Pinal REVISED BUYER BOOK - Title Security · Application interview and lender obtains all pertinent...

P r e s en t e d b y T i t l e S e c ur i t y A g e n c y

REALTOR Phone#: __________________ Mobile#: __________________ Fax#: __________________

LOAN OFFICER Company: ____________________ Phone#: ____________________ Mobile#: ____________________ Fax#: ____________________

TITLE AGENCY Escrow Officer: _________________ Phone#: _________________ Fax#: _________________ Address: _________________ Escrow#: _________________

INSURANCE COMPANY

Agent: ___________________ Phone#: ___________________ Policy#: ___________________

HOME WARRANTY COMPANY Company: __________________ Phone#: __________________

HOME INSPECTION COMPANY Company: ___________________ Phone#: ___________________

HOMEBUYING PERSONNEL


TABLE OF CONTENTS

1. Why Use REALTOR®? a. Real Estate Agency Disclosure & Election b. Buyer—Broker Exclusive Employment Agreement 2. Loan Information a. Maximize Your Chances b. Loan Process c. Loan Information d. LSR 3. Finding The Perfect Home a. Home Comparison Checklist b. MLS Abbreviations c. Making an Offer d. Get Protection e. Home Warranty f. Home Warranty Companies 4. AAR Forms a. Buyer Broker Exclusive Agreement b. Real Estate Agency Disclosure c. Attention Buyer d. Buyer Advisory e. Residential Resale Real Estate Purchase Contract f. Lead Based Paint Disclosure g. What is Lead Based Paint? h. Environmental Hazards i. Residential Pool Safety

5. Escrow & Title a. What is Escrow? b. Opening Escrow c. Closing Costs d. What Do I Pay For? e. Closing the Deal f. Closing Escrow g. What to Expect at Closing h. Life of an Escrow i. Title Insurance j. What You Don’t Know Can Hurt You k. It Can Happen l. Holding Title m. Owner Policy Comparisons 6. Moving Tips a. Helpful Hints for Moving b. 6 Week Checklist for a Good Move c. Final Steps to Ownership d. Important Phone #’s e. Pinal County Information f. Glossary of Terms 7. Maps a. Area Map b. Area Boundaries c. School District Map


1. WHY USE A REALTOR®?


Buying a home calls for your informed decision based on the knowledge, judgement and guidance of a real estate broker or agent -- particularly on who is a REALTOR®. Unlike many real estate agents who are simply licensed by their state to do business, REALTORS® have taken additional steps to become members of their local Board of REALTORS® and have agreed to act under and adhere to a Code of Ethics. This membership obligates them to be fair to all parties involved in this transaction, be it the buyer, seller or cooperating agent. Be sure your real estate agent is a REALTOR®.

REALTORS® do more… much more…than you think.

· A REALTOR® can help you determine how much home you can afford. Often a REALTOR® can suggest ways to accrue the down payment and explain alternative financing methods. · A REALTOR®, in addition to knowing the local money market, also can tell you what personal and financial data to bring with you when you apply for a loan. · A REALTOR® is already familiar with current real estate values, taxes, utility costs, municipal services and facilities, and may be aware of local zoning changes that could affect your decision to buy. · A REALTOR® can usually research your housing needs in advance through the Multiple Listing Service -- even if you are relocating to another city.

WHY USE A REALTOR®

· A REALTOR® can help familiarize you with the closing process. · A REALTOR® shows you only those homes best suited to your needs -- size, style, features, location, accessibility to schools, transportation, shopping, and other personal preferences. · A REALTOR® often can suggest simple, imaginative changes that could make a home more suitable for you and improve its utility and value. · A REALTOR®, though generally acting as an agent for the property owner, is bound and obligated by the Code of Ethics to give fair treatment to all parties in the transaction. · A REALTOR® is sensitive to the importance you place on this major commitment you are about to make. Count on this real estate professional to facilitate negotiation of an agreement satisfactory to both seller and buyer. If you see a home as one of your most important investments, the REALTOR® you work with could be one of your most valuable resources. As a home buyer, you can expect the commitment, integrity and expertise that you’ll find in REALTORS®. It is the business of a REALTOR® to work with you by understanding your home buying needs and showing you properties that fit your lifestyle and budget.

Working with a REALTOR® - Buying a Home


2. LOAN INFORMATION a. Maximize Your Chances b. Loan Process c. Loan Information d. LSR


With inventory diminishing daily and multiple offers becoming common, it is of great importance that you position yourself to have the “BEST CHANCE” to get your offer accepted. You enhance your chance of getting the home of your choice by doing the following: GET PRE-QUALIFIED FOR YOUR PURCHASE: This takes very little time and is based on unverified information. This identifies the price range for which you qualify and which fits your lifestyle. GET PRE-APPROVED FOR THE PURCHASE: This takes a bit more time but is of great value. This is based on verified information and credit approval. SUBMIT A STRONG COMPETITIVE OFFER: Submit the offer as if there will be multiple offers in an escalating market. INCLUDE SUBSTANTIAL EARNEST MONEY DEPOSIT: Acceptance of an offer is sometimes determined by the amount of the deposit. A larger amount may signify a bigger commitment to the seller. MINIMIZE OR ELIMINATE CONTINGENCIES: The fewer contingencies, the stronger the offer. MAKE A BUYER PROFILE AVAILABLE: Time on the job, flexibility, reason for purchasing the seller’s home, etc. BE PREPARED TO PREVIEW A NEW PROPERTY QUICKLY: Homes sell sometimes in hours. Be prepared to make decisions quickly and be accessible to change the terms instantly.

MAXIMIZE YOUR CHANCES


PREQUALIFICATION/INTERVIEW Application interview and lender obtains all

pertinent documentation.

ORDER DOCUMENTS Order credit report, appraisal on property,

verifications of employment, mortgage and/or rent, and funds to close, landlord ratings,

and commitment of title insurance.

LOAN SUBMISSION The loan package is assembled and submitted

to the underwriter for approval.

DOCUMENTATION Supporting documents come in.

Lender checks on any problems. Requests for any additional items are made.

LOAN APPROVAL

Parties are notified of loan approval and conditions.

DOCUMENTS ARE DRAWN

Loan documents are completed and sent to Lawyers Title. Borrowers come into Lawyers Title

for final signatures.

FUNDING Lender reviews the loan package.

Funds are transferred by wire or check to Lawyers Title.

Lawyers Title records the Deed and Deed of Trust with the County Recorder’s Office.

DISPERSAL OF FUNDS

ESCROW IS NOW OFFICIALLY CLOSED!!!!!!!!

THE LOAN PROCESS


The following information will be needed at your loan application: • Copy of accepted earnest money contract. • Residence addresses for past 2 years (landlord addresses if applicable). • Name and address of employers for past 2 years with W-2’s, 1099’s, etc. • Pay stubs showing gross monthly salary and all deductions, for 1 month period. • Names, addresses, account numbers, and balances of all checking and saving accounts. • Last 2 statements on all checking, savings, investments, IRA’s, etc., accounts. • Names, addresses, account numbers, balances, and monthly payments on all open charge accounts. • Addresses, loan information, and lease agreements on all other real estate owned. • Estimated value on all furniture, clothing, jewelry, and other personal property. • Face value and cash value of life insurance, retirement accounts, and profit sharing accounts. • Certificate of Eligibility and/or DD214 for VA loans. • Money for credit report and appraisal. • If self-employed, 2 years tax receipts with all schedules, YTD P&L statement with balance prepared by a CPA. • If incorporated, 2 years corporate tax returns. • Divorce decree, if applicable. • Complete bankruptcy papers, if applicable.

LOAN INFORMATION


LOAN STATUS REPORT


3. FINDING THE PERFECT HOME a. Home Comparison Checklist b. MLS Abbreviations c. Making an Offer d. Get Protection e. Home Warranty f. Home Warranty Companies


Deciding on Your Dream Home While your real estate agent will offer professional assistance, only you can determine your home purchase priorities. Taking the following into account may help in selecting the right home for you. What features are you looking for?

Do you have the design of a house in mind, such as traditional, southwestern, or modern? What is the least amount of bed and bathrooms you will need? Are amenities such as garage space or pool a priority? Is low-maintenance landscaping a concern?

The price is right…or is it? Most buyers’ first consideration is price. As you begin to view homes, make sure you can comfortably manage the monthly payments and that you will have enough cash to pay transaction costs and moving expenses.

Location, Location, Location!

Your decision on the neighborhood should depend largely on the size and age of your family, your income, and your personal preferences. Also, how accessible are major roads and highways? Are public services such as street cleaning, garbage collection, police and fire protection without charge? How does the cost of municipal taxes compare to similar municipalities? What is the standing of area schools?

Condition & Comfort

While a thorough home inspection will reveal the home’s integrity, considerations such as a new roof, electrical and plumbing upgrades, and efficiency of heating and cooling systems should weigh significantly in your selection of a property.

Does it Have Resale Potential?

