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Show Contracts Checks Outlined on G. I. Home Loans Editor's Note: This is the third in a series of articles directed to veterans intending to buy a home with a GI loan). In addition to containing an agreement that the builder or seller will refund the veteran's cash deposit, in the event the veteran fails to get a GI loan or the deal fails to go through and it is not the fault of the veteran, the contract should be carefully examined so that the veteran's interests will be protected. The contract should specifically specifical-ly state the sale price, and should contain a clause that this sales price is not subject tc change. Some contracts contain a so-called "escalator clause" in cases where houses are still under un-der construction. A clause of this kind allows the builder to increase the price if he is faced with future cost increases. Many builders insist on this "escalator clause", and it is perfectly legal for them to do so. But, the veteran should know about it, VA advises. The contract should also state the amount of the cash down payment, and the method of financing fi-nancing the balance. It should require the seller to deliver the house to the veteran on or before a definite date, and should set forth the veteran's right to withdraw with-draw and get his deposit back if that deadline is not observed. In the case of new construction, construc-tion, the contract should clearly state that the builder will complete com-plete the home in accordance with definite plans and specifications specifica-tions previously agreed Upon. The veterans should know exactly what these plans and specifications specifica-tions call for, and if he doesn't understand blueprints and the terminology used in these matters, mat-ters, he certainly should have some trained person review these important papers with him. VA demands that the house measure up to VA construction requirements, but VA does not undertake complete supervision of construction for the veteran. Another provision of the contract con-tract should make it very clear who is responsible for the property prop-erty from the date the veteran signs the contract until the day he moves in. The builder or seller sell-er usually shoulders this responsibility. respon-sibility. In buying a new house, the veteran should insist that the contract, or a seperate written agreement, indicates the extent of the responsibility the builder will assume after the veteran moves in. These responsibilities refer to any number of things which might need fixing, even though the house passed inspection, such as faulty wiring, water in the basement, and other defects. VA advises veterans against signing any paper which is merely mere-ly an "offer to purchase". The veteran is also warned against signing a contract containing a so-called "escape" clause, which would enable the builder or seller to back out of his agreement, agree-ment, unless the veteran has similar rights. In giving veterans these tips on actual home costs and advising advis-ing them concerning provisions of the contract, VA stresses that it is, in no way, an attack on the honesty or reputation of the builder or seller. Because of the size of the transaction, VA does want the veteran to understand all provisions of the contract. (Next week: "Know What You Are Buying"). |