David Blockhus
CRS, GRI, MBA
In Silicon Valley two types of purchase contracts are used: (1) the Peninsula Regional Date Service (PRDS) purchase contract and the California Association of Realtors (CAR) purchase contract. The PRDS purchase contract is the preferred contract and is used for purchases of property located on the western side of the south bay, up through homes located on the peninsula (i.e. for the cities of Los Gatos, Saratoga, Cupertino, West San Jose, Sunnyvale, Mountain View, Los Altos, Los Altos Hills, Palo Alto, and Menlo Park). The CAR purchase contract is used mainly in the south to southeast bay cities. Both purchase contracts include elements such as the property address, buyer’s names, purchase price, terms, contingencies, closing and possession dates, seller’s responsibilities and buyer’s responsibilities. The purchase contract’s terms include: the amounts of the initial deposit and down payment, the terms of the loan(s), and when and where the funds are to be deposited into escrow.
There are two main contingencies in a purchase contract: (1) the financing contingency and (2) the property condition, otherwise known as, the inspection contingency. The financing contingency allows the buyer to back out of the contract if he/she can’t obtain the necessary financing to purchase the property. The inspection contingency allows the buyer to run a series of inspections on the property to check its current condition and to verify proposed future use on the property.
The seller is obligated to transfer the property free of any recorded liens (i.e. that title is clear) and provide a series of disclosures describing any known material defect that might affect the property’s value. Typical property disclosures include: earthquake, flood, and environmental hazards, lead based paint, Megan’s law, smoke detector and water heater compliance, FRPTA, road noise, concert venue noise, airplane flight paths, and other material facts or defects about the property or its location.
Unless agreed to by both parties in writing, the seller is obligated to transfer the property with a water tight roof and with all operating systems (plumbing, electrical, heating, cooling, and built-in appliances) in functional condition. This does not mean the all systems must have been installed according to current building codes, but rather that all operational systems work. The seller is also obligated to provide a termite clearance issued by a licensed termite inspector prior to close of escrow. Termite companies issue termite clearances when all active termite infestation and/or dry rot have been repaired. When the real estate market is very active, most buyers purchase the home in "as-is" condition, meaning that no repairs will be performed or paid for by the seller.
The buyer is obligate to have their down payment, obtain the required financing, inspect the property as they see fit, read and understand all the seller’s disclosures including the preliminary title report, obtain property insurance and close escrow within the agreed upon time frame.
Contact David today for further assistance in buying a home.
110 First St., Los Altos, CA 94022
(650) 917-4250 - Phone
(650) 948-3749 - Fax
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