When your Realtor prepares an offer to purchase a home for you it is done on a form called the deposit receipt.
If the offer is accepted the deposit receipt becomes the contract the spells out all of the terms and conditions for the purchase transaction.
The deposit receipt is in fact a receipt for your deposit, often called the earnest money deposit. The deposit is not given to the seller, but instead is held by a third party (usually the Realtor) until your offer is accepted. It is then deposited into your escrow account.
Over the years the real estate deposit receipt has continued to evolve. Years ago a deposit receipt was a purchase contract that consisted of one page. It outlined the purchase price, initial deposit, balance of down payment, and loan amount that was to be obtained to pay the balance of the funds required to close the escrow.
Today, there are two or three publishers of deposit receipts that are most commonly used in the State of California. These deposit receipt contracts have as many as ten or twelve pages and are very detailed.
They are designed to spell out the complete understanding of both the buyers and sellers respective responsibilities throughout the escrow period, until the close of escrow. It becomes the road-map for navigating your way through the escrow process.
Today’s deposit receipts, or purchase agreements, also include the terms of the financing, the time periods for obtaining financing and removing financing as a contract contingency. It also details the disclosures that the sellers are to provide and the amount of time allowed to approve or disapprove them. In addition, it provides for a multitude of inspections and the time frames for approving or disapproving the property condition. All of the buyers and sellers responsibilities are clearly defined.
When all parties to a transaction follow the terms set forth in the deposit receipt, the odds of a smooth transaction increase. Problems begin when the contract is not strictly followed. Transactions can get out of control very quickly when there is deviation from the contract.
The Realtor’s job is to help their client understand and follow the provisions set forth in the deposit receipt.
This article was published in the San Francisco Examiner.
Articles are written by Eric Ruxton and Larry Aikins, owners of Terrace Realty, Inc. and Terrace Associates, Inc. in Redwood City. Terrace has been in business more than 55 years and in addition to being an independent Brokerage Company, also owns and operates rental properties.