Purchasing or selling a home can be a stressful exercise, particularly if you are unfamiliar with the steps that are involved, and especially if you are selling and purchasing at the same time.

The initial step is usually to approach an agent for assistance with finding an interested party. A purchaser should remember that a selling agent has a first obligation to the vendor.

Once the deal has been made each party should prepare a list of everything that has to be done. The lists should be kept up to date throughout the transaction. For a first timer there is a lot to learn and remember.

Sale and purchase of a home is an expensive process involving agent's commission, stamp duty, bank fees and legal fees. For this reason, vendors (who, all being well, shall have cash at the end of the transaction) are usually asked to pay part of the purchaser's legal fees and stamp duty, in addition to the vendor's own costs.

You should carefully consider all expenses involved before signing any document. An attorney, agent, or bank official can give an estimate of the likely expenses. Agents usually charge a commission based on a percentage of the price, banks normally charge one per cent of the mortgage, the stamp duty is calculated on scales set by Government, and legal fees are levied as published by the Bermuda Bar Association.

Often the Sale & Purchase Agreement ('sales agreement') is conditional on the vendor marking out boundaries of the home in accordance with the title deeds. Unless the sales agreement says otherwise, the home is sold in the condition it is in at the time the sales agreement is signed and dated. The sales agreement deems the purchaser to have full knowledge of any defects with the home. This means that there is no comeback for problems found afterwards. Purchasers and vendors should each obtain an attorney's advice before signing a sales agreement.

A structural survey is also advisable but often ignored to save expense. Such a survey can identify if maintenance expenditure shall be required in the near or distant future. Expenditure in the near future is likely to be a nasty surprise for a purchaser.

When the sales agreement is signed by both purchaser and vendor and then dated, its terms are binding and the parties are committed to the deal. The purchaser, at that point pays a deposit of ten per cent of the price to the agent or to the vendor's attorney. Special rules apply to how the deposit is held. Failure by a party to comply with a sales agreement obligation can have significant financial consequences. For example a purchaser could forfeit the ten per cent deposit and not be entitled to buy the home.

The sales agreement should specify a closing date, which is the day the purchaser takes possession of the home. The purchaser becomes responsible for the home on that date and so insurance should be arranged and suppliers of utilities and services engaged. Such matters should be organised in advance of the closing date.

On the closing date the purchaser's attorney usually pays out the price and other sums due including to the vendor's bank (if there was a mortgage on the home), the agent, the vendor, and the Tax Commissioner for stamp duties and for apportioned land tax. Additionally, if the home is a condominium, there may be apportioned management charges to be paid.

If a purchaser has a mortgage there are additional steps required to satisfy the bank. Purchasers and vendors should be sure there is a firm offer from the bank, before the sales agreement is signed, to confirm the availability of bank funding at closing. The bank will require details of employment and finances in order to assess the borrower as a good or bad risk. Prior to closing, the borrower shall be required to sign a loan agreement and a mortgage.

When the mortgage closes the borrower promises to pay the bank as agreed (the sum borrowed plus interest), and to insure and to maintain the home. The mortgage enables the bank to more easily sell the home, in the unfortunate event that the borrower defaults.

Closing is a big relief to all of the parties involved.

Attorney Neil Molyneux is a member of the Property Practice Group at Appleby. A copy of Mr. Molyneux's column can be found on the Appleby website at www.applebyglobal.com.

This column should not be used as a substitute for professional legal advice. Before proceeding with any matters discussed here, persons are advised to consult with a lawyer