A real estate Contract is a legal document that specifies the details of a real estate sale between two or more parties. It includes the terms of the sale, such as the purchase price, closing costs, names of the parties, and the date of closing. A real estate Contract also typically includes contingencies and representations or warranties. It must be signed by all parties to become enforceable.
The contract should specify the address of the property, a description of the property, and the purchase price. It should also include the names and signatures of all parties. A notary may be required for the signing of certain parts of the document. The contract should also identify the property as either residential or commercial, and describe any improvements or additions to the property. It should also include the closing date and any contingencies that need to be met.
If the contract contains a contingency that needs to be fulfilled, such as an existing homeowner needing to sell their home before purchasing the new property, this should be clearly specified in the contract. A time frame should also be set to meet this contingency. If the contingency is not met, the contract can be withdrawn by either party. The contract should also state that any earnest money (money paid towards the purchase of a home) will be forfeited if the contract is withdrawn.
Real estate agents frequently use standardized, fill-in-the-blank forms to create real estate contracts for their clients. However, investors should understand the fundamental elements of a contract to ensure that they have all the necessary information to be successful in their real estate transactions. Some of the most important aspects of a real estate contract are an offer, acceptance, consideration, and legal capacity.
An offer is the initial proposal made by a buyer to a seller. The seller can reject or accept the offer, modifying items such as the purchase price or closing costs. This process is known as building the contract.
Once the offer is accepted, it becomes a binding agreement. It is important to carefully review the terms of the contract to be sure that all parties understand them. It is also helpful to have a lawyer or real estate agent review the contract before it is signed.
Besides the basic terms of the contract, there are other terms that can be added to customize a real estate transaction. For example, a buyer can request a survey of the property or require that the seller pay for certain closing costs. The contract should also include any personal property that will be included in the transaction, such as appliances or furniture.
If a party to a real estate contract fails to fulfill its obligations, such as the seller failing to give a deed or perform other duties required by the contract, that party can take legal action to force the other party to honor the agreement. In some cases, a court will award damages to the injured party.