Since most first-time homebuyers expect to purchase a bigger and better home someday, resale value should be an important factor in decision-making. Consider the following purchase and resale tips before buying:

• It's best to buy a modest home in the nicest neighborhood you can afford, rather than the most expensive home in a modest neighborhood.

• Two-bedroom/one-bath homes usually have less appeal; three and four bedroom houses are most popular among buyers

• Curb appeal is very high on a buyer’s list. Homes with a charming, well-maintained “street-view” appearance are easiest to resell.

FINDING THE PERFECT HOME


COMPARISON CHECKLIST

The House

Roof Condition ____________ ____________ ____________

Overall Exterior Condition ____________ ____________ ____________

Garage Size ____________ ____________ ____________

No. of Bathrooms ____________ ____________ ____________

No. of Closets ____________ ____________ ____________

No. of Bedrooms ____________ ____________ ____________

Central Air Conditioning

Living Room

Fireplace

Separate Dining Room

Family Room

Kitchen Eating Area

Refrigerator

Stove/Oven (Gas/Electric)

Home Buyer Checklist 1 2 3

Property Address ____________ ____________ ____________

Asking Price $___________ $___________ $___________


RESIDENTIAL LISTING ABBREVIATIONS


MAKING AN OFFER How much?

To ensure your offer is based on local market conditions, your agent will provide you with comparable sales information as well as comparable listings. A second criteria is making a sensible offer is determining how fast homes are selling, and whether they are selling for close to the asking prices. In hot markets, otherwise known as a 'seller's market' --well-priced homes sell for very close to the list price -- usually within five percent. In slower-paced markets where prices are flexible, the gap between the list and sale price could be more than five percent.

Once you make your offer, one of three things will happen: 1) It will be accepted, 2) It will be rejected, or 3) you will receive a counteroffer.

If all goes well and the offer is accepted, you’ll want to then proceed with a Home inspection. If it's rejected, you can still come back with a higher offer if you're really interested in the house. Fortunately, your agent is a professional negotiator and will work earnestly to bargain the deal in your favor.

Contingencies A contingency is a specified condition that must be met before a contract is legally binding. The two most common contingencies in home purchasing are 1) the house must pass the home inspection, and if not, the contract could become void, and 2) the borrower must obtain specific financing from a lend-ing institution, but if the loan can't be procured, the buyer won't be bound by the contract. Essentially, a contingency protects you, the buyer, from being obligated to purchase a house based solely on an accepted offer.

Earnest money Once an offer and its contingencies are agreed upon, the next step is to provide earnest money, proving the buyers commitment to purchasing the home. Also known as money given by a buyer to a seller as part of the purchase price, it binds a transaction and assures payment. Your escrow officer at your Title Company usually holds the deposit, and the amount will become part of your down payment.

Withdrawing an offer Once you make an offer, can you take it back? In most cases the answer is yes, right up until the moment it is accepted, or even in some cases, if you haven't yet been notified of acceptance. However, ask your Realtor for professional advice on this matter.


Got Protection? To protect owners in the event of catastrophe, real estate insurance can be the best buy of a lifetime. There are varied insurance categories associated with home ownership, including these major types:

• Title insurance: Protecting owners in the event that title to the property is found to be invalid, coverage includes two types of policies; "lenders" policies, which protect buyers up to the mortgage value of the property, and "owners” policies, which protects owners up to the purchase price.

• Homeowners' insurance: Required when you take ownership,

coverage provides fire, theft and liability protection for the home as well as its contents.

• Flood insurance: Issued by the federal government and generally

required only in high-risk flood areas, this insurance provides as much as $250,000 in coverage for a single-family home, plus an added $100,000 for its contents. Your agent will explain which locations require such coverage.

How do you get insurance? It’s never too soon to shop around and compare insurance quotes. Be sure to

ask your agent about limitations, costs, and deductibles, and most importantly, if your homeowner’s insurance plan incorporates a guaranteed replacement cost policy. Since the Insurance company requires a couple of days to secure the policy, you should take care of this during the inspection period.

THE HOME INSPECTION


THE HOME INSPECTION

Your Home Inspection The AAR Residential Resale Real Estate Purchase Contract is intended to be a binding contract; therefore, the importance of performing your own inspection of a home before you decide to purchase it cannot be understated. Remember that while this is only a precursor to the professional inspection that will soon follow, your personal inspection allows you to pin-point first-hand any potential problem areas that could cause you to change your mind about whether or not you buy the house.

In general, you are looking for such details as: structural cracks; musty smells; rotting floor-boards; roof leaks; peeling paint; cracked windows; broken appliances (including air conditioning and heating units); quality of tile, carpeting, and other flooring material; and/or any aesthetic (such as floor plan convenience, landscaping, or general home maintenance). In particular, you will want to make note of any serious flaws about which you will want to notify the professional home inspector.

Professional Home Inspection The purchase contract gives you the right to make any inspections of the property/premises for defects of any kind. Buying a home without having it professionally inspected first is about as risky as engaging in a game of Russian roulette. A professional inspection gives you more detailed information than an appraisal; information you need to make a wise decision. In a home inspection, a qualified inspector takes an in-depth, unbiased look at your potential new home to: (1) evaluate the physical condition (structure, construction, and mechanical systems); (2) identify items that need to be repaired or replaced; and (3) estimate the remaining useful life of the major systems, equipment, structure, and finishes. The inspection gives a detailed report on the condition of the structural components, exterior, roofing, plumbing, electrical, heating, insulation and ventilation, air conditioning, and interiors.

It is your responsibility to be an informed buyer!


Buyer’s Reasonable Disapproval After any/all desired inspections have been performed, your Realtor may ask you to complete an AAR Buyer Inspection Notice and Seller’s Response. You have three options on this form: (1) Premises Accepted- No Repairs Requested; (2) Repairs Requested; or (3) Cancellation. Remember, a professional home inspection report is not necessarily a “fix-it” list for the seller. However, if you determine repairs are deemed necessary, you and your Realtor should submit all reasonably disapproved items to the seller. The seller has the option to either repair those items or to refuse to do so. If the seller refuses to do so, you may cancel the contract or proceed without any obligation on the part of the seller to make the repairs. Your Realtor will be your greatest asset in handling all the negotiations for you in regard to reasonably disapproved items.

Home Warranty Unlike home owner’s insurance, which is only used in the event of a catastrophe such as fire or storm damage, a home warranty is a renewable contract that combines the best characteristics of an insurance policy and a service contract. A home warranty plan covers home owners against unexpected failures of built-in mechanical systems and appliance failures due to normal wear and tear. A home owner need only notify the warranty company of a problem. The warranty company selects a local, licensed and bonded service technician to diagnose and do the repair. The home owner merely pays a small deductible ($35-$50) for the service. The initial policy period is for one year; however, renewals are available. Ask your Realtor for specific information and read the policy for coverage and limitations.

THE HOME INSPECTION


4. AAR FORMS a. Buyer Broker Exclusive Agreement b. Real Estate Agency Disclosure c. Attention Buyer d. Buyer Advisory e. Residential Resale Real Estate Purchase Contract f. Lead Based Paint Disclosure


SAMPLE CONTRACT


BUYER ADVISORY

Provided by the Arizona Association of REALTORS® A real estate agent is vital to the purchase of real property and can provide a variety of services in locating a property, negotiating the sale, and advising the buyer. A real estate agent is generally not qualified to discover defects or evaluate the physical condition of property; however, a real estate agent can assist a buyer in finding qualified inspec-tors and provide the buyer with documents and other resources containing vital information about a prospective property. This advisory is designed to make the purchase of real property as smooth as possible. Some of the more common issues that a buyer may decide to investigate or verify concerning a property purchase are summarized in this Advisory. Included in this Advisory are: (1) common documents a buyer should review; (2) physical conditions in the property the buyer should investigate; and (3) conditions affecting the surrounding area that the buyer should investigate. In addition, a buyer must communicate to the real estate agents in the transaction any special concerns the buyer may have about the property or surrounding area, whether or not those issues are addressed in this Advisory. REMEMBER: This Advisory is supplemental to obtaining professional property inspections. Professional property inspections are absolutely essential: there is no practical substitute for a professional inspection as a measure to discover and investigate defects or shortcomings in a property. COMMON DOCUMENTS A BUYER SHOULD REVIEW The documents listed below may not be relevant in every transaction, nor is the list exhaustive. Unless otherwise stated, the real estate agent has not independently verified the information contained in these documents. Purchase Contract Buyers should protect themselves by taking the time to read the real estate purchase contract and understand their legal rights and obligations before they submit an offer to buy a property. MLS Printout A listing is an agreement between the seller and the listing agent and may authorize the listing agent to submit information to the Multiple Listing Service (“MLS”). The MLS printout is similar to an advertisement and contains various abbreviations and symbols. Neither the listing agreement nor the printout is a part of the purchase contract between the buyer and seller. The printout contains a limited description of a property, such as its size, encumbrances, utilities, amenities, etc. The information was probably secured from the seller, the builder, or a governmental agency, and could be inaccurate, incomplete or an approximation. Therefore, the buyer should verify any important information contained in the MLS. The Subdivision Public Report Developers are required to give new home buyers in a subdivision an Arizona Department of Real Estate (“ADRE”) Public Report. The Public Report should be read before signing any contract to purchase a new home. Although some of the information becomes outdated or is no longer accurate, subsequent buyers may also benefit from reviewing the Public Report. Public Reports dating from January 1, 1997, are now or will be available on the ADRE website at http://159.87.254.2/publicdatabase/. The purpose of the Public Report is to point out material information about the development. For example, the section of the Public Report entitled “Adjacent Lands and Vicinity” will disclose adjacent land uses that may be of concern. Note, however, that the Public Report is prepared by the subdivider, could be inaccurate, and should be verified.

