A real estate Contract is a legally binding agreement made between the buyer and seller that details the terms of the sale. It is a vital document that should be reviewed carefully and thoroughly before it’s signed.
The Contract Typically Created by an Attorney
Most states require that a real estate Contract be created by an attorney. It should be drafted and shaped according to the specific situation of each individual transaction. It is also important that it is in writing and signed by the parties.
The Contract Must Include Consideration
A real estate contract must state the consideration, or what one party is offering to the other in exchange for the property. This can be money, services, or other valuable goods such as furniture and appliances.
The contract must also state that the parties have willingly consented to the terms of the contract. This is an essential condition for the document to be enforceable in court.
It Must Be In Writing
In the United States, the Statute of Frauds requires that a real estate contract be written and signed by both parties before it can be considered valid. This can help prevent fraud and other types of misrepresentation, as well as a number of other legal issues.
It Must Include Contingencies
The contract is often conditioned on the purchase price being at or below an appraisal that a lender approves. Alternatively, it may be contingent on financing, or the sale being subject to a favorable report from a home inspector, among other things.
It Must Include Closing Costs
In most cases, a real estate contract includes closing costs. These costs are fees that are paid by both the buyer and the seller to transfer ownership of the property from the seller to the buyer. They can include escrow fees, title search fees, title insurance, notary fees, recording fees, transfer tax, and other costs.
It Must Include the Date of Closing and Possession
The date of closing is the point at which the legal transfer of ownership of the property occurs. This is normally the date that the seller hands over possession of the property to the buyer, but it can be specified in the contract if there are any circumstances that would delay this process.
It Must Include the Location and Land Description
A real estate contract may include a detailed description of the property, including its location, size, and any special features or amenities. It may also specify the type of deed to be used for the transfer of ownership.
It Must Include a Warranty Deed and Marketable Title
The real estate contract should include a warranty deed that conveys ownership of the property to the buyer. Lenders may not lend on properties that do not have a warranty deed, so it is imperative that the real estate contract include this information.
It Must Include the Name of the Seller and Buyer
A residential real estate contract will list both the seller and the buyer’s names. It will also include the address of the property and the purchase price.