Colorado Real Estate Contracts Contain Provisions For Due Diligence, But What is it?
When Purchasing a Grand Junction Home, There Are a Lot of Responsibilities For The Buyer And Due Diligence is Much More Than a Home Inspection.
When you have an accepted offer for your new Grand Junction home, the clock starts ticking. Page 2 and 3 of the Colorado Real Estate contract contains a list of action items also known as contingencies and a corresponding date to be completed by and accepted by buyers and sellers. It is important that every action item on the list with a date next to it be met. For many of the items, there is a date for it, a date to object to it and a date for a resolution between buyer and seller.
The first action item is a title commitment from the specified title company. This is usually delivered to the buyers within one week. The title commitment encompasses these things:
- Land size
- Legal description
- liens if any (taxes, mortgage and personal)
- Taxes and taxing authorities
- Right-of-way, easements for utility and government agencies
- Mineral rights for the property (some areas this can be a big problem)
- Water rights are mentioned in some instances
- County Assessor information on original construction of the home
- Flood Zone information (if in a flood zone)
A buyer’s due diligence is to read the report and make sure the information contained is acceptable first of all. Are the taxes what you were told they were? Is the lot the size stated in the home brochure? All of the information should be reviewed, researched and accepted. If you find something that is a concern, your real estate agent will complete a form “Amend/Extend” whereby you are objecting to the information. There will be a corresponding date for a “Resolution” between buyer and seller.
Scheduling the home inspection should take place as soon as possible. If there are any problems with the property that may be adverse or an issue, you want to know before your order and pay for the appraisal. The buyer’s real estate agent will again prepare the form “Inspection Objection”, listing the unsatisfactory items and asking for repair or replacement. The seller can agree to the repairs, agree to some of the repairs or refuse to do any repairs. If repairs are made, receipts should be provided to the buyers for their record. Other concerns which should be investigated are mold, radon, asbestos and termites.
If the property has a Homeowner’s Association (HOA), it is very important to review the CC&R’s. That stands for declaration of covenants, conditions and restrictions. This is a list of rules and regulations, possible fines and amount of HOA dues and what services are provided for the dues. Some HOA’s have architectural review committees that control paint colors, fences, RV and boat parking etc. These are the rules you will have to live by so make sure you know what they are.
Once these tasks are completed and accepted, then focus on your appraisal and financing conditions. Then you are on your way to being a homeowner!
This post is meant to be a guide and provide information and not intended to be legal advice.