Initials _________ / __________


BUYER ADVISORY The ADRE does not independently verify the information in the Public Report. Additional information about the Public Report may be found on the ADRE website at www.re.state.az.us/checklist.html. Seller’s Property Disclosure Statement (“SPDS”) Most sellers provide a SPDS. This document poses a variety of questions for the seller to answer about the property and its condition. A buyer should carefully review the SPDS and verify those statements of concern. The ADRE advises: “Read the seller’s property disclosure report, and check every item on it. Ask to see receipts for repairs to the home. . . . Look for stains on the ceilings or carpets that might indicate water damage. Read the purchase contract carefully to determine if there are any dead-lines for challenging the seller’s disclosure report or for having your own inspections conducted.” www.re.state.az.us/checklist.html. A real estate agent is not responsible for verifying the accuracy of the items on the SPDS. If the real estate agent is aware of a misrepresentation, the agent is required to disclose it to their client, but the agent is not required to confirm all the information on the report. Remember, your review of the SPDS is not a substitute for professional inspections. Covenants, Conditions and Restrictions (“CC&Rs”) The CC&Rs are recorded against the property and generally empower a homeowner’s association to control certain aspects of property use within the development. By purchasing a property in such a development, the buyer agrees to be bound by the CC&Rs. Thus, the CC&Rs form an enforceable contract. The association, the property owners as a whole, and individual property owners can enforce the contract. It is essential that the buyer review and agree to these restrictions prior to purchasing a property. The ADRE advises: “Read the deed restrictions, also called CC&Rs (covenants, conditions and restrictions). You might find some of the CC&Rs are very strict, especially those addressing landscaping, RV parking, play equipment, satellite antennas, and other common amenities — particularly if the subdivision is governed by a homeowner’s association.” www.re.state.az.us/checklist.html. A short but informative document on the purpose and effect of CC&Rs may be read at www.realtor.com/BASICS/condos/ccr.asp. Buyers should consult legal counsel if uncertain of the application of particular provisions in the CC&Rs. Homeowner’s Association (“HOA”) Governing Documents In addition to CC&Rs, HOAs may be governed by Articles of Incorporation, Bylaws, Rules and Regulations, and often architectural control standards. The HOA is in place to enforce these rules and to preserve the value of property in the condominium or planned community. Read and understand these documents. Also, be aware that some HOAs impose fees that must be paid when the property is sold, so it is important to ask if the purchase of the property will result in any fees. Condominium and planned community HOAs are also regulated by Arizona statutes; however, they are not under the jurisdiction of the Department of Real Estate. If you have questions about your rights and remedies regarding homeowner’s associations or community associations, read the information provided at www.re.state.az.us/communityassoc.html. HOA Disclosures If purchasing a resale home in a condominium or planned community, the seller (if fewer than 50 units in the community) or the HOA (if there are 50 or more units) must provide the buyer with a disclosure containing a variety of information, including the principal contact for the association, assessments, the money held by the association as reserves and, if the statement is being fur-nished by the association, a statement as to whether the records of the association reflect any alterations or improvements to the unit that violate the declaration. See www.azleg.state.az.us/ars/33/01260.htm and www.azleg.state.az.us/ars/33/01806.htm for the laws detailing these requirements.

Initials _________ / __________


BUYER ADVISORY Title Report or Title Commitment The title report or commitment contains important information and is provided to the buyer by the title/escrow company or agent. This report or commitment lists documents that are exceptions to the title insurance (Schedule B Exceptions). Schedule B Exceptions may include encumbrances, easements, and liens against the property, some of which may affect the use of the property, such as a future addition or swimming pool. Make sure you receive and review all of the listed documents. Questions about the title commitment and Schedule B documents may be answered by the title or escrow officer, legal counsel, or a surveyor. General information regarding title issues may be found at www.alta.org/consumer/questions.cfm or obtained from the title/escrow company employed in the transaction. Loan Documents Unless a buyer is paying cash, the buyer must qualify for a loan in order to complete the purchase. A buyer should complete a loan application with a mortgage broker or a mortgage banker before making an offer on a property if at all possible and, if not, immediately after making an offer. It will be the buyer’s responsibility to deposit any down payment and insure that the buyer’s lender deposits the remainder of the purchase price into escrow prior to the close of escrow date. Therefore, make sure you get all requested documentation to your lender as soon as possible. For information on loans and the lending process, visit the following websites: Ginnie Mae: www.ginniemae.gov/2_prequal/intro_questions.asp?Section=YPTH HUD: www.hud.gov/ Mortgage Bankers Association: www.mbaa.org/ National Association of Mortgage Brokers: www.namb.org/ Home Warranty Policy A home warranty may be part of the sale of the home. Buyers should read the home warranty document for coverage and limitation information. Be aware that pre-existing property conditions are generally not covered under these policies. Affidavit of Disclosure If the buyer is purchasing five or fewer parcels of land (whether improved or vacant), other than subdivided land, in an unincor-porated area of a county, the seller must furnish the buyer with an Affidavit of Disclosure. A sample form is located at www.aaronline.com/documents/affidavit.aspx. Lead-Based Paint Disclosure Form If the home was built prior to 1978, the seller must provide the buyer with a lead-based paint disclosure form. Information about lead-based paint may be obtained at www.re.state.az.us/leadfacts.html or www.epa.gov/lead/nlic.htm. County Assessors/Tax Records The county assessor’s records contain a variety of valuable information, including the assessed value of the property for tax purposes and some of the physical aspects of the property, such as the reported square footage. The date built information in the Assessor’s Records can be either the actual or effective/weighted age if the residence has been remodeled. All information on the site should be verified for accuracy. Information is available on county websites: Coconino: http://co.coconino.az.us/assessor.aspx Maricopa: www.maricopa.gov/assessor and http://treasurer.maricopa.gov/parcels/ Pima: www.co.pima.az.us/navigate.aspx?L1=1&L2=11 Yavapai: www.co.yavapai.az.us/departments/DepartmentIndex.asp Other counties: www.az.gov/webapp/portal

Initials _________ / __________


BUYER ADVISORY Professional Home Inspection Report For the buyer’s protection, the importance of having a home inspected by a professional home inspector cannot be over-emphasized, regardless of whether the home is new or a resale. A home inspection is a visual physical examination, performed for a fee, designed to identify material defects in the home. The home inspector will generally provide the buyer with a report detailing information about the home’s condition. The inspector and the report will point out existing problems and possible potential problems. The buyer should carefully review this report with the inspector and ask the inspector about any item of con-cern. Pay attention to the scope of the inspection and any portions of the property excluded from the inspection. Home inspectors may be found at the Arizona Board of Technical Registration website, www.btr.state.az.us. Additional information on inspections may be found at the American Society of Home Inspectors website, www.ashi.com, and guidance on hiring a home inspector may be found at www.realtor.com/basics/buy/inspnegot/hire.asp?gate=realtor&poe=propertystore Termites and Other Wood Destroying Insects and Organisms Termites are commonly found in some parts of Arizona. Investigating evidence of termites or other wood infestation is the job of the pest inspector. The Structural Pest Control Commission (“SPCC”) regulates these inspectors and can provide the buyer with information regarding past termite treatments on a property. The SPCC publication, What You Should Know About Wood Infesta-tion Reports, can be found at www.sb.state.az.us/wir.htm. Additional information may be obtained at the SPCC website at www.sb.state.az.us or by calling 800-223-0618. COMMON PHYSICAL CONDITIONS IN THE PROPERTY A BUYER SHOULD INVESTIGATE Every buyer and every property is different, so the physical property conditions requiring investigation will vary. Repairs and New Construction The seller may have made repairs or added a room to the property. For example, the property may have an obvious improve-ment, covered patio, or garage, or may have been remodeled. The buyer should feel comfortable that the work was properly done or have an expert evaluate the work. Request copies of permits, invoices or other documentation regarding the work performed. The Registrar of Contractors’ (“ROC”) publication, Hiring a Licensed Contractor, is available on the ROC website at www.rc.state.az.us/Consumer_menu.html. The Arizona Chapter of the National Association of the Remodeling Industry may be contacted at http://aznari.com/. For information regarding permits, contact the city or county building department. Roof The inspector might recommend that you have the roof further inspected by a licensed roofer. If the roof is 10 years old or older, a roof inspection by a licensed roofer is highly recommended. See the ROC information on hiring a licensed contractor online at www.rc.state.az.us/Consumer_menu.html or the Arizona Roofing Contractors Association at www.azroofing.org. Swimming Pools and Spas If the property has a pool or a spa, the home inspector might determine the cleaning system is not working properly or may exclude the pool or spa from the general inspection. It would then be necessary to have a pool or spa company inspect the pool or spa and/or evaluate any problem. See the Arizona Chapter of the National Spa & Pool Institute at www.azpoolspas.org. Swimming Pool Barriers Each city and county has its own swimming pool barrier ordinance. Pool barrier contact information for Arizona cities and counties may be found at www.aaronline.com/documents/pool_contacts.aspx. The Arizona Department of Health Services Private Pool Safety notice may be found at www.hs.state.az.us/diro/admin_rules/pool_rules.htm. The state law on swimming pools is located at www.azleg.state.az.us/ars/36/01681.htm.

