Understanding Real Estate Purchase Contracts

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Looking to buy or sell a property? Learn about the crucial aspects of real estate purchase contracts from Driessen De Rudder Law Office. Call for a consultation today.

What Are Real Estate Purchase Contracts?

If you are looking to buy a home, farm or other kinds of real estate, it is important that you’re aware of real estate purchase contracts and what they entail.

A real estate purchase contract, also called a real estate purchase agreement, is a document that defines the agreed terms, rights and obligations between a buyer and seller in a real estate transaction. Once it is signed, the contract becomes legally binding on all the parties. Any party who fails to comply with the terms can be sued.

There are many standard form real estate purchase contracts available on the internet. Real estate agents and individuals involved in real estate transactions generally rely on such pre-printed agreements to close real estate deals. However, each real estate transaction is unique, and you need to tailor your agreement to your unique needs before signing. Otherwise, you may be obligated to perform a contract whose terms are unreasonable and unfavourable.

As the real estate purchaser, you are at a disadvantage if there are issues with the agreement or property because you’re the one who has to part with money. So, before signing that agreement, you need to be certain that its terms fully represent your intentions and protect your interests.

The details in this guide can help you understand what your real estate agreement should contain and other steps to take to ensure the contract aligns with your interests. Keep reading to learn more.

Before Signing a Real Estate Purchase Agreement

As real estate transactions often involve a lot of money, relying on photographs or virtual tours is dangerous. You need to look out for yourself, do your homework to learn more about the property you intend to purchase, and ensure that the contract protects your investment properly. Some of the steps to take for this purpose include:

  • Physically inspecting the property.

  • Confirming the land title or ownership at the Land Titles Office. This also allows you to confirm if the land had been used as collateral for a loan with a mortgage company or whether there are competing ownership claims.

  • Confirming that there are no restrictions on the property that could affect your intended use. For example, if you intend to rent out the basement of the condo you are purchasing, you must verify that there are no restrictions that prevent you from doing so.

If you spot any issues while investigating the property, it does not mean you have to cancel the transaction, although that could be an appropriate response in some circumstances. In other cases, identifying any issues early on could help you negotiate better contract terms, such as a lower purchase price or whether you require the seller to take out title insurance in your favour.

You don’t have to embark on these investigations on your own. You can get help from a skilled Barrhead Real Estate Lawyer who can handle things on your behalf and advise you on the next steps based on their findings.

What Should Real Estate Purchase Agreements Contain?

Some of the usual terms in real estate agreements include the following:

  • Details of the property, including its location

  • Information about the buyer and seller, such as their names and addresses

  • Financing terms (such as the purchase price, down payments, or whether an earnest money deposit is required to confirm the contract and the specific amount if required)

  • Details of any personal property involved in the sale or tangible amenities that are being transferred with the property, such as furniture

  • Specific conditions and warranties required or imposed on the buyer or seller

  • Details as to who bears the transaction closing costs

  • Possession or closing date (when the transfer of property occurs and the buyer can take possession of the property).

If you have any preference or conditions based on your findings during your investigation of the property, it must also be included as part of the contract terms to ensure it is binding on the other party.

What To Do if You Are Dissatisfied With Your Real Estate Purchase Contract

 

If the contract you are offered does not suit the uniqueness of your real estate transaction, you can have the terms altered or modified before or after signing to ensure they meet your needs.

Generally, real estate purchase contracts can be modified in two ways: by an addendum or an amendment.

What Is an Addendum?

An addendum is a document that modifies or adds to the terms of a real estate purchase agreement. This modification approach is usually applied when you need to add additional contract terms not covered in the main contract before signing.

The addendum may be contained in a separate document, but it is usually attached to the main contract document. Once the contract is signed, its terms and the terms in the addendum become equally binding on all parties.

What Is an Amendment?

On the other hand, an amendment is a change made to the contract terms after both parties have signed it. It involves drafting a new contract without any of the undesirable terms in the old contract and containing any new terms desired by either party.

An amendment is tricky because if the other party does not agree, you would still be bound by the terms of the old contract you signed. This underscores the need to have your real estate purchase agreement reviewed by a professional before you sign.

Do You Have Further Questions About Real Estate Purchase Agreements? Contact the Experienced Real Estate Lawyers at Driessen De Rudder Law Office for Help

A poorly crafted real estate contract can lead to several unwanted legal problems. So, even though you may be eager to close your real estate transaction and sign all documents quickly, taking some time to investigate the property you wish to purchase and review the purchase agreement can save you lots of trouble in the long run. At Driessen De Rudder Law Office, we aim to help our clients get the maximum satisfaction from their real estate transactions. Our experienced real estate lawyers understand the intricