This legal document is used for the exchange or purchase of property and land between the buyer and seller. It can cover a lease, purchase, rental, or sale and is typically in writing. It follows the normal legal requirements and contract laws. It is also known as a contract for deed or land contract. A real estate contract can be composed by one side, signed, and offered to the other side for their agreement and signature or can be drawn up by both sides and signed. If any counter offers are going to be made, they must be done before either side signs the contract. If the real estate contract is signed and there is a counter offer, it is usually accompanied by a markup of the contract and then initialed.
In order for the contract to remain effective, it often has many conditions that must be maintained or met. It also lists a date of possession. This is normally time when the contract becomes effective and the possession of the property is transferred to a signer. Depending on the buyer’s financial reliability, there may be a deposit required and conditions may be added to the real estate contract.
There are many requirements to a property contract and it has to include all of the following in order for it to be considered enforceable and legal.
• A legal street address and description of the property
• The selling price
• Payment that is agreed upon by both parties
• If applicable, the specifics of a mortgage, including the due date, amount, terms, and rate
• Amount of deposit
• Closing date for the finalization of the contract and possession takeover date
In addition, the real estate contract must outline many of the details that can break or make the deal. Usually these details are important to the buyer. These can include:
• What is included and not included from the real estate
• Contingency for an inspection and when it is to be done
• Warranty on the components of the property or on the land
• Testing of any septic tanks and wells
• How long the offer stands before a counter offer must be initiated or before the buyer accepts the contract
• Insurance coverage between the exchange of possessions
• What process will be used for arbitration if the contract is broken or thought to be broken?
A lawyer from one or both sides can do a review of the real estate contract before it is signed. All of the terms of the real estate contract must be within the laws of the governing county. Often, if the contract is broken it could result in a civil claims lawsuit.