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BUYER ADVISORY Square Footage Square footage on the MLS printout or as listed by the county assessor’s records is often only an estimate and generally should not be relied upon for the exact square footage in a property. An appraiser or architect can measure the property’s size to verify the square footage. If the square footage is important, you should have it confirmed by one of these experts during the inspection period in a resale transaction and prior to executing a contract in a new home transaction. A list of appraisers may be found at the Arizona Board of Appraisal, www.appraisal.state.az.us/Directory/directory.html. A list of architects may be found at the Board of Technical Registration, www.btr.state.az.us. Sewer Even if the listing or SPDS indicates that the property is connected to the city sewer, a plumber, home inspector, or other professional should verify it. Some counties and cities can perform this test as well. Septic and Other On-Site Wastewater Treatment Facilities If the home is not connected to a public sewer, it is probably served by an on-site wastewater disposal system (septic or alternative system). If the system was approved by a certain date, a qualified inspector must inspect it prior to transfer. Even if an inspection is not required by law, all systems should be inspected prior to transfer. A qualified septic pumper may be trained to inspect a septic system; however, a person with training and knowledge of the particular system should inspect alternative systems. For information on current inspection and transfer of ownership requirements, contact the county environmental/health agency or the Arizona Department of Environmental Quality at www.adeq.state.az.us/environ/water/permits/wastewater.html. For general information on maintenance of a septic system, go to www.septic-info.com/. Soil Problems The soil in some areas of Arizona has “clay-like” tendencies, sometimes referred to as “expansive soil.” Other areas are subject to fissures, subsidence and other soil conditions. For additional information on earth fissures, visit: http://www.azwater.gov/dwr/Content/Hot_Topics/Earth_Fissures_in_Arizona/Earth_Fissures_in_Arizona.pdf . Properties built on such soils may experience significant movement causing a major problem. If it has been disclosed that the property is subject to any such soil conditions or if the buyer has any concerns about the soil condition or observes evidence of cracking, the buyer should secure an independent assessment of the property and its structural integrity by a licensed, bonded, and insured professional engineer. To investigate areas in Arizona where expansive soils exist, go to www.az.nrcs.usda.gov (search “shrink/swell”) or www.azgs.az.gov (“Geologic Hazards”). A list of state certified professional engineers and firms can be found at www.btr.state.az.us. Previous Fire/Flood If it is disclosed there has been a fire or flood on the property, a qualified inspector should be hired to advise you regarding any possible future problems as a result of the fire or flood damage and/or any subsequent repairs. For example, if the property was not properly cleaned after a flood, mold issues may result. Your insurance agent may be able to assist you in obtaining information regarding fire, flood, or other past damage to the property. Pests Cockroaches, rattlesnakes, black widow spiders, scorpions, termites and other pests are common in parts of Arizona. Fortunately, most pests can be controlled with pesticides. Scorpions, on the other hand, may be difficult to eliminate. If the buyer has any concerns or if the SPDS indicates the seller has seen scorpions or other pests on the property, you should seek the advice of a pest control company. A source of information on scorpions may be found at www.desertusa.com/oct96/du_scorpion.html. For informa-tion on roof rats, which have been reported in some areas, go to www.maricopa.gov/envsvc/WATER/VECTOR/roofrats.asp. For information on termites or bark beetles, which have been reported some forested areas, see www.sb.state.az.us/.

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BUYER ADVISORY Cactus Ferruginous Pygmy-Owl The Cactus Ferruginous Pygmy-Owl is listed as an endangered species under federal law. For information on the Pygmy-Owl and its critical habitat, which may affect land use in certain areas, visit the following websites: Tucson Association of REALTORS®: www.tucsonrealtors.org/documents/pygmyowl.pdf Pima County: www.co.pima.az.us/cmo/sdcp/sdcp2/PO/pygmy.html Deaths and Felonies on the Property An Arizona law states that sellers and real estate licensees have no liability for failure to disclose to a buyer that the property was ever the site of a natural death, suicide, murder or felony; see www.azleg.state.az.us/ars/32/02156.htm. This information is often difficult to uncover; however, the local law enforcement agency may be able to identify calls made to the property address. Mold Mold has always been with us, and it is a rare property that does not have some mold. However, over the past few years a certain kind of mold has been identified as a possible contributor to illnesses. Allergic individuals may experience symptoms related to mold. Mold growth is found underneath materials where water has damaged surfaces, or behind walls. A pamphlet, Mold in my Home: What Do I Do?, prepared by the Arizona Department of Health Services, Office of Environmental Health, states: “If you can see mold, or if there is an earthy or musty odor, you can assume you have a mold problem.” www.hs.state.az.us/phs/oeh/invsurv/air_qual/mold_contents.htmThe Environmental Protection Agency (EPA) and Centers for Disease Control and Prevention websites also contain valuable information: www.epa.gov/iaq/molds/moldresources.html and www.cdc.gov/nceh/airpollution/mold/default.htm. Other Indoor Air Quality Concerns Radon gas and carbon monoxide poisoning are two of the more common and potentially serious indoor air quality (“IAQ”) concerns. Both of these concerns can be addressed by the home inspector, usually for an additional fee. As for the many other IAQ concerns, the EPA has a host of resource materials and pamphlets available at www.epa.gov/iaq/iaqinfo.html and www.epa.gov/iaq/pubs/index.html. Property Boundaries If the property boundaries are of concern, a survey may be warranted. For example, a survey may be advisable if there is an obvious use of property by others (i.e., a well-worn path across a property and/or parked cars on the property) or fences or structures of adjacent property owners that appear to be built on the property. For more information, visit the Arizona Professional Land Surveyors website at www.azpls.org. A list of surveyors may be obtained from the Board of Technical Registration at www.btr.state.az.us. Flood Plain Status If the property is in a flood zone, an additional annual insurance premium of several hundred dollars may be required (check with your insurance agent about cost and coverage). If the property is in an area deemed high risk, the buyer may be required by the lender to obtain flood hazard insurance through the National Flood Insurance Program. Find details on flood plain status at: Maricopa County: www.fcd.maricopa.gov/Resources/MapApplications.asp Pima County: www.dot.co.pima.az.us/flood/ Other parts of the state: www.azgs.state.az.us/flood_links.htm FEMA’s Flood Map Service Center: www.fema.gov/maps Insurance (Claims History) Many factors affect the availability and cost of homeowner’s insurance. Depending on the insurance company, these factors may include past insurance claims filed on the property being purchased, past insurance claims filed by the buyer on previous properties, and the buyer's credit score. Some insurance companies use a database known as the Comprehensive Loss Underwriting Exchange (“C.L.U.E.”) in their underwriting practices to track the insurance claim history of a property and of the person applying for insurance coverage.

