contract is the legally binding document that sets forth the terms of the sale,
establishes the rights and obligations of the parties involved, specifies the
actions to be taken in order to close the sale, and establishes the time frames
for those steps to be completed.
is created when there is a "meeting of the minds" on all terms. The contract is
created when the buyer and seller have come to such agreement and signed the
offer form along with any counter-offers and addenda. Real estate contracts
must be in writing; verbal contracts to purchase real estate cannot be
enforced. Prior to signing a contract to buy or sell real property it is
important to understand all of the terms to which you may be obligating
standard pre-printed purchase contract forms are utilized and filled out by the
real estate agents handling the transaction or by the principals if there is no
agent involved. While most buyers and sellers are usually fully aware of the
terms such as price, closing date, and financial terms, there is a tendency to
overlook much of the pre-printed portion of the form. Since all the terms of
the contract can be binding it is important to understand all of the terms that
you are agreeing to before you sign the contract. Not doing so can be a costly
mistake, especially if there are problems or difficulties in the
Some of the items that you
may be agreeing to when you sign the pre-printed form may include:
What personal property will be included or excluded from the sale.
will pay for required repairs or retrofits.
the seller's disclosure obligations will be.
What the seller's obligation to maintain the property will be.
the seller is warranting about the property.
the buyer's inspection rights will be.
will happen in the event either party does not comply with the contract.
What will the parties'
legal rights and attorney fee provisions be in the event of
It is highly recommended that you read and review the
pre-printed forms used most commonly in your area before you write and sign an
offer to purchase. Your real estate agent can provide you copies of the
forms and should be willing to explain and review them with you. Once a
bona-fide offer has been presented, your focus will be on issues such as price,
terms, and closing date.
By reviewing and understanding the purchase
contract form ahead of time you can strengthen your negotiating position,
protect yourself from incurring unnecessary costs or problems, and have a
better understanding of what you will need to do to conclude the sale.