How to sell a house on contract iowa
Iowa State Bar Association
Helping Iowa Attorneys Succeed
The Iowa State Bar Association
Offer and Acceptance or Real Estate Sales Contract
Under Iowa law, a contract for the sale of real estate is only binding if it is in writing signed by the parties. Since the sale of real estate often involves substantial sums of money and the legal issues can be complex, a buyer should consider retaining an attorney to review the real estate sales contract before it is signed by the buyer. A real estate sales contract needs to address price, payment terms, determination of and the manner of transfer of title, a description of the real estate and any fixtures or personal property included in the sale, the possession date and the closing date (which normally coincide), proration of property taxes and other matters.
Normally, an offer and earnest money are submitted by the buyer, and the seller will accept, counteroffer or ignore the offer. The amount of earnest money varies for each transaction. Earnest money should be held in the seller’s attorney’s trust account or the real estate broker’s trust account until closing.
The Residential Property Seller Disclosure Statement form is required under Iowa law to be given to a buyer once the buyer tenders an offer to purchase a house. It should be completed by the seller to the best of the seller’s knowledge. Both buyer and seller should sign two copies of the form and each should retain a signed copy.
Once an offer to purchase is accepted, the seller will need to locate the abstract of title for the real estate and get it updated and extended by an abstract company. The abstract lists all of the documents (e.g., deeds, mortgages etc.) that are part of the public record at the county recorder’s office, the courts and other governmental offices that affect title to the property. The extension of the abstract by an abstract company can take several weeks. Abstract extensions to show marketable title in the seller are usually done at the seller’s expense. In order to keep track of the abstract (they are expensive to replace), please be sure to get a receipt for the abstract whenever you deliver possession of it to anyone.
If the Buyer’s lender is providing financing, normally the lender will prepare a closing statement reflecting the purchase price, applicable credits (like accrued taxes, transfer taxes, earnest money, etc.), and the amounts due seller at closing. Remember, the property taxes paid in September and March each year are actually for the prior fiscal year ending June 30 and, therefore, property taxes are always one year behind. Accrued and prorated property taxes are normally taken as a credit by the buyer against the purchase price.
The condition of title (as shown in the abstract) can change between the date and time of the last extension of the abstract, which is usually recited in the title opinion, and the date of closing. As part of the closing, buyers should obtain from the abstract company an oral update summarizing whether there have been any changes to the condition of title.
After closing, the buyer or the buyer’s lender will want to record the deed, DOV and GWHS. The abstract should be kept by the buyer or their lender.
You can also purchase and/or sell a residence by using a real estate licensee (e.g., salesperson or broker). If real estate licensees are involved, a sales commission is usually paid by the seller. There are some real estate documents that cannot be prepared by real estate licensees, such as deeds, installment contracts, etc. These documents should be prepared by an attorney. Your lender, real estate licensee, and attorney will all play different roles to assist you in the purchase and/or sale of your residence. You should make use of each of their skills and training and carefully consider their advice.
By no means does this pamphlet cover everything you need to know concerning purchasing and/or selling a residence, and every transaction is different. However, this pamphlet does give you a simple overview of the process.
To find a legal professional to meet your needs, please visit www.iowafindalawyer.com .
The Iowa State Bar Association • 625 East Court Avenue • Des Moines, IA 50309
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