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BUYER ADVISORY To reduce the risk of insurance cancellation, a buyer should ask their insurance agent about the company's underwriting practices and request that their insurance agent confirm in writing the availability and cost of insurance early in any real estate transaction. And, although a buyer cannot directly obtain the claims history of a property, a buyer may ask the seller to provide a copy. However, be aware that obtaining a claims history or C.L.U.E. report on a property will not give a buyer all the necessary information to determine insurability, since not all insurance companies use this information or use it in the same manner. Property owners may request a five year claims history from their insurance agent or purchase a C.L.U.E. report online at www.choicetrust.com or by calling 866-527-2600. For more detailed information on homeowner's insurance, please read "The New Reality of Property Insurance - What You Should Know" at www.aaronline.com/documents/insurance.pdf. For additional insurance information or to file a complaint against an insurance company, visit the Arizona Department of Insurance website at www.id.state.az.us/ Other Property Conditions Plumbing: Check functionality. Also, a national class action suit has been more information, see www.pbpipe.com or www.aaronline.com/documents/polyb.aspx. Cooling/Heating: Make sure the cooling and heating systems are adequate. Arizona State Chapter affiliate of the Air Conditioning Contractors of America: www.acca-az.org/ . As of 1/23/06, manufacturers that produce residential air conditioners and heat pumps must meet the new government minimum standard of 13 seasonal energy efficiency rating or “SEER” standard for residential central air conditioners. Check with a licensed contractor and your home warranty company about the implications of this requirement. Electrical systems: Check for function and safety. CONDITIONS AFFECTING THE AREA SURROUNDING THE PROPERTY THE BUYER SHOULD INVESTIGATE Every property is unique; therefore, important conditions vary. Environmental Concerns It is often very difficult to identify environmental hazards. For environmental information, search the ADEQ website at www.adeq.state.az.us. The ADEQ website contains information regarding the locations of open and closed landfills (Solid Waste Facilities) at www.adeq.state.az.us/environ/waste/solid/other.html and wildfire information at www.adeq.state.az.us/function/about/wildfire.html, as well as air quality information, water quality information and more. Superfund Sites There are numerous sites in Arizona where the soil and groundwater have been contaminated by improper disposal of contami-nants. To check if a property is in an area designated by the ADEQ as requiring cleanup, see www.adeq.state.az.us/environ/waste/sps/phx.html for available maps to view. The EPA also has information on Federal sites at: http://www.epa.gov/superfund/spanish/index.htm (Spanish). Freeway Construction and Traffic Conditions Although the existence of a freeway near the property may provide highly desirable access, sometimes it contributes to undesirable noise. To search for roadway construction and planning, go to the Arizona Department of Transportation (“ADOT”) website at www.azdot.gov/Highways/. Check ADOT maps to find the nearest future freeway routes and roads in the area slated for widening. For traffic conditions, visit www.az511.com/. Crime Statistics Crime statistics, while an imperfect measurement at best, nevertheless provide some indication of the level of criminal activity in an area. To check the crime statistics for the cities of Phoenix, Tempe, Glendale, Mesa, Scottsdale, Chandler, Gilbert and Peoria, go to www.faxnet1.org. A visit or phone call to other law enforcement agencies may be required. For a list of all Arizona city links, go to www.azleague.org. To find crime statistics on their websites, you may need to search for “crime statistics.”

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BUYER ADVISORY Sex Offenders Since June 1996, Arizona has had a registry and community notification program for convicted sex offenders. This information may be accessed at www.azsexoffender.org. Prior to June 1996, registration was not required, and only the higher-risk sex offenders are on the website. The presence of a sex offender in the vicinity of the property is not a fact that the seller or real estate agent is required to disclose. Military and Public Airports The legislature has mandated the identification of areas in the immediate vicinity of military and public airports that are susceptible to a certain level of noise from aircraft. The boundaries of these areas have been plotted on maps that are useful in determining if a property falls within one of these areas. The map for military airports may be accessed at www.re.state.az.us/airport.html; view maps for many of the public airports at www.re.state.az.us/airports/airportintro.html. These maps are intended to show the areas subject to the preponderance of airport-related noise from a given airport. Periodic over-flights that may contribute to noise cannot usually be determined from these maps. Forested Areas Life in a forested area has unique benefits and concerns. For information on protecting your property from wildfire, go to: http://www.firewise.org/ or http://www.land.state.az.us/divisions/fire.htm . See also: Arizona Firewise Communities: http://cals.arizona.edu/firewise/ Contact county/city fire authority for information on issues particular to your community. Zoning/Planning/Neighborhood Services Phoenix: www.phoenix.gov/PLANNING/index.html Scottsdale: www.scottsdaleaz.gov/Topic.asp?catID=1 Tucson: www.ci.tucson.az.us/planning.html Other cities and towns: www.azleague.org Schools Although there is no substitute for an on-site visit to the school to talk with principals and teachers, there is a significant amount of information about Arizona’s schools on the Internet. Public and charter school information may be accessed at www.ade.state.az.us. The ADRE advises: “Call the school district serving the subdivision to determine whether nearby schools are accepting new students. Some school districts, especially in the northwest part of the greater Phoenix area, have placed a cap on enrollment. You may find that your children cannot attend the school nearest you and may even be transported to another community.” www.re.state.az.us/checklist.html OTHER METHODS TO OBTAIN INFORMATION ABOUT A PROPERTY Talk to the Neighbors Neighbors can provide a wealth of information. Buyers should always talk to the surrounding residents about the neighborhood and the history of the property the buyer is considering for purchase. Drive around the Neighborhood Buyers should always drive around the neighborhood, preferably on different days at several different times of the day and evening, to investigate the surrounding area.

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FOR ADDITIONAL INFORMATION Arizona Association of REALTORS® (“AAR”): www.aaronline.com (Consumer Assistance) Arizona Department of Real Estate (“ADRE”): www.re.state.az.us (Consumer Information) NATIONAL ASSOCIATION OF REALTORS® (“NAR”): www.realtor.com NAR’s Ten Steps to Homeownership: www.homestore.com/finance/buyersguide/default.asp lnksrc=REALR2LF2C0047&gate=realtor FOR INFORMATION ABOUT ARIZONA GOVERNMENT Links to state agencies, city and county websites: www.az.gov Maps and information based on address (Geographic Information System): www.az.gov/webapp/govinfo/main.do FOR INFORMATION ABOUT FAIR HOUSING AND DISABILITY LAWS The Fair Housing Act prohibits discrimination in the sale, rental, and financing of dwellings based on race, color, national origin, religion, sex, familial status (including children under the age of 18 living with parents or legal custodians, pregnant women, and people securing custody of children under the age of 18), and handicap (disability). For more information, visit HUD’s Fair Housing/Equal Opportunity Website at www.hud.gov/groups/fairhousing.cfm. For information on the Americans with Disabilities Act, visit www.usdoj.gov/crt/ada/adahom1.htm. For the Arizona Office for Americans with Disabilities, visit www.know-the-ada.com.

BUYER ADVISORY Provided by the Arizona Association of REALTORS®

BUYER ACKNOWLEDGEMENT Buyer acknowledges receipt of all nine pages of this Advisory. Buyer further acknowledges that there may be other disclosure issues of concern not listed in this Advisory. Buyer is responsible for making all necessary inquiries and consulting the appropriate persons or entities prior to the purchase of any property. The information in this Advisory is provided with the understanding that it is not intended as legal or other professional services or advice. These materials have been prepared for general informational purposes only. The information and links contained herein may not be updated or revised for accuracy. If you have any additional questions or need advice, please contact your own lawyer or other professional representative. _____________________________________________________________________________________________________ Buyer’s Signature MO/DA/YR _____________________________________________________________________________________________ Buyer’s Signature MO/DA/YR

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BUYER ADVISORY


SAMPLE CONTRACT


WHAT IS LEAD-BASED PAINT? Effects of Lead-Based Paint Lead poisoning can cause permanent damage to the brain and many other organs and causes reduced intelligence and behavioral problems. Lead can also cause abnormal fetal development in pregnant women.

Background To protect families from exposure to lead from paint, dust, and soil, Congress passed Title X directing HUD and the EPA to disclose known information on lead-based paint and its hazards before the sale or lease of most housing built before 1978.

What is Required Before ratification of a contract for housing sale or lease:

• Sellers and landlords must disclose known lead-based paint and lead-based paint hazards and provide available reports to buyers or renters.

• Sellers and landlords must give buyers and renters the pamphlet, developed by EPA, HUD, and

the Consumer Product Safety Commission (CPSC), titled Protect Your Family from Lead in Your Home.

• Home buyers will get a 10-day period to conduct a lead-based paint inspection or risk

assessment at their own expense. The rule gives the two parties flexibility to negotiate key terms of the evaluation.

• Sales contracts and leasing agreements must include certain notification and disclosure language.

Sellers and real estate agents share responsibility for ensuring compliance. (Note: This rule does not require any testing or removal of lead-based paint by sellers or landlords. )

For More Information For a copy of Protect Your Family from Lead in Your Home (in English or Spanish), call the National Lead Information Clearinghouse (NLIC) at (800) 424–LEAD, or TDD (800) 526–5456 for the hearing impaired.


GUIDE TO ENVIRONMENTAL HAZARDS Although it is unlikely that any home you purchase will contain substances that pose a health threat, it’s important to ask the question, “Is this a safe, secure home, free from potential hazards?” In recent years, new concerns have been raised regarding the natural environment, and substances such as radon gas and asbestos have provoked new questions about how and where we build homes and manage their upkeep.

What is Radon & Where is it Found? Radon is a colorless, odorless, tasteless gas that occurs worldwide in the environment as a byproduct of the natural decay of uranium present in the earth. Hence, radon that is present in surrounding soil or in well water can be a source of radon in a home.

Entering through small spaces and openings, such as cracks in concrete, floor drains, sump pump openings, wall/floor joints in basements, and the pores in hollow block walls, it can also can seep into ground water and remain entrapped there.

Therefore, if a home is supplied with water taken from a ground water source (such as a well), there is greater potential for a radon problem. The likelihood of radon in the water supply is greatly reduced for homes supplied with water from a municipal water supply.

Because testing is the only way to know whether a home has a radon problem, if you are buying a home, the EPA recommends:

• Having it tested for radon.

• Knowing its indoor radon levels, and asking the seller for their radon test results.

• If the home has a radon-reduction system, ask the seller for all information regarding the component

• For a new home, asking if radon-resistant construction features were used and if the home has been

tested.

