the contract. Below, we’ll highlight some of the most common deadlines found in a Colorado real estate contract.
What Are Deadlines in Real Estate Contracts?
Deadlines in real estate contracts guide the buying and selling process to ensure that items such as acceptance, earnest money, inspection, appraisal, disclosures, loan approval, HOA documents, insurance, and more are addressed before closing. Each requirement has a specific date, which the buyer or seller is responsible for completing. This keeps the transaction transparent and the closing on track. There are no required time allowances for any of these dates, many which differ depending on closing date, as they are negotiated between buyer and seller before signing the contract. Depending on the type of property, as well as the buyer and seller’s personal situations, there are items that may or may not apply. For instance, vacant land will have different dates and deadlines than a new construction townhome, a 50-year old home, or a commercial building. Below are seven of the most common dates and deadlines for residential real estate in Southwest Colorado.
Buyer’s Responsibilities
- Appraisal: Almost always required by the lender if the buyer is using a loan, the buyer and their lender are responsible for scheduling an appraisal to ensure the property is worth the purchase price. If it’s a cash purchase, this is not required but may be recommended
- Loan: There are two loan deadlines. The Loan Terms deadline allows the buyer to review and accept the components of their loan including interest rate, monthly payment, mortgage insurance, etc. The second is the Loan Availability deadline, which ensures that the buyer is able to get the loan. This typically happens after the appraisal comes in favorably and the buyer’s financials and employment verification meet the lender’s requirements
- Inspection: It is highly recommended that buyers hire a home inspector to check the property’s condition, including foundation, roof, plumbing, electrical systems, HVAC, and any other potential issues, as well as environmental concerns such as radon. The home inspection may identify additional items that warrant evaluation by a specialized contractor.
- Insurance: It’s the buyer’s responsibility to research and secure home insurance, or feel confident they can obtain a suitable policy by this deadline. In years past, this was typically done shortly before closing because home insurance was not difficult to obtain. However, with the prevalence of natural disasters, specifically wildfires and hail in Colorado, starting this process early is increasingly important.
Seller’s Responsibilities
- Title: The title company will facilitate the record title search which will not only verify the true ownership but also include recorded easements, liens, and restrictions. There may also be off-record title matters such as unrecorded easements, access agreements, HOA restrictions, or other information the seller has regarding the property that will not be found in public records.
- Due Diligence: Major repairs, insurance claims, and other similar items the buyer should be aware of are shared in the Due Diligence timeframe. There is a section of the contract where the buyer may request specific information as applicable.
- Disclosures: The seller fills out a property disclosure which includes any known facts or issues with the property, the source of the advertised square footage, and the water source.
Objections, Resolutions, and Termination
Within most of the deadlines are associated objection, resolution, or termination options. These three deadlines follow a specific event such as record title, inspection, or new loan application. An objection is an opportunity for the buyer to submit a concern in writing and, in the case of an inspection, propose a solution, such as a credit or repair. If there is an objection, the seller is given an opportunity to agree or counter before the resolution deadline. If the parties do not reach an agreement, or the buyer doesn’t withdraw their objection by this deadline, the contract automatically terminates. However, if there is no concern and the buyer doesn’t object, the objection and resolution deadlines can pass without any further action. The termination deadline allows the buyer to terminate the contract, only if an objection was made, and receive a refund of their earnest money.
Using a real estate professional is important when buying or selling property, as they will help guide you through the intricate details of a real estate contract. Please contact The Durango Team at The Wells Group for assistance buying or selling real estate.
