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CONTRACTS

The document that spells out the terms and conditions of the sale of your property is referred to as a purchase contract, deposit receipt, earnest money contract or sales contract. It is a legally binding document that should reflect your intentions and capabilities accurately.

Your CENTURY 21 Lakes Region Realty agent will provide you with all documents needed to successfully complete your transaction. This includes the wide number of property disclosures now required by State and Federal law. All contracts have basic elements that should be included in any residential property sales agreement.

To be enforceable, a property sales contract must be written; oral agreements to sell real estate are not binding. The contract must identify the buyers, the sellers and the property. It must establish a purchase price and the terms of the sale if the sale is not all cash.

The contract specifies the amount of the buyer’s earnest money (good faith) deposit. The agreement usually provides for this money to be held by a third party, typically an escrow agent such as CENTURY 21 Lakes Region, another real estate firm or an attorney. The deposit is applied to the purchase price at closing, or it is refundable to the buyers if certain terms of the contract (called contingencies) are not satisfied. The deposit amount is negotiable, but local custom often prevails.

Most real estate purchase contracts will include at least two contingencies. A financing contingency makes the purchase conditional on the buyer’s ability to obtain a loan commitment from a lender. An inspection contingency allows the buyers to have professionals inspect the property to their satisfaction. If the sellers are unwilling or unable to correct defects, the contract is voidable and the buyer’s deposit is refundable.

A deposit could be forfeited by the buyers under certain circumstances, such as if the buyers back out for a reason not provided for in the contract.

The purchase contract should describe the seller’s responsibilities which will include such things as passing clear title to the property, maintaining the property in its present condition until closing, delivering the property "broom clean" and free of personal possessions and debris and making any agreed upon repairs to the property. Buyers may also have responsibilities in attending to all of the details of the contingencies that may be referenced in an agreement.

The sales contract should also specify who is responsible for paying which closing costs. Closing costs include such things as a brokerage commission, loan origination fees, title insurance and transfer taxes. Which party pays these charges is usually dictated by local custom but they can be negotiated. CENTURY 21 Lakes Region Realty offers Buyers Representation as well as Sellers Representation. Be sure to ask your CENTURY 21 agent about your options.

The purchase contract should clarify any items of personal property that will be included in the sale and any attached fixtures that will be excluded. It should also include the dates that title will transfer to the buyer and when possession will be delivered to the buyer.

First-Time Tip

A final walk-through provision gives the buyers the right to inspect the property prior to closing. This allows the buyers an opportunity to confirm that the property is in the same general condition as it was when they agreed to purchase it. A walk-through can also be used for the purpose of assuring that the sellers have completed repairs they agreed to do, or that a home that was still under construction when the buyers purchased it is finished.

The Closing

A real estate purchase contract is a complicated legal document. You should read and understand it before signing it. If you have any questions, ask your CENTURY 21 Lakes Region Realty agent or a knowledgeable attorney for an explanation. There are no stupid questions when it comes to the purchase and sale of real property.

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