For further information on this environmental hazard, contact your local Radon Office.

State Radon Offices- Arizona (602) 255- 4845


RESIDENTIAL POOL SAFETY To educate residential pool owners on proper pool safety and the legal requirements of pool ownership, the Arizona State Legislature has passed A.R.S. § 36-1681 to prevent children from gaining unsupervised access to residential swimming pools.

Pool Enclosesure Requirements A.R.S. § 36-1681 requires that all residential swimming pools are enclosed by a barrier. Unless a local code** provides otherwise, the barrier must:

• Entirely enclose the pool area & be at least 5 feet high • Not have openings, handholds, or footholds that can be used to climb the barrier • Have no openings through which an object 4 inches in diameter can pass • Be at least 20 inches from the water’s edge & prevent direct access from the house to the pool.

If the wall of the residence forms part of the pool enclosure, there must be:

• A barrier at least 4 feet high between the residence and the pool

• A motorized safety pool cover that requires a key switch and meets the ASTM standards in F1346-91 (www.astm.org)

• Self-latching devices on all doors with direct access to the pool, and self-latching devices at least 54 inches above the floor on all emergency or rescue windows with direct access to the pool

• For all other open able windows with access to the pool or pool area: screwed in place wire mesh screens or a keyed lock that prevent opening a window more than 4 inch, or self-latching devices at least 54 inches above the floor.

Gate Requirements A.R.S. § 36-1681(B)(3) requires that all gates for the pool enclosure be: self-closing & open outward from the pool. The latches must be located at least 54 inches above the ground, or if on the pool side with a release mechanism:

• Located at least 5 inches below the top of the gate & so that no opening greater than ½ inch is within 24 inches of the release mechanism

• Secured at any height if secured by a padlock or similar device that requires a key, electronic opener, or integral combination.

Above Ground Pools A.R.S. § 36-1681 (C)(4) requires that the exterior sides of an aboveground pool are non-climbable and a minimum of 4 feet high. Any access ladder or steps must be secured and locked or removed when the pool is not in use.


5. ESCROW & TITLE a. What is Escrow? b. Opening Escrow c. Closing Costs d. What Do I Pay For? e. Closing the Deal f. Closing Escrow g. What to Expect at Closing h. Life of an Escrow i. Title Insurance j. What You Don’t Know Can Hurt You k. It Can Happen l. Holding Title m. Owner Policy Comparisons


Webster’s vest pocket dictionary defines ESCROW as: “Deposit to be delivered upon fulfillment of a condition.”

As an escrow holder, Lawyers Title’s duty is to act as the neutral third party. We hold all documents and all funds, pursuant to the purchase contract and escrow instructions, until all terms have been met and the property is in insurable condition; then, we make the final exchange. We do not work for the seller or for the buyer; however, we are employed by ALL parties and act only upon MUTUAL WRITTEN INSTRUCTION.

OPENING ESCROW

“Opening Escrow” occurs when your REALTOR® brings in a contract with your earnest money deposit. The escrow officer needs to have all signatures on the purchase contract and related documents. We will accept the contract with final signatures of a party to be forth-coming. We will make arrangements to get signatures if a REALTOR® is unable to do so. Your escrow officer reviews the contract, receipts in the earnest money, orders the Commit-ment for Title Insurance, and prepares the documents required to close escrow. All of the documents are double checked by your escrow officer; however, it is the final responsibility of your REALTOR® to review the documents, explain them to you, and make any necessary changes or submit approval. We do our best to understand the contract as presented, to take all calls or return them promptly, and to send out documents in a timely manner. During the last few days of the month we are extremely busy closing escrows already in progress; therefore, sometimes we are not quite as responsive . . . but your transaction is important to us and we will get back to you as soon as possible.

WHAT IS ESCROW?


Any questions pertaining to loan fees and charges should be directed to your loan officer. Your Escrow Officer will review and explain your settlement statement at closing. The following is designed to help you understand some of the costs associated with closing and to show you cost saving policies offered through Title Security Agency of Arizona.

SOME TYPICAL CLOSING COSTS

TITLE INSURANCE PREMIUM Fee paid by an individual to insure the

buyer has a marketable title and the lender is in lien position.

REAL ESTATE COMMISSION

Fee paid to real estate broker for services rendered in listing, showing, selling, and consummating the transfer of property.

TRANSFER/ASSUMPTION CHARGES

Fee charged by the lender to allow a new purchaser to assume the existing

loan. Recording fees are assessed by the County Recorder’s Office to record document of a real estate transaction.

LOAN FEES

Fees charged by a lender in connection with the processing of a new loan. These may include points, origination fee, credit

report, appraisal, etc.

ESCROW FEES Fees charged by an escrow agent for

services rendered in preparing documents and collecting/disbursing funds necessary to consummate a real estate transaction.

ADDITIONAL SETTLEMENT CHARGES

Taxes, insurance, impounds and interest prorations, termite inspection fee, home

warranty, Homeowners Association transfer, etc.

CLOSING COSTS


SELLER

• Owners Title Insurance Policy • Real Estate Commission • 1/2 Escrow Fee • Escrow Fee for New VA Loan • Payoff Loans of Record and Required Fees • 1/2 Homeowners Association Transfer Fees • Homeowner Association Inspection Fee • Home Warranty • Judgment Lien(s), Tax Lien(s), etc. • Recording Charges to Clear Title • 1/2 Assumption/Change Records Fees

for Assumptions • Prorations for Unpaid Items • Unpaid Associations Dues, Mortgage

Payments, Accrued Property Taxes, etc.

BUYER

• Lenders Title Insurance Policy • 1/2 Escrow Fee (except on VA) • Recording Charges for Deed and New

Loan Security Instruments • 1/2 Homeowners Association Transfer Fees • All New Loan Charges, except those

required of the seller, including Interest from day of funding to first of next month

• Termite Inspection • 1/2 Assumption/Charge Records • Fees for Assumptions • Prorations for Prepaid Items • Next Association Dues, Mortgage Pay-

ment, etc. • Settlement Charges including Property

Insurance (fire and extended coverage) • 14 Months of Property Insurance

YOUR CUSTOMARY GUIDE TO CLOSING COSTS

• Appraisal Fee: By Agreement

Various fees charged by a lender for a new loan may be negotiated unless mandated by government regulations. Please check with your REALTOR® and/or loan officer for clarification.

WHAT DO I PAY FOR?


CLOSING THE DEAL

Prior to closing, make sure the following things are in place: • Most lenders require homeowner’s

insurance, so be ready to verify you’ve got it.

• The day before closing, you’ll want a

final walk-through of the property. Carefully inspect the premises and make certain all repairs and contract conditions are satisfied.

• Review the “Uniform Settlement

Statement” prepared by your title company itemizing the costs of all services you must pay at closing, then…..

Be prepared to provide a cashier’s or

certified check for your share of expenses on closing day.

One Step Closer to Ownership Also called "settlement" or "escrow," the closing process is the official transfer of ownership from seller to buyer. At this stage (except for cases of fraud) all seller commitments end, and the property legally becomes the responsibility of the pur-chaser. Involving the release of a deed, the signing of notes, and the disbursement of funds necessary to complete the sale, settle-ment is a synchronized effort of many groups. An impartial third party is entrusted with the job of seeing that the transfer of ownership takes place according to the terms of the written contract, then the closing agent holds any funds or documents until all the details have been settled and disburses them to the proper parties. Opening escrow simply involves visiting the office that handles closings, then handing over the deposit money and giving instructions for the transaction. Customarily, each party completes their papers separately, which typically takes one to two hours. When setting the closing date, some things to consider are: • Plan it near the end of your lease to prevent paying

unnecessary rent. • Does the time of year pose any tax implications? • Give yourself enough time to move

How much will the closing costs be? Generally, your closing costs, which include title searches, government taxes, notary fees, loan fees, escrow fees, recording fees, reconveyance fees, prorations and sales commissions, will range between 4 and 5 percent of your purchase price.


CLOSING ESCROW Your escrow officer will call you to make an appointment for you to sign your lender’s package as well as your deed, affidavit, and all other required documents. You should allow a minimum of 60 minutes for this process. If you would like, ask your REALTOR® and/or your loan officer to be present in case you should have questions. Bring the following items to your appointment.

• Identification. You must have a photo ID, which can be in the form of a current driver’s license or a current passport, and one other form of identification. Identification must be presented in order for your signatures to be notarized.

• Good Funds. Please plan ahead so that the necessary funds will be available at the time of closing. Your escrow officer will prepare a pre-audit for you prior to your signing, which will indicate the amount of funds required by you to close. The law requires us to have Good Funds, which consist of a Cashier’s Check or Certified Check drawn on an Arizona banking or savings institution or a Wire Transfer.

• Insurance. Proof of homeowner’s insurance on the property must be provided for your lender. Bring in the name, company, address, and phone number of your insurance agent.

If a new loan is being obtained, generally the signed loan package must be returned to the lender for review and subsequent funding of the loan. Upon the escrow holder’s receipt of all GOOD FUNDS, including but not limited to the buyer’s closing funds, loan proceeds, and fulfillment of conditions and contingencies, the documents are then released for RECORDATION. Upon confirmation of recordation, all funds are disbursed and closing packages provided to all parties.


