Park City Buyers Due Diligence Checklist

The Park City Board of Realtors (as well as the state of Utah) has a checklist for real estate Buyers in Park City. The list is designed as a reminder of things that Buyers should be aware of when purchasing Park City area properties. The list contains many things that may affect the use and future value of the property, the list contains many items that are outside the scope of what your REALTOR® has been trained and may require other professionals to inspect and assess implications of their findings.

There is a matching document on the Seller's side of a contract in which the Park City property seller must tell you all that they know about these same items. The Buyer's Due Diligence Checklist and Seller's Property Disclosures often times are the primary exhibits in real estate litigation. Careful attention to these documents can often times eliminate lawsuits.

The Park City real estate Buyer Due Diligence checklist very strongly states what the limitations of your real estate agent and real estate brokerage are as follows:

Buyer is advised that the Company and its agents are trained in the marketing of real estate. Neither the Company nor its agents are trained or licensed to provide Buyer with professional advice regarding the physical condition of any property or regarding legal or tax matters. The Company and its agents strongly recommend that in connection with any offer to acquire any property, Buyer retain the professional services of legal and/or tax advisors, property inspectors, surveyors, and other professionals to satisfy Buyer as to any and all aspects of the physical and legal condition of the Property. BUYER IS ADVISED NOT TO RELY ON THE COMPANY, OR ON ANY AGENTS OF THE COMPANY, FOR A DETERMINATION REGARDING THE PHYSICAL OR LEGAL CONDITION OF THE PROPERTY. The following is a general listing of issues that Buyer should consider in evaluating any property. This is not intended to be a comprehensive list of all issues that may be relevant in Buyer's evaluation of a specific property, including any property listed above. This document is, however, intended to direct Buyer's attention to a number of issues that are commonly considered important in the evaluation of any property.

The checklist then goes on to list 23 items (this is a changing document and does not cover all things pertinent to the due diligence, make sure you are using the most up to date form and consult with your agent or other professionals to explore and discuss other items that may affect your purchase decision):

1. BUILDING CODE/ZONING COMPLIANCE/FUTURE DEVELOPMENT: As a Park City realty Buyer you should consult with local zoning officials to assure that your intended use of the Property (including, but not limited to, rental and business uses, construction of new improvements and/or the remodel of existing improvements) will comply with local zoning requirements and with any recorded restrictive covenants and conditions. You need to determine whether a certificate of occupancy has been issued for the Property and if such certificate is available for inspection. The Buyer is also advised to make inquiry at the local building department to determine if building permits and final inspections were obtained for any remodel work at the Property, if applicable. Buyer is further advised to consult with the local building and/or planning departments regarding any proposed development(s) in the vicinity of the Property and the potential impacts of such future development(s) on Buyer's use and enjoyment of the Property. Such impacts may include, but are not limited to, change in view corridors, noise, use, and inconvenience associated with such proposed development(s). Just because the lot behind the home you intend to purchase is empty does not insure that it will stay that way. Buyer acknowledges that their real estate agent and brokerage should not be relied upon for a determination as to any past, present or future building code or zoning restrictions or violations, the impacts of future development in the area, or as to the suitability of the Property for Buyer's intended use.

2. HAZARDOUS WASTE AND TOXIC SUBSTANCES: Park City is a former mining town and there are areas in town that have been shown to have hazardous waste present. The EPA has done work in the area and it may impact the home you intend to purchase. The Park City real estate Buyer is advised to consult with appropriate professionals regarding the possible existence of hazardous wastes and toxic substances on the Property, including, but not limited to, asbestos, radon gas, lead and lead- based paint, and the contamination of the Property from the use, storing or manufacturing of any illegal substances including methamphetamines. Many of these items are not visible or discoverable without professional testing, it is the Buyer's responsibility to have these tests done.

3. SURVEYING AND STAKING: Fences and the fact that a home has been in its present location for years do not mean that they are correct. Buyer is advised that without an accurate survey of the Property, Buyer cannot be certain as to the boundaries of the Property, or that any improvements on the Property are not encroaching upon adjoining parcels of property, or that improvements located on adjoining parcels of property do not encroach onto the Property. A formal survey and consultation with city officials may be necessary.

4. HOME WARRANTY PLANS: The group advises that a Home Warranty Plans be purchased in order to provide limited warranties for certain home appliances and certain components of the Property after Closing.

5. FLOOD ZONE AND INSURANCE: Park City and Deer Valley Buyers need to be aware that there are flood zones in the area and that they may impact the property as well as the ability to obtain and the cost of flood insurance.

