A house transaction generates a shelf of paper, and most of the anxiety it produces comes from receiving a document without knowing what question it answers. The rows below describe classes of document, not particular publications, companies or products. They are annotated in the order they usually appear.
The shelf
- The purchase agreement
- The contract itself: parties, the described property, price, deposit, the contingency periods and their deadlines, what is included with the house, and who bears which cost at closing. Every later date in a transaction is calculated from this document.
- The title commitment
- The title company's statement of what it is prepared to insure and what it will not. Schedule-style sections list the current recorded owner, the exceptions such as easements and covenants, and the requirements that must be satisfied before a policy issues.
- The plat and the legal description
- The recorded map of a subdivision and the words that identify one parcel within it. The legal description, not the street address, is what is bought, sold, taxed and mortgaged.
- The inspection report
- A trained observer's account of the visible condition of the structure, roof, envelope and the mechanical, electrical and plumbing systems, with a scope statement describing what was not examined.
- The appraisal report
- The comparable sales selected, the adjustments applied to each and the reasoning that produces a value conclusion, prepared for the lender rather than for either party to the sale.
- The loan estimate and the closing statement
- Two views of the same borrowing: an early standardised summary of the loan's terms and expected costs, and a final itemised account of every debit and credit passing through the settlement.
- The covenants and association rules
- Recorded restrictions that run with the land, together with any governing documents of an owners' association, its rules, and the budget and reserve information those documents require to be disclosed.
- The survey
- A measured plan of the parcel showing boundary lines, monuments found or set, the position of improvements and any encroachment or easement affecting occupation of the land.
How to read any of them
Three questions get most of the way through any transaction document. Who is it addressed to, since an appraisal written for a lender and an inspection written for a buyer answer different questions. What does it say it did not do, since the scope statement is where the real limits live. And what date is it as of, since almost every one of these documents is a snapshot that stops being true.
Applied consistently, those three questions dissolve most apparent contradictions between documents. Two reports disagreeing about a roof are frequently a report from March and a report from September, or a visual assessment and a specialist examination, rather than a dispute.
What is not on the shelf
There is no single document that states what a house is worth, no document that guarantees its condition, and no document that lists its owner as a settled fact. Value is an opinion supported by evidence, condition is an observation limited by scope, and ownership is a conclusion reconstructed from a chain of recorded instruments.
Expecting certainty from any of the three is the most common reason people feel misled by a process that is in fact behaving normally.