SELLERS CHECKLIST OF DOCUMENTS

Home Inspection. We strongly recommend having a home inspection performed by a member of ASHI (American Society of Home Inspectors). These are the type of inspections contemplated by the home inspection contingency in the standard PAR (Pennsylvania Association of Realtors) agreement of sale. Anecdotally, we find that the single biggest reason that a transaction falls apart is due to home inspection issues. Whether intentionally or not, buyers seem to use the home inspection contingency  (which strongly favors buyers) to routinely renegotiate transactions. 

In most circumstances, you as the seller, agree to a price and terms, one of which, usually permits the buyer to take 15 or more days to complete an inspection. During this time, your home’s status is “Contingent” in the Multi-list. Agents typically are not going to show homes with such a status for a number of reasons, including for example, the fact that it can take hours to prepare and present an offer and then they would have to knock the current buyer out of the contract, which is not always so easy to do. So, your home is effectively off the market for several weeks, or more, after which the buyer (who usually has the option of walking away) wants thousands or tens of thousands of dollars off the sale price or as concessions. 

It’s better to spend the money up front for an inspection and disclose it with the seller disclosure form. You can permit buyers to do their own inspection (and we think that is a good idea because it can limit liability after the sale if a problem comes to light ) but with your delivery to the buyer of the inspection, you can draft a further provision in the agreement making it clear that the home inspection contingency does not apply to anything disclosed on the Seller Disclosure or the Home Inspection. This means that they can’t validly point to any of those items in a home inspection, that they obtain, as a reason to terminate the transaction.

If you are inclined to make repairs discovered in the inspection, you now have time to seek out the appropriate persons to make the repairs and possibly obtain a lower price than if you wait for the buyer to make the demand for repairs and have to respond within a matter of days under the standard contract.

Appraisal.  Do you have a prior appraisal with useful information such as square footage? Obtaining a new appraisal can be a valuable tool. As mentioned earlier, neither an agent, nor a real estate broker can give a legal opinion of value. (Pennsylvania has recently recognized a Limted BPO, which is a broker opinion of value, for financial institutions and cannot be used in a number of circumstances. Separate training must be obtained and must be co-signed by a broker or associate broker). An appraisal provides strong independent support of a Seller’s asking price and can keep price negotiations rooted in facts related to similar properties and not emotions. 

Local government issues: Real Estate and Local Income tax receipts, dye test and building inspection. Sometimes Sellers are given notice during the transaction by the closing company that a certain real estate tax hasn’t been paid from a prior year or that the tax or municipal lien information won’t be released because the Seller owes local wage taxes. This can happen if an owner is self-employed and the township doesn’t have complete records. It can usually be worked through but a call early on to the local tax collector can catch this issue

If you have the last 3 years real estate tax receipts that could save you some money. Give those to the closing company as soon as you are given their information so they don’t order a tax certification.

Additionally, many townships require a dye test to make certain that storm water isn’t running into the sewage system. There is usually a fee and enlisting a plumber to throw dye on the roof to see where it drains is part of the process. If the storm water drains into the sewage system, at times, the fix is to divert the gutters to drain elsewhere.

Some townships also require a building or zoning compliance certification. If you made improvements to your home but you didn’t (or your contractor didn’t) obtain the required permits, you could be fined and the buyer may want additional assurances related to that work. A call to the township building inspector’s office can tell you if these are required however if you don’t call and they are needed the closing company will let you know. As we have been saying, detection of these types of requirements early makes for a smoother transaction.

Owners Title Insurance Policy and Copy of your Deed. The most recent copy of your deed is helpful in order to make certain that the correct parties sign the listing agreement and will be able to sign the new deed at the time of the sale. Sometimes there are co-owners such as parents who cosigned at the original purchase or in the case of an estate or company owned property, specific documentation and authorized parties are needed. A copy of the deed can be obtained at the Recorder of Deeds. If you believe that you own oil, gas and mineral rights a special search needs to be completed in order to verify your ownership, this can be costly and take additional time. You need to know what you are selling when you enter into an agreement with a buyer. Additionally, if obtaining mineral rights is important to the buyers, they have the ability to request a search of those rights and to purchase insurance.

A copy of the title insurance policy that you obtained when you purchased the property can be useful in the event that a mortgage shows up in a new search of the title which mortgage has not been satisfied on the record at the courthouse. The title insurance underwriter that issued the policy might agree to indemnify the new title company that is conducting the closing for the sale of your home. However, this doesn’t necessarily cure the problem and the attorney for the buyer may object and require that the lien either be satisfied or a Quiet Title Action be undertaken since the indemnification may only kick the can down the road and present an issue for the buyer when they attempt to resell your home. If you can’t find your title insurance but have the final settlement sheet, the name of the title agency that issued the insurance should be listed, and you could contact them for a copy. The deed also would have a Notary who could be contacted in search of the policy.