6. HOMEOWNERS INSURANCE: There are many factors that impact the terms and availability of homeowners insurance such as: location, condition, and/or claims history as well as factors related to you the realty buyer such as: your credit, insurance claims history, and other issues (such as specific kinds of pets). Make sure that you and the home are insurable before purchasing.

7. TITLE/TITLE INSURANCE: Real estate Buyers should carefully review with legal counsel and with the title insurer regarding: the cost and availability of various types of title insurance coverage for the Property, the contents of any Commitment for Title Insurance on the Property, and the contents of all documents affecting the Property that are a matter of public record, including, but not limited to, any restrictive covenants (CC&R's). Park City and Deer Valley have properties that contain deed restrictions and/or CC&R's may have considerable impact on Buyer's use and enjoyment of the Property, including by way of illustration, limitations on pets, vehicle parking, rental and business use restrictions.

8. AFFORDABLE HOUSING: Many real estate developments in the Park City and Deer Valley area contain an affordable housing component which means that some or all of the housing in that development may be deed restricted as affordable housing. Such deed restrictions may place limits on such housing, including, but not limited to: who is eligible to purchase; appreciation; rental; and resale pricing of the Property. Some deed restrictions also contain a first right of refusal to governmental entities and others that require specific procedures to be followed prior to offering a property for sale. These affordable housing restrictions may, among other things, significantly impact the current and future value of the Property, the marketability of the Property, and the ability to finance or refinance the Property. These restrictions are not always advertised in the sale and need to be discovered as part of the Buyer's Due Diligence.

9. HOMEOWNERS ASSOCIATION. Many Deer Valley and Park City properties are part of a condominium or other Homeowners Association and/or Master Homeowners Association ('HOA'), you should consult directly with the HOA regarding all HOA matters that may affect the Property, including, but not limited to: existing and proposed budgets, financial statements, present and proposed assessments, dues, fees, reserve accounts, rules, and HOA meeting minutes. Reading HOA minutes can be very revealing as to the possibility of future costs associated with the property.

10. SPECIAL ASSESSMENTS & TRANSFER FEES. Buyer is advised to consult directly with the HOA and with all applicable special improvement districts, governmental and quasi governmental entities regarding any special or extraordinary assessments for capital improvements and/or other expenses authorized under the applicable local laws and HOA governing documents. Some HOA's (most newer developments at The Canyons Resort as well as most Empire Pass area properties to name a few) may also require the payment of a transfer fee (including but not limited to transfer fees that are based on a percentage of the purchase price) as a result of a transfer of title to the Property. Special assessments and transfer fees often involve significant expense. Buyer is advised to carefully consider and factor into the negotiations for the purchase of the Property, all such special assessments and transfer fees, if any. Who pays these costs in a Park City real estate transaction is often a negotiable item.

11. PROPERTY MANAGEMENT/MAINTENANCE & RENTAL OR LEASE AGREEMENTS. Many Park City and Deer Valley area properties are managed or maintained by a property management or property maintenance company, you should consult directly with the property management and/or property maintenance company, and to review and evaluate all documents relating to management and/or maintenance of the Property, including, but not limited to, terms and conditions of any management and rental contracts, leases, past and future rental bookings and/or rental reservations, if any, affecting the Property after closing. In most situations you are required to honor existing reservations associated with the property that were made before the purchase, this may have a big impact on your ability to use the property especially during holiday periods in the first year after your purchase.

12. PHYSICAL CONDITION: Appropriate professionals should be consulted regarding all physical aspects of the Property, including, but not limited to: built-in appliances; plumbing fixtures, lines, fittings and systems; heating, air conditioning systems and components; electrical wiring, systems, appliances and components; foundation; roof; structure; exterior surfaces (including stucco), exterior features and equipment; pool/spa systems and components; any diseased trees or other landscaping; and moisture seepage and damage from roof, foundation or windows. Your Keller Williams Park City Real Estate agent should not be relied upon to determine the physical condition of the property.

13. SQUARE FOOTAGE/ACREAGE: Many lawsuits have been filed due to discrepancies in the advertised and actual size of a home or land. If the square footage of the home and other improvements, or the acreage of the Property is of material concern to you, make sure to verify all applicable square footage and acreage through any independent sources or means deemed appropriate by Buyer. All statements relating to the measurement of a property should be considered approximations.

