If you are looking to buy, sell, or refinance property in Connecticut , it is important to understand the ins and outs of real estate law. Each transaction is unique in its own way, but all transactions are subject to laws, rules, and regulations that vary from state to state and even county to county. Your real estate attorney will know the laws, rules, and regulations that apply to your particular transaction and will work to ensure that your interests are considered, your rights are protected, and your transaction closes with precision and expertise.
Having some general information can help relieve some of the stress and frustration that buyers and sellers can experience throughout the closing process. So, what general information should you know before signing on the proverbial “dotted line”?
First, real estate transactions are built upon contracts. They are subject to the terms and conditions contained therein and are binding upon each party who signs. However, unlike many contracts, real estate contracts in Connecticut generally come with built-in flexibility. Specifically, unless otherwise stated in the contract, the dates in real estate contracts can be “reasonably” extended by either party. This general rule for reasonable extensions helps parties navigate the various events that need to happen in order for a deal to officially close. Rather than create points of contention and impasse between buyers and sellers, Connecticut law provides for each side to grant reasonable extensions upon request.
Next, contracts for purchases and sales contain contingencies that must be satisfied before the deal will close. In other words, if the contingencies are not satisfied and timely notice is given to the opposing side, a deal can be terminated despite there being a signed contract. The most common contingencies in Connecticut real estate transactions are the “Inspection Contingency” and the “Mortgage Contingency”. Typically, these contingencies are designed to protect a buyer and the buyer’s deposit money. A contract will have specific dates by which the contingencies must be satisfied or where notice must be given if it is not satisfied. Parties will generally attempt to work with each other to satisfy the contingencies. However, where contingencies cannot be met, a deal may be terminated.
Lastly, the difference between a loan approval and a loan commitment is the difference between not closing and closing. A loan approval is provided by a lender to a buyer early on in the house hunting process. A buyer will be “approved” for a loan up to a certain amount. With that information a buyer will know the price range to afford for a new home. A loan commitment, on the other hand, is the final piece to the puzzle in the closing process. This is the stage where the lender has done all of its homework, reviewed all the paperwork, and has formally committed to making the loan. The loan commitment usually goes hand in hand with the “clear to close”. At this point, the deal can officially close.