Liens: Federal Income taxes owed, child support, second mortgages only due upon the sale of your home, past due HOA fees, judgments and more. If you owe federal income taxes from prior years, the IRS may have put a lien on your home which would need to be satisfied at closing. Child Support which is past due is also a lien that would need to be paid. Occasionally owners obtained special financing that may only be due upon the sale of the home, without having to make regular payments, these can be overlooked by the owner. Or owners may have purchased something like solar panels and the selling company puts a UCC lien on the property. Past due homeowners association fees and certain judgments will need to be paid. The point is, you should make certain that you will clear enough from the sale to satisfy all debts. If you are in doubt about possible liens, mortgages or other encumbrances on the property, you should obtain at least a “current owner” title search showing liens incurred during your period of ownership. 

Mortgage payoffs and shortfalls in your escrow account. Double check your mortgage payoffs, payoffs are higher than your unpaid balance due to interest the accrues from the date of your last payment. Also, if your real estate taxes or insurance have increased, you could have a negative balance in your escrow account which would need to be paid upon closing.

Inheritance Tax. In the event that an owner of the property passed away, inheritance tax could be owed and if an estate has not been opened for that person, that would need to be done as well. Closing companies will want to escrow an amount that is not insignificant if proof of payment of the inheritance tax is not provided and this could mean that the Seller has to pay funds to close.

Business lines of credit or mortgages. If you own a business and have any business loans, banks will at times place a lien against your home as collateral. It is wise to check with the bank and arrange for a Release if this is the case in your situation. 

Survey. Although surveys are not usually required in the purchase of a home, we always recommend that they be obtained. If you have a prior survey, even if changes to the property have occurred, it is a good idea to offer it to your buyer along with any explanations about changes. The more information that you can provide to the buyer about the property and invite them to obtain their own information, including a survey, the less likely you will be liable for misrepresentations after the sale. We often get calls from disgruntled buyers about property line problems which, had they obtained a survey, could have been avoided.

Warranties/ Home Warranty. Some warranties are transferable, to the extent that they are, you should offer these to the buyer so that they have recourse to the third party, and not you, after closing. You as a seller can also offer to purchase a Home Warranty for the buyer in the event that they experience an issue with certain appliances or other items after closing. Of course, warranties will vary and you should ask about pricing and coverages.

Water and Gas Line Protection Plans. If you discover an issue with your sewer or water lines, check to see if you previously purchased coverage through one of your utility companies. You could also call your home insurance agency to check for coverage.

Seller Disclosure. Our mantra is Disclose, Disclose and Disclose. Sellers are required to complete a detailed disclosure, the form of which is prescribe by Pennsylvania law and is standardized. Your agent should not complete the form. The careful completion of this form can be valuable in insulating you from liability to the buyer after closing. The failure to disclose is one of the most often brought claims against Sellers and it carries with it, your responsibility for triple damages and the buyer’s attorney fees. If you need to add extra pages to the disclosure, take the time and give as much detail as you have available about the condition of the property. There are a few exceptions to this requirement to disclose.

Government Notices. If you received a notice of change in your real estate tax assessment or of an eminent domain proceeding, you will need to provide that information to any buyer.

Condominium Resale Package. Sellers of condominiums and homes in plans with a homeowners association, need to provide buyers with a Resale Package from their homeowners association. The buyers have 5 days from receipt to terminate the transaction should they desire. The information includes the monthly dues and notice of any special assessments. It should also include information about the insurance on the project but if that is not included you at least want to obtain the contact information from the association for the insurance company. The management company or association will have fees for this and you should be prepared to pay that up front. (Note if you are a purchaser you should also ask for minutes from the last 2 meetings and review them for issues or lawsuits against the association as this could result in issues in obtaining a mortgage). 

We suggest that you also obtain a copy of the document that created the condominium (the Declaration) and the plot plan or survey showing the location of the unit and verifying the deed book and volumes match to verify the unit is within the Condo or Plan. Believe it or not there have been instances where the unit is in a different plan or not in the plan at all.

Utility Bills. Sometimes buyers will it will be important to buyer to know the cost of utilities. If possible, put together a file for the utilities for the past twelve months.

Non-US Citizens. Foreign Investment in Real Property Tax Act requires 10% withholding from the sale proceeds of non-US Citizens. 

 Insurance and Flood Insurance. It is important to ask your insurance agent if there are any impediments for your buyer to obtain the best insurance rates and if you are in a flood plain that requires flood insurance. If flood insurance is required, the application should be started early because there is a 10-14 day notice requirement for properties in a flood zone that could delay the closing and map changes can increase premiums.

Solar Panels. these may not be owned and a separate financing statement may be filed against the title to the property and should be investigated early to determine the proper way to handle this.

On lot sewage and/or water. Seller should consider getting tests early on these to avoid practical problems of access and timing as provided in the agreement of sale. 

Internet of Things: Prepare to notify Buyer of passwords for internet controlled devices and to remove private information.