14. UTILITY SERVICES: Rely upon appropriate professionals regarding the location of utility service lines and the availability and cost of all utility services for the Property including, but not limited to, sewer, natural gas, electricity, telephone, cable TV, and internet. Ask for billing statements and check with providers to verify costs. Check to see that the Property is connected to public water and/or public sewer, and applicable fees have been paid. If not, septic tanks may need to be pumped. Leach fields should be inspected.

15. WATER: Consult with the water service provider for the Property and with other appropriate professionals regarding the source, quality, and availability of water for the Property; and regarding all applicable fees and costs (including, without limitation, connection fees, stand-by fees and service fees), use and regulatory restrictions, and ownership of water rights and water system. Water laws vary state to state and Utah water laws are very intricate. It is probable that the river that runs adjacent to or through a property is not useable by the property owner. Depending upon the location of the Property, the water service provider, and climate conditions, water service to the Property may be interrupted (many "cabin" properties in the Park City area have only seasonal water). Water rights are especially important in terms of future development and vacant land purchases. The Park City real estate Buyer should consult directly with applicable State and local authorities, and with legal counsel, regarding the content and potential effect of such water- related laws.

16. GEOLOGIC CONDITIONS: Geologic conditions may include, but are not limited to, soil and terrain stability, the existence of wetlands, drainage problems, and any building and/or zoning requirements relating to such geologic conditions. The Park City and Deer Valley areas are impacted by former mines, earthquake faults, and geothermal activity among other things; consult with appropriate professionals regarding possible geologic conditions at or near the Property.

17. MOLD: This issue has been well publicized in other areas, and Park City is not immune: consult with appropriate professionals to determine the possible existence of mold in the Property. Water leaks and water damage to the Property may result in mold that may have adverse health effects. Additional information regarding mold is available through the EPA at:

18. RADON: Park City and Deer Valley area homes and condominiums should be inspected for the possible existence of excessive levels of radon gas in the Property. Radon is a naturally occurring radioactive gas that has been found in homes all over the United States. Excessive levels of radon may have adverse health effects. The EPA and the Surgeon General recommend testing all homes for excessive levels of radon. Information is available through the and the Utah Department of Environmental Quality  Environmental Hotline 1-800-458- 0145.

19. HOUSING COMPLIANCE/NEIGHBORHOOD ISSUES: Consult with appropriate professionals regarding neighborhood or property conditions including, but not limited to: schools; proximity and adequacy of law enforcement; proximity to commercial, industrial, or agricultural activities; crime statistics; convicted sex offenders residing in proximity to the Property; fire protection; other governmental services; existing and proposed transportation; construction and development; noise or odor from any source; and other nuisances, hazards, or circumstances. We like to think that Park City and Deer Valley are insulated from most of these items, but we are not. Please note that your Keller Williams Park City Real Estate agent will show you all properties without regard to race, color, religion, sex, national origin, handicap or familial status.

20. PROPERTY TAXES: In Utah "primary residences" are eligible for significantly lower property taxes. In order to qualify as a primary residence, the Property must be either: (a) the primary residence of the owner; or (b) the primary residence of a long-term tenant. Make sure that appropriate forms are submitted if you plan to use the property as a primary residence for yourself or another. The purchase of unimproved land may have "greenbelt" tax implications; consult with the County Assessor's Office and with the title insurance company providing title insurance coverage on the Property.

21. INCOME TAX/LEGAL CONSEQUENCES: Property ownership in Deer valley and Park City may have tax and legal consequences (both good and bad). Consult with appropriate tax and legal advisors regarding this transaction.

22. VALUATION OF THE PROPERTY: Carefully consider the value of the Property prior to making a purchase offer. There are numerous factors influence the sales price of Park City and Deer Valley property, including but not limited to: national, state, and local economic factors; market conditions; the location, age, size, condition, finish and features of the property; the relative wants, needs, and personal circumstances of a seller and a buyer; and sales of other generally comparable properties. You are ultimately responsible to determine the price that you are willing to pay for a Park City or Deer Valley area property. You should obtain and carefully review the contents of a professional, independent appraisal.

23. MORTGAGE LOAN APPLICATION: Be scrupulously honest, accurate, and complete in providing to your mortgage lender, all information, documentation, and other materials requested by the mortgage lender.

Your efforts in discovering all that you can about a property you intend to purchase in the Park City, Utah area are very important make sure that you are comfortable with your findings regarding all of the above mentioned items before completing your purchase. Note that speaking with neighbors and other area owners/residents can be a great way to find out about a property as well as a way to make new friendships in your future home or vacation space. Your REALTOR® can help put you in touch with many professionals that can assist in your due diligence process.

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