Real estate agreements are necessary to help define the rights and responsibilities of both parties. There are different real estate agreements, including purchase agreements, rental agreements, lease option agreements, and land contract agreements.
A contract is written in legal terms for it to be held up in court. Each word has a specific meaning within the law, so the two parties cannot change the meaning of their intentions without having a new document drawn up. Additionally, contracts are needed because if one party doesn’t honor the end of an obligation, then there is recourse available through the court’s system to resolve any disagreements.
For instance, a couple hiring a plantation contract drafting attorney would use a purchase agreement to outline the terms of what they are purchasing, including price, closing date, down payment amount, and other relevant information. Without a purchase agreement in place, there will be no protection for either party if one person is trying to take advantage of another.
What Happens In a Breach of Contract?
If there is a breach of contract, then the first step will be to give a written demand for performance or damages if appropriate. If it’s clear that something has been violated, then the next step would be filing a lawsuit against the breaching party along with any damages incurred as a result of their actions. Once this occurs, both parties should consult an experienced plantation contract drafting attorney for guidance on what steps they need to take from here on out. In conclusion, real estate agreements can define who owes what to whom and can help protect both parties from any breach of contract.
When a potential home buyer does not get an offer accepted, they can breach the contract. Title companies stay clear of this because they know that if their title agent drafted the agreement, then they would automatically become liable for any claims against a party that broke a contract.
An attorney who drafts real estate agreements has several different types of contracts written before but have to be edited and customized to fit each unique situation. When writing an agreement, it has to be done in legal terms so that if the case were to go into court, all evidence used would be held up under review by a judge or jury. In addition, when signing off on a contract with another party, you want to make sure it’s binding so that if a party decides to violate or breach the contract, they can be held accountable.
What is Written in Real Estate Agreements?
The real estate agreements should include who is buying and selling the property, what will happen in case of a default, all assets included in the sales price, and any other relevant information about the sale that should be known before signing on the dotted line.
The purchase agreement should include all necessary information to avoid any misunderstandings or confusion about the terms of the sale.
The most common documents included in real estate agreements are:
- Preliminary negotiations between buyer/seller about price and terms of sale.
- Title commitment includes a thorough description of what is being sold and all encumbrances or potential rights on the property.
- Conduct an independent title search to uncover any prior interests in the property which may interfere with its use by the buyer.
- The deed transfers ownership from the seller to the buyer.
- An agreement regarding who will pay real estate taxes on the property after it’s transferred to the new owner(s).
- A statement describing earnest money held by the title company (usually 1 percent of the purchase price. Earnest money demonstrates the party’s good faith intention to enter into the contract. It is deposited with a neutral third party, such as a title company or attorney, and becomes part of the purchase price if all parties close on the transaction.)
- Home warranty to protect the new owner from unforeseen structural defects in their home.
- Inspection reports are prepared by professional inspectors hired to conduct inspections of the physical condition of the property and report their findings to buyers and sellers.
- The owner’s title insurance policy protects your ownership rights if someone else claims they own it (most common for co-purchases).
The Different Forms and Agreements
There are different forms used in real estate agreements:
Preliminary Agreement: This document outlines all terms expressed in the purchase contract and is used to establish all the duties, responsibilities, and liabilities of both buyer and seller for the sale of real estate.
Earnest Money Contract: This document describes how earnest money will be handled through the closing process. Express provisions include issues such as who gets it if one party defaults or walks away from the deal; whether all or part of the payment can be forfeited by a party who defaults; what happens to the money if one party dies before closing.
Purchase Agreement: This document sets forth specific terms agreed upon by the buyer and seller for the purchase price, time limits on making payments, terms of financing by specific lenders, contingencies under which contracts can be voided, deadlines for inspection reports by appraisers or others who must report to buyer and seller.
Settlement Statement: This document itemizes the cost of the sale.
Many different forms are used in a Real Estate Agreement, but each has its own specific purpose and helps clarify issues for each item. Everything is binding in writing and is vital in such agreements.