A real estate contract is a written document that outlines important details about a piece of property. It is signed by all parties involved. The main components of the contract include the selling price, payment terms, legal description, and closing date. These elements should be clearly stated in the agreement. There may also be other information included, including the condition of affixed appliances, and the condition of the property’s HVAC system.
The most obvious aspect of a real estate contract is the purchase price. Typically, money is the most common form of consideration, though it is possible to get by without it. If the buyer is financing the deal, he will need to specify in the contract what type of loan he is applying for.
Other details are often included in the contract, such as the cost of inspections and title searches. Real estate deals have legal implications, and both sides are obligated to abide by the contract. When a seller refuses to sell, the buyer may take legal action against the seller.
Another important feature of a real estate contract is the right to cancel. This gives the buyer the ability to renegotiate the price of the property, or even void the contract altogether. An earnest money deposit is commonly held by a third party. For the most part, the buyer will receive the money back if he cancels the contract. However, it is not unheard of for the seller to retain the money if the buyer fails to make the required payments.
Many real estate contracts contain a number of other items, including a date of possession. This is usually the same date as the closing, but the contract can specify a different date.
Some other items to look for in a real estate contract are the encumbrances, or liens, on the property. If a lien is discovered, the contract should detail its existence and how the lender plans to settle it. You may also want to consider a mortgage contingency, which is a condition of the sale. Often, buyers will require a mortgage to be able to purchase a home, and it is essential that the contract contains a mortgage clause.
In addition to the above, real estate contracts can contain other interesting features, such as a warranty on the property. For example, the contract might say that the property is sold “as is,” with no defects. Likewise, the contract might include a provision to hold over the buyer’s possession until he or she has paid any required property taxes.
In many cases, a real estate contract is a two-way street, with the seller and the buyer both putting forward their own offers. This can cause a tangled mess if the parties are not on the same page. To avoid this, all parties should be at least 18 years old, and have the legal capacity to enter into a real estate contract. Those who are mentally impaired should not attempt to enter into such a contract.