When you purchase a home, you need to sign an enormous pile of mortgage and closing documents, where each document can total hundreds of pages or more. The huge dilemma: they will likely take up a huge part of your storage space, so you may not want to file all of it. However, you also don’t want to throw out or destroy something crucial.
Still, it’s important to keep these documents on hand after closing on your home for future reference. You may need them later on in the event that you need to file a claim, either against the seller or any professional from your home buying team (hopefully, that won’t happen). Your closing company will also keep a record of your closing documents, but it’s wiser to keep them handy while you’re residing in the home and when you’re preparing to sell it.
Here’s a list of real estate documents you should keep filed in a safe and accessible place:
1. Purchase Agreement.
The real estate purchase agreement is a legally binding contract signed by both the buyer and seller. It sets forth all the terms and conditions for the home purchase, including the purchase price, closing date, essential rights and conditions, and other terms agreed upon by both parties.
The provisions stated in this bilateral agreement must be followed and there could be legal ramifications if the buyer or seller fails to fulfill the duties indicated in the document.
2. Agenda, Amendments or Riders.
These are documents that alter or amend the terms of your signed purchase contract, and they’re worth keeping since they are often related to home inspections or appraisals. These documents could clarify any issues you may encounter down the road or correct any clerical mistakes related to the seller’s or buyer’s name.
3. Buyer’s Agent Agreement.
This is the contract you signed when you hire a real estate agent to represent you in your home purchase. This agreement is between you and the brokerage and outlines the terms of the relationship with your agent. It details what services your agent agreed to provide you with, as well as the terms of terminating the agreement. The contract also spells out who pays for the commission which, in most cases, is handled by the seller. Make sure to keep this document just in case you encounter an issue with your real estate agent even after the transaction closes.
4. Seller Disclosures.
Sellers are required by law to disclose certain issues with the home to their potential buyers. It is known as the “caveat emptor,” a general rule in buying and selling real estate which means “let the buyer beware.” Disclosure regulations vary by state and issues may include asbestos, lead-based paint, pest manifestations, mold, and repairs done without a permit.
The seller’s failure to disclose these issues in accordance with government or state laws can be a basis for future lawsuits against them. Make sure that you won’t lose them so that in case a major problem comes up with your home after you move in, you won’t have trouble holding the seller accountable.
5. Home Inspection Report.
This detailed document produced by your home inspector shows the condition of the home and its potential problems. It’s an itemized list of the inspector’s findings, highlighting which parts of the home are still in good condition and which are in need of repair or replacement. It should also include photos of the property’s problem areas. Storing this report will help you in planning the repairs you need to make in the future. If you have a digital file of the report, copy it in cloud-based storage so you’ll have a backup.
6. Closing Disclosure.
The closing disclosure is provided by the mortgage lender to a borrower at least three business days before settlement. It includes all the things related to your mortgage loan, such as the loan term (whether it’s for 15 or 30 years), loan type (if it’s a fixed-rate or adjustable-rate mortgage), the interest rates, and all the estimated costs associated with closing and your mortgage. It’s an important document that you’ll need when you file your taxes to get deductions for things like mortgage points.
7. Homeowner’s Insurance Policy.
Your policy includes all the terms, conditions, premium notice, and policy number for your homeowner’s insurance. Keep these documents on hand and remember to update them regularly to make sure you have all the right policy types and the appropriate amount of coverage in case of natural disasters like fire, hurricane, floods, or an earthquake.
8. Title Insurance Policy.
Title insurance offers protection against any defects with the title, legal ownership status, or any competing claims to a home. Your owner’s title insurance policy will cover any financial loss in case someone tries to claim the property and wants to settle the case in the court of law, or if there are existing property liens for delinquent taxes and other debts incurred by the former homeowners.
9. Property Deed.
The property deed is a legal document that confirms your ownership rights to the home. It’s proof you can show to anyone that you now hold the title and you legally own the home you’re residing in. Typically, the property deed is sent to you after the title transfer documents are recorded in your county’s public records office. Make sure to secure the physical document because before the deed is mailed to you, neither the mortgage lender nor the title company is required to keep a copy of it.
Credit: LFR