Understanding the Key Parts of a Real Estate Purchasing Contract

Posted by Nestlewood Realty on January 10, 2019  /  in Blog, Questions and Answers  /  No Comments

A real estate purchase contract, also known as a “contract to purchase real estate” or a “residential purchase agreement,” is a binding, bilateral agreement between two or more parties. The purchase contract is the key to your real estate transaction. Not only does it make your purchase or sale official, but it also protects both the buyer and the seller, ensuring that all expectations are clear.

Purchase agreements can vary from one state to the next but generally contain the same key elements. In some regions, agreements are concise and serve primarily to open the negotiation process, while in other regions, the purchase agreement may be an in-depth, legally binding contract.

The U.S. Statute of Frauds requires that all real estate contracts must be in writing or they’re not enforceable, and must be signed by both the buyer and the seller. (Handshakes are a thing of the past!) An experienced real estate lawyer or agent will be able to help you put this together, but a real estate purchase contract should also include the following:

Identification of the parties

And a description of their role

 

A description of the property

Including the address, condition, and legal description

 

Price accepted by the seller

And means by which it will be paid

 

Deposit amount

And means by which it will be paid

 

Closing dates and costs

And who is responsible for costs

 

Itemized additional costs and who is responsible for paying

Including inspections, appraisals, etc.

 

Contingencies that must be met before the sale can go through

Might include problems with the inspection, appraisal, financing or title

 

Fixtures and appliances that are included

And what moves with the seller

 

Required disclosures

Like termite damage, lead paint, etc.

 

Delivery, acceptance and expiration dates

Exactly when the purchase agreement will expire if not accepted

 

Default

Terms by which either party can back out of the agreement

 

The signatures of each party

Acceptance of the terms must be communicated. At this point, the offer becomes a legally binding contract


Having competent lawyers and agents in your corner who can draft a solid legal contract can help to prevent a good deal from going bad, but it’s still important to understand the elements of your real estate purchase and sale agreement.

As with any legal document, it’s essential to review a contract thoroughly. If anything is unclear, ask your Nestlewood agent and attorney. And even if you don’t see any red flags, ask questions anyway. You want to be especially careful when considering contingencies, disclosing information about the property, and deciding on deadlines.

 

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