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Important Considerations When Buying a New Home By K. Michelle Lind Reviewed October 2006 |
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Buying a new home in a recently developed subdivision involves different
considerations than buying a resale home in an established neighborhood.
When you decide to buy a new home, there are many important decisions to
make. Where will the home be located? What design, what flooring, what
countertops and what colors do I want? And, of course, how much will it
cost? With all these decisions and all the excitement of buying a new
home, the legal issues are often forgotten or ignored. However, buying a home is a substantial investment and there are a few issues that demand a buyer’s attention. For example, before signing a new home contract, buyers should do the following: Read the Subdivision Public Report A new home seller in a subdivision is required by law to give a Public Report to a prospective home buyer. The purpose of the Public Report is to disclose important information about the subdivision. For example, the Public Report will include information about adjacent land uses that may be of concern, taxes, assessments, nearby schools, transportation, and emergency services. A new home buyer should always read the Public Report before signing a purchase contract. Additional information about this important disclosure document may be found on the Arizona Department of Real Estate website at www.azre.gov/Dev/Documents/Sub_App_for_Pub_Report_Min_Filing_Requirements.pdf. Read the CC&R’s and Other Homeowner’s Association Rules Most new homes are in a homeowner’s association. Covenants, Conditions and Restrictions (“CC&Rs”) generally empower a homeowner’s association to control certain aspects of a home’s use. The CC&Rs may be very strict, especially those addressing landscaping, RV parking, and play equipment. It is essential that the buyer review and agree to these restrictions prior to entering into a contract; afterwards is generally too late. In addition to CC&Rs, a homeowner’s association may be governed by articles of incorporation, bylaws, rules and regulations, and often architectural control standards. The homeowner’s association is in place to enforce the CC&R’s and the other rules in order to preserve the value of homes in the community. For additional information about living in a homeowner’s association, go to www.azre.gov/PUBLIC_INFO/Documents/Property_Buyer_Checklist.html. Read the Purchase Contract Generally, each new home seller has its own purchase contract, so there is no “standard” contract as there is in the resale market. Therefore, it is important to read the purchase contract carefully and keep the following questions in mind: Who will hold the earnest money and other advance deposits? Talk to Your Real Estate Agent Most agents working at a model home center or a new home seller’s office represent only the seller. Consider working with a buyer’s agent from the beginning of your new home search. A buyer’s agent can assist you in the home buying process, answer your questions and offer resources that can be invaluable. K. Michelle Lind, Esq. Michelle is general counsel to the Arizona Association of REALTORS® (“AAR”) and a State Bar of Arizona board certified real estate specialist. She serves as the primary legal advisor to the association, provides legal direction in the development of standard forms, is involved in legislative advocacy, and assists in the association’s educational efforts. Please note that this article is of a general nature and may not be updated or revised for accuracy as statutory or case law changes following the date of first publication. Further, this article reflects only the opinion of the author, is not intended as definitive legal advice and you should not act upon it without seeking independent legal counsel. |
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