Real estate contracts
Whenever you are buying or selling real estate, it is best to consult with an attorney before you sign any agreements. The law requires all real estate contracts to be in writing. An oral agreement to buy or sell real estate has no effect. When you sign a real estate contract prepared by a licensed real estate broker for the purchase of a home, you have three business days to have the contract reviewed by an attorney. This period is called the attorney review period. During this period, your attorney can review the contract, make changes, or even cancel the contract.
To review real estate contract immediately it is extremely important to get a lawyer. For any reason if you change your mind, the attorney will cancel the real estate contract within three day period. After that, the real estate contract is legally compulsory.
The three-day review period applies to those contracts for purchase of real estate that are prepared by a licensed real estate broker. However, you can put an attorney review period clause in any real estate contract. Although this also allows the other side to back out, if you change your mind within the three days you are protected. In order to put an attorney review period clause into a contract, the seller and buyer must both agree to it and it must be put in writing on the contract. All parties must sign and date the contract. Proper wording of the attorney review period clause should specify that the contract is not binding on either party until three business days after the date of the signing excluding Saturdays, Sundays, and legal holidays.
To protect you as buyer, the real estate contracts should deal with a host of issues. You need to discuss each of these issues with your attorney. Among other topics, you should make the contract conditional on:
Passing structural inspection by an engineer (for all inspections this contract should say who will pay for the inspection).
Passing a radon inspection.
Passing a water quality inspection.
Passing a test of the septic system if the house is not hooked up to a city sewer system.
Passing a termite inspection.
The owner having marketable title (no liens or other encumbrance on the house or against the seller, and the seller has full power to convey title with no restrictions).
The contract should also include a firm date for the closing. It should be made subject to your ability to get acceptable financing for a specific amount and interest rate. It should provide for apportionment of real estate taxes paid and, if the land as five acres or more, it should state who is responsible for any possible rollback taxes from loss of a farmland assessment. The contract should apportion all utility charges, based upon the date of closing. If sewers have recently been installed or are planned, there may be special, very high sewer assessments, and the parties should be clear as to how these costs will be allocated.
The real estate contracts are dominated by business contracts. Buying, selling, mortgaging, leasing and listing real estate all involve particular kinds of real estate contracts. To become familiar with the real estate business, we must devote a considerable part of our study to the estate contracts in general, as well as to the specific kinds that concern real estate.
For convenience we divide real estate contracts into two rather loosely defined groups. Our major contracts are associated with the kinds of real estate dealings that most frequently occur: these are listings, contracts of sale, deeds, mortgages, and leases. Other contractual arrangements, which involve particular kinds of circumstances and so are less frequently encountered, constitute our minor contracts.
Real estate contract is an agreement between two or more parties, in which each of the parties pledges to do, or is shows to have done, something that will benefit the others. This something can take a multitude of forms. A common one is a payment of money, though real estate contracts involving no money payment can be perfectly valid. Each of the parties must be shown to benefit, so real estate contracts must involve exchanges of benefits.
For most such estate contracts, however, there is one critical requirement with respect to form: generally, all real estate contracts, except listings and leases for one year or less, must be written. This requirement is an outgrowth of the fact that each state has enacted a law called the statute of frauds, which requires all real estate contracts of certain types be written if legal means are to be used to enforce them. Included in these categories are all such contracts in which land or an interest in land is sold and real estate contracts that cannot be performed within one year. This latter category, then, includes lease estate contracts extending for more than one year.
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