A real estate purchase agreement is a type of contract that is created during the purchase or sale of a residence. The contract is used to govern the terms of the sale and to provide guidance on the various duties, rights, and responsibilities of each of the parties involved in the transaction.
Although each state has slightly different laws when it comes to real estate purchase agreements, the majority of states require that the agreement describe the property in a certain way. For instance, such descriptions must include actual measurements and boundary lines, but must leave out any landmarks on the property that may be subject to changes over time like a garden statue or bird bath since both can be removed.
Additionally, it should be noted that a real estate purchase agreement may involve several different parties, such as the buyer, seller, their respective real estate agents, loan agents, zoning officials, and housing inspectors. However, most of these agreements will only bind the actual buyer and the seller of the property.
To learn more about real estate purchase agreements and the types of legal issues that you should look out for when entering into such an agreement, you should consult a local real estate lawyer for further advice. A real estate lawyer can offer guidance on topics that are specifically related to your matter and can make sure that you are in compliance with the relevant laws in your area.
What Types of Terms Should I be Aware of in a Real Estate Purchase Agreement?
There are a number of important terms that a buyer and seller should be aware of when entering into a real estate purchase agreement. Although these terms may vary in accordance with the laws of a particular jurisdiction, there are several basic terms that are associated with the majority of real estate purchase agreements. These terms will usually include the following:
- A legal description of the property that identifies the exact location of the property, the boundaries of the property, and whether there are any easements or bodies of water on the property. Some important terms to note in this category include rectangular surveys, metes and bounds, and lot and block systems. A licensed surveyor will most likely be the professional in charge of preparing these types of reports.
- The terms of the sale (e.g., what needs to happen for the sale to go through), the actual purchase price of the property, how the property will be paid for, whether a mortgage loan or a lien still sits against the property, and if there are any earnest money requirements.
- Other terms related to encumbrances on the property, such as mortgages, liens, escrow, property taxes, homeowners’ association fees, or homeowner’s insurance, and who is responsible for paying for them or paying off remaining balances.
- Various contingency clauses that may permit the buyer or seller to back out of a contract in the event that they are triggered or not fully satisfied (e.g., subject to inspection clause).
- The closing date, any costs or requirements that must be met on the day of the closing, and how the deed and title to the property will be exchanged.
- An outline of every item to be included or excluded in the sale of the home, such as structures, fixtures, and appliances (e.g., light fixtures, window treatments, doors, built-in kitchen appliances, etc.).
- The date of delivery and acceptance, as well as when the offer expires.
- Terms regarding what to do if one of the parties does not complete their legal obligations before the closing.
- Information about the type of warranty included in the deed or what the seller is essentially agreeing to when selling the buyer the property.
- Requirements for inspections and/or appraisals, including who is responsible for paying for them and how the results will be processed.
- The names of the seller and the buyer, the actual address of the property, and signature blocks along with a blank space for the date the agreement is signed.
- Various other disclosures, contingencies, or classifications required by the laws of the jurisdiction wherein the property is located or other terms that the buyer and seller agree to during the negotiations stage of the process.
By learning about these terms and provisions before entering into a real estate purchase agreement, the parties can avoid making costly errors, providing information that might be considered as fraudulent, and preventing any forms of miscommunication or ambiguities. Additionally, the parties should also consult a real estate lawyer for further guidance on drafting and reviewing real estate purchase agreements and their terms just to be safe.
What Should I Do Before Entering Into a Real Estate Purchase Agreement?
It is very important that the parties prepare themselves properly before entering into a real estate purchase agreement for the sale and/or purchase of a home. For instance, both parties should ask their respective real estate lawyers about any questions they may have about the agreement or the obligations that were decided during the negotiations process.
It also should be noted that most real estate transactions follow a “buyer beware” standard. This means that it is normally up to a buyer to inspect the property and check for any defects or substandard elements in and/or around the home.
Some additional steps that a party can take to protect themselves when it comes time to sign the contract include:
- Conducting an inspection of the property themselves;
- Hiring a certified home appraiser to confirm the value of the home;
- Hiring a home inspector to investigate the safety of the home and whether there are any defects that were overlooked or concealed;
- Interviewing neighbors and/or the real estate broker to obtain more information about the home itself, the surrounding neighborhood, and the local community;
- Hiring a lawyer to draft and review the real estate purchase agreement and any other related documents;
- Asking that a deadline be extended before signing if a party will not realistically be able to meet it, such as to complete one of the actions required under a specific contingency clause or if a buyer will not be able to secure financing or sell their house in time for the closing; and
- Hiring a title insurance company to perform a title search and check for any potential legal issues like encumbrances or easements on the property.
Do I Need a Lawyer for Help With a Real Estate Purchase Agreement?
The real estate purchase agreement is arguably the most important document in the home sale purchase process. Depending on the terms that a buyer and a seller include in the contract, it can impact the entire outcome of the final sale transaction.
Therefore, if you need assistance with negotiating, drafting, modifying, or reviewing a real estate purchase agreement, then it may be in your best interest to hire a local real estate lawyer for further assistance.
An experienced real estate lawyer will be able to help you with all of these tasks as well as can provide guidance on various real estate laws and protections. In the event that you encounter a legal issue or become involved in a dispute over the agreement, your lawyer will also be able to provide representation in court.
Finally, if there are other legal documents that are connected to the home sale purchase process that need to be drafted or reviewed, your lawyer will be able to complete these tasks as well.