Important conditions for real estate contracts

On Behalf of | Apr 5, 2022 | Real estate litigation |

Your real estate purchase can be one of the most consequential financial decisions you ever make. It is important to understand all of the conditions in the contract.

Having contingencies in a contract can help prevent real estate litigation.  If a contingency is not met during a specified time period, purchasers may be able to walk away from the deal and keep their deposit.

Financing

Transactions depend on a purchaser obtaining financing at a reasonable rate. It is important to make an offer contingent on obtaining financing at a specific rate or you may lose your earnest money deposit or purchase a home beyond your financial means. The contract should also address contingencies such as obtaining FHA or VA loans.

Seller assist and closing costs

A seller assist is the seller’s agreement to pay some of the additional costs that buyers usually have to pay, such as closing costs.  The amount of the assist typically depends on the property’s full purchase price.

You should ask for any seller assistance on paying closing costs in your offer. It should state the costs as a dollar amount or a percentage of the purchase price.

The agreement should also address whether buyer or seller is responsible for other common fees associated with the transaction such as escrow costs and transfer taxes.  This usually depends upon the practice in your area.

Inspection

A home inspector walks through the property and looks for problems or damages. Other electrical, pest and lead inspectors may be needed.

A home inspection contingency is important and allows a purchaser to leave a deal if the inspection uncovers significant or costly flaws in the structure. Sellers sometimes pay for repairs or credit it from the purchase price.

Fixtures

Do not assume or rely on verbal assurances on whether fixtures and appliances will be sold with the house. The contract must identify any fixtures or appliances that come with the purchase.

Closing

Common time frames for closings are 30, 45 and 60 days but this often depends on issues such as the seller finding a new home, remaining times on existing leases, and job relocation. The parties should address this time period.

Existing home sale

If you need to sell your current home for financing your new home purchase, make your offer contingent upon the sale of your present home. Provide a reasonable time for selling your home such as 30 to 60 days because the seller does not want to take their home off the market for an extended time.

Attorneys can assist you with a real estate transaction. They can help assure that your interests are protected.