A real estate contract is a legally binding document that describes the agreement between two or more parties in the purchase and sale of a home. It outlines the terms of the transaction, and often contains contingencies that may be useful for one or both parties.
An example of a real estate contract is one that spells out a buyer’s financing options. If the buyer fails to obtain the financing needed to make a purchase, he or she is allowed to withdraw from the transaction. This may be an important consideration for a buyer.
Real estate contracts typically include several other critical details, such as the closing date and the deposit amount. These may vary depending on the property. In addition, the terms of the contract will often include representations and warranties made by the seller. When you are negotiating a real estate contract, it is helpful to consult an expert who can walk you through the process.
The most commonly used term in a real estate contract is “consideration.” Consideration is the value exchange between the parties. This can take the form of money, another property, services, or something of value. The most common consideration in a real estate deal is money.
An alternative form of consideration can be offered by the buyer, such as furniture or a boat. The buyer may also be able to offer a different type of consideration, such as an open-ended pre-leasing or environmental inspection.
Another common term in a real estate contract is the purchase price. You will probably have to submit a statement of price paid to the recorder’s office.
An important part of a real estate contract is the inspection. The inspection period will provide the buyer with a clearer idea of what to expect. Most contracts of sale include an inspection contingency, so a buyer should be prepared for the possibility that the inspection does not go as planned. Having an open-ended inspection period can also provide the buyer with the opportunity to avoid obligations, if necessary.
While the most important aspect of a real estate contract is the purchase price, other important elements of a contract include the legal capacity of the parties, the acceptance of the offer, and the closing date. All of these elements should be included in the contract, so that the transaction will be legally binding.
Some real estate contracts are a bit intimidating, particularly when you read the long, legalese. However, it is important to remember that there are some simple rules to follow. First, the parties involved must have the mental ability to sign the contract. They should also understand the purpose of the contract, the legal limitations of the contract, and the legal rules of the transaction.
Lastly, the real estate contract should be in writing. Even though notarization is not required, many recording offices will require that the signature of the seller be notarized. Likewise, a Power of Attorney is a document that allows another party to sign a real estate contract on your behalf.