LIFE OF AN ESCROW

1. Opening the Escrow- Items needed to Open Escrow ▪ Fully executed Purchase Contract ▪ Earnest money check ▪ Copy of listing ▪ New lender information ▪ Existing loan payoff/assumption information ▪ Cost estimate sheet

2. Processing the Escrow

▪ Escrow deposits earnest money check ▪ Escrow orders Preliminary Title Report from Title Department ▪ Escrow requests payoff or assumption information, homeowner’s association information, etc.

3. Title Examination

▪ Property is searched ▪ Property and parties are researched by the Title Examiner ▪ Preliminary Title Report is typed and sent to Escrow Officer, Agents, Sellers & Buyers

4. Escrow Closing Preparation

▪ Preliminary Title Report received by Escrow Officer and is reviewed for any surprises, I.e. tax liens, judgments, unknown liens of record, discrepancies in legal description, delinquent taxes, access problems, etc.

▪ Escrow advises Agents if additional information is needed to clear any surprises revealed by the Preliminary Title Report

▪ Escrow prepares for closing ▪ Escrow follows-up on receipt of the following if needed, per Purchase Contract: -Termite Report -Home Protection Plan -Buyer’s Hazard Insurance -New Loan Package -Payoff Information -Assumption Information -Repair Bills -Warranties ▪ Time for closing– loan documents are received and Escrow Officer ‘works’ the file to reflect

closing and advises agents of funds (if any) that are needed for closing ▪ Closing appointment times are set for Seller and Buyer with Escrow Officer ▪ Advise all parties executing document to bring a valid government issued picture, I.e. license, passport,

etc. ▪ Advise Buyer to bring in a cashier’s check or wired funds for closing ▪ Advise seller that pursuant to the Purchase Contract, they shall supply escrow with their Social

Security No.


LIFE OF AN ESCROW

5. Execution of Documents

▪ Buyer & Seller meet with Escrow Officer and execute all documents

6. Lenders Funds

▪ After all parties have executed the necessary documents, escrow returns loan package to new lender for review and funding

▪ Lender funds the loan and lenders check or wired funds are sent to escrow for processing

7. Recordation

▪ After escrow receives all funds needed and have ascertained that all funds are ‘Collected”, original documents are sent to the Recorder’s office for recordation

▪ Once documents are recorded, escrow notifies Agents

8. Disbursement of Funds ▪ All Disbursements are made in accordance with the Settlement Statement

9. Policies Issued

▪ Purchaser receives Owner’s Title Insurance Policy ▪ New Lender receives ALTA Loan Policy


WHAT IS TITLE INSURANCE?

DEFINITION: A contract where by the Insurer for valuable consideration agrees to indemnify the Insured in a specified amount against loss through defect of title to real estate wherein the latter has an interest either as a purchaser or otherwise. PURPOSE: Title Insurance services are designed to afford real property owners, lenders, and others with interest in real estate, the maximum degree of protection from adverse title claims or risks. The financial assurance offered by a Title Insurance Policy from the Title Company is, of course, the primary aspect of title protection. The Policy affords protection both in satisfying valid claims against the title as insured and in defraying the expenses incurred in defending such claims.

THE TITLE SEARCH

Title companies work to eliminate risks by performing a search of the public records or through the title company’s own plant. The search consists of public records, laws and court decisions pertaining to the property to determine the current recorded ownership, any recorded liens or encumbrances or any other matters of record which could affect the title to the property. When a title search is complete, The Title Company issues a Commitment for Title Insurance (pre-lim) detailing the current status of title.

TITLE INSURANCE


WHAT YOU DON’T KNOW CAN HURT YOU!

When you buy an ordinary article like a coat, a radio, or a watch, you do not need to know whether the former owner is married, single, or divorced. You may buy stocks or bonds without caring whether the seller has a tax bill due. You may buy an automobile without worrying about whether there are any suits or judgments against the owner. But when you buy real estate, all of these things and many, many others can cause you untold trouble.

WHY IS BUYING REAL ESTATE DIFFERENT?

No other property has a useful life that compares with the life of land. Owners die, new ones succeed, but land goes on forever. Owners of goods may change their location at will, but land is immovable. Being both permanent and immovable, land lends itself to the absorption of innumerable rights. Over the ages, this so impressed lawyers and jurists that they formed a separate body of laws for land. These laws, creating many types of rights in land, are so numerous and so complex that it is impossible in the very nature of things for there to be a mathematical certainly of ownership. For example, every lawyer is aware that there may be hidden defects in titles to land of which they cannot take cognizance in their opinion: defects arising from fraud, forgery, insufficiency of deeds, persons of unsound mind, demands of missing heirs, widow’s/widower’s dower, rights of divorced persons, rights of a child born after the making of a will, and many other circumstances that are liable to cause serious financial loss to the buyer of real estate.

WHEN YOU BUY REAL ESTATE


Tom Rowe was amazed to learn that his title examiner had missed a substantial sum in old taxes which had to be paid. Sam White had to move his garage because it was partly built on his neighbor’s property. The surveyor had made a mistake. Bob Smith saw a small fortune spent defending the title to his home when a man who only thought he had a better title carried his fight to the Supreme Court. Art Green was shocked to hear that there was an old mortgage outstanding on his home. A clerk had indexed it improperly. Fred Page handed over a substantial check because the man from whom he bought his home said he was single; however, when he died, it was discovered he was secretly married.

THE SECURITY OF YOUR HOME IS NO BETTER THAN THE TITLE TO THE PROPERTY.

There are many title troubles that can arise to cause the loss of your home . . . or your business property . . . or your mortgage investment. Title troubles not disclosed by the most careful search of the public records — called hidden hazards — are most dangerous. Because of them, your abstract may be perfect, but your title worthless. Owner’s title insurance protects you as well as your heirs from financial loss caused by title troubles. And the title insurer, without expense to you, will defend you against any attack on the title to your property as insured.

The ONE-TIME premium is small. The protection is GREAT!

IT CAN HAPPEN!!!


HOLDING TITLE


OWNER’S POLICY COMPARISONS


6. MOVING TIPS a. Helpful Hints for Moving b. 6 Week Checklist for a Good Move c. Final Steps to Ownership d. Important Phone #’s e. Glossary of Terms


HELPFUL HINTS FOR MOVING The following is a list of items that will help you in preparation of your moving day!

⇒ Defrost and empty refrigerator ⇒ Have adequate funds available for the move (cash and checks) ⇒ Prepare transportation for pets and children ⇒ Notify post office of forwarding address (forms are available at the post office). ⇒ Notify your bank ⇒ Inform all subscriptions/magazines ⇒ Notify all credit card companies With the following utilities make sure to check for refund once all utility companies have been notified of moving date at the old residence. After this has been done, notify utility companies at new residence. ⇒ Telephone ⇒ Electric ⇒ Gas ⇒ Water ⇒ Cable ⇒ Garbage Pickup Obtain the following records before your move date. ⇒ Medical Records ⇒ Dental Records ⇒ Veterinary Records ⇒ School Transcripts Register the following items before your move date ⇒ Register to vote ⇒ Register children for school ⇒ Register vehicle ⇒ Apply for new drivers license (address change can be done online)


SIX-WEEK CHECKLIST FOR A GOOD MOVE


• Plan on spending entire day at house with movers. Don’t leave until movers

have gone. • Record all utility meter readings (gas, electric, water). • Stay with moving van driver oversee inventory of goods. • Give moving van driver directions to new home and numbers where you can

be reached prior to delivery. • Get routing information from moving van driver. • Review carefully and sign bill of lading and inventory, and keep your copy in a

safe place until all charges have been paid and all claims (if any) have been settled.

• Make final walk-through of house, including basement, attic and closets, to make sure it’s empty.

MOVING DAY


FINAL STEP…. OWNERSHIP Congratulations! Now that you’ve looked at properties, made an offer, obtained financing, and gone to closing, the home is officially yours. Yet, you’re probably wondering, “Is there any more to the homebuying process? “ First, the settlement papers you received at closing are extremely valuable, so hold on to them! In the short-term they can help establish tax deductions for the year in which the property was purchased, and in the future, if the property is sold, such papers will be important for tax purposes. Next, determine the status of the property utilities such as water, sewage, gas, electric and telecommunications. As of closing, you will want utility bills to be paid in full by the owners so without delay they can be transferred to your name for billing. Listed below are the areas major utility and service suppliers.

Finally, make sure you change your address with the United States Postal Service. Should you want to avoid a trip to your local station, you can access their Mover’s Guide online at http://www.usps.com/moversguide/.

Ask the seller for the property’s equipment information; i.e. instruction booklet for the washing machine; information on how that timer-light above the front door works; how you re-code the

automatic garage door opener; how-to manuals for the refrigerator and the food disposal.


FREQUENTLY CALLED NUMBERS


ADDENDUM - Something added. A list or other material added to a document, letter, contractual agreement, escrow instructions, etc. (See also: Amendment). ADJUSTABLE MORTGAGE LOANS (AML'S) - Mortgage loans under which the interest rate is periodically adjusted to more closely coincide with current rates. The amounts and times of adjustment are agreed to at the inception of the loan. Also called: Adjustable Rate Loans, Adjustable Rate Mortgages (ARM's), Flexible Rate Loans, Variable Rate Loans. (See also: Indexing, Rate Index). AGENCY - Any relationship in which one party (agent) acts for or represents another (principal) under the authority of the latter. Agency involving real property should be in writing, such as listings, trusts, powers of attorney, etc. AMENDMENT - A change, either to correct an error or to alter a part of an agreement without changing the principal idea or essence. AMORTIZED LOAN - A loan repaid in periodic (most commonly monthly) payments of principal and interest. See also: Amortize, Interest Extra Note, Interest Included Note. APPRAISAL - An opinion of value based upon a factual analysis. Legally, an estimation of value by two disinterested persons of suitable qualifications APPRECIATION - An increase in value to real property due to positive changes or the elimination of negative elements in the surrounding area. Although not within the original meaning, the word has been incorrectly used so often that it is now acceptable to describe an increase in value for any reason, including inflation. ASSESSED VALUE - Value place upon property for property tax purposes by the tax assessor. BALLOON PAYMENT - The final payment (balance due) of a balloon note CC&R'S (COVENANTS, CONDITIONS, AND RESTRICTIONS) - A term used in some areas to describe the restrictive limitations which may be placed on property. In other areas, simply called restrictions. CHAIN OF TITLE - The chronological order of conveyancing of a parcel of land, from the original owner (usually the government) to the present owner.

GLOSSARY OF TERMS


CLOSING - (1) In real estate sales, the final procedure in which documents are executed and/or recorded, and the sale (or loan) is completed. (2) A selling term meaning the point at which the client or customer is asked to agree to the sale or purchase and sign the contract. (3) The final call in a metes and bounds legal description which "closes" the boundaries of the property. CLOSING COSTS - Expenses incidental to a sale of real estate, such as loan fees, title fees, appraisal fees, etc. CLOSING STATEMENT - The statement which lists the financial settlement between buyer and seller, and also the costs each must pay. A separate statement for buyer and seller is sometimes prepared. CONDOMINIUM - A structure of two or more units, the interior space of which are individually owned; the balance of the property (both land and building) is owned in common by the owners of the individual units. The size of each unit is measured from the interior surfaces (exclusive of paint or other finishes) of the exterior walls, floors, and ceiling. The balance of the property is called the common area. CONVENTIONAL LOAN - A mortgage or deed of trust not obtained under a government insured program, (such as F.H.A. or V.A.). COUNTER OFFER - An offer (instead of acceptance) in response to an offer. For example: A offers to buy B's house for X dollars. B, in response, offers to sell to A at a higher price. B's offer to A is a counter offer. DEED - Actually, any one of many conveyancing or financing instruments, but generally a conveyancing instrument, given to pass fee title to property upon sale DEED OF TRUST - An instrument used in many states in place of a mortgage. Property is transferred to a trustee by the borrower (trustor), in favor of the lender (beneficiary), and reconveyed upon payment in full. DEPRECIATION - (1) Decrease in value to real property improvements caused by deterioration or obsolescence. (2) A loss in value as an accounting procedure to use as a deduction for income tax purposes. (See specific types of depreciation). DEPOSIT - (1) Money given by the buyer with an offer to purchase. Shows good faith. Also called earnest money. (2) A natural accumulation of resources (oil, gold, etc.) which may be commercially recovered and marketed.

GLOSSARY OF TERMS


DISCOUNT POINTS - The amount paid to increase the yield. Example: A borrower receives a loan with an interest rate of seven percent but pays the lender three points in advance. The points raise the annual percentage rate of the loan. The lender may then sell the loan at less than face value and still make a profit. Each point equals one percent of the face value of the loan. EASEMENT - A right created by grant, reservation, agreement, prescription, or neces-sary implication, which one has in the land of another. It is either for the benefit of land (appurtenant), such as right to cross A to get to B, or "in gross", such as a public utility easement. ENCUMBRANCE, INCUMBRANCE - A claim, lien, charge, or liability attached to and binding real property. Any right to, or interest in, land which may exist in one other than the owner, but which will not prevent the transfer of fee title. EQUITY - (1) A legal doctrine based on fairness, rather than strict interpretation of the letter of the law. (2) The market value of real property, less the amount of existing liens. (3) Any ownership investment (stocks, real estate, etc.) as opposed to investing as a lender (bonds, mortgages, etc.). ESCROW - Delivery of a deed by a grantor to a third party for delivery to the grantee upon the happening of a contingent event. Modernly, in some states, all instruments neces-sary to the sale (including funds) are delivered to a third (neutral) party, with instructions as to their use. ESCROW OFFICER - An escrow agent. In some states, one who has, through experience and education, gained a certain degree of expertise in escrow matters. FAIR MARKET VALUE - Price that probably would be negotiated between a willing seller and willing buyer in a reasonable time. Usually arrived at by comparable sales in the area. HAZARD INSURANCE - Real estate insurance protecting against loss caused by fire, some natural causes, vandalism, etc., depending upon the terms of the policy. F.H.A. (FEDERAL HOUSING ADMINISTRATION) - A federal agency which insures first mortgages, enabling lenders to loan a very high percentage of the sale price.

GLOSSARY OF TERMS


IMPOUND ACCOUNT - Account held by a lender for payment of taxes, insurance, or other periodic debts against real property. The mortgagor or trustor pays a portion of, for example, the yearly taxes, with each monthly payment. The lender pays the tax bill from the accumulated funds. LEGAL DESCRIPTION - A method of geographically identifying a parcel of land, which is acceptable in a court of law. LIEN - An encumbrance against property for money, either voluntary or involuntary. All liens are encumbrances but all encumbrances are not liens. LOAN ORIGINATION FEE - A one time set up fee charged by the lender MORTGAGE - (1) To hypothecate as security, real property for the payment of a debt. The borrower (mortgagor) retains possession and use of the property. (2) The instrument by which real estate is hypothecated as security for the repayment of a loan. ORIGINATION FEE - A fee made by a lender for making a real estate loan. Usually a percentage of the amount loaned, such as one percent OWNER'S POLICY - Title insurance for the owner of property, rather than a lienholder. PERSONAL PROPERTY - Any property which is not designated by law as real property PITI (PRINCIPAL, INTEREST, TAXES AND INSURANCE) - Used to indicate what is included in a monthly payment on real property. Principal, interest, taxes and insurance are the four major portions of a usual monthly payment. POINT - (1) One percent of the amount of the loan. (2) A commission paid for arranging a loan. POWER OF ATTORNEY - An authority by which one person (principal) enables another (attorney in fact) to act for him. (1) General power - Authorizes sale, mortgaging, etc. of all property of the principal. Invalid in some jurisdictions. (2) Special power - Specifies property, buyers, price and terms. How specific it must be varies in each state. PROMISSORY NOTE - A promise in writing, and executed by the maker, to pay a specified amount during a limited time, or on demand, or at sight, to a named person, or on order, or to bearer.

GLOSSARY OF TERMS


QUITCLAIM DEED - A deed operating as a release; intended to pass any title, interest, or claim which the grantor may have in the property, but not containing any warranty of a valid interest or title in the grantor. RECORDATION - Filing instruments for public record (and notice) with a recorder (usually a county official. SEPTIC SYSTEM - A sewage system, whereby waste is drained through pipes and a tile field into a septic tank. Found in areas where city or county sewers have not yet been installed. SPECIAL ASSESSMENT - Lien assessed against real property by a public authority to pay costs of public improvements (sidewalks, sewers, street lights, etc.), which directly benefits the assessed property. SUBDIVISION - Commonly, a division of a single parcel of land into smaller parcels (lots) by filing a map describing the division, and obtaining approval by a governmental commission (city or county). The exception is a condominium, which is sometimes called a "one lot subdivision". SURVEY - The measurement of the boundaries of a parcel of land, its area, and sometimes its topography. TERMITES - Insects, similar to ants, which feed on wood, causing destruction to wooden structures. TERMITE INSPECTION - An inspection required in certain types of sales of property, to determine if termites are present within a building TITLE - The evidence one has o —————————————————————-f right to possession of land. TITLE INSURANCE - Insurance against loss resulting from defects of title to a specifically described parcel of real property. Defects may run to the fee (chain of title) or to encumbrances. WARRANTY DEED - A deed used in many states to convey fee title to real property. Until the widespread use of title insurance, the warranties by the grantor were very important to the grantee. When title insurance is purchased, the warranties become less important as a practical means of recovery by the grantee for defective title.

GLOSSARY OF TERMS


AREA MAP

7. MAPS a. Pinal County Area Map b. School Districts


AREA MAP


SCHOOL DISTRICTS

Pinal REVISED BUYER BOOK - Title Security · Application interview and lender obtains all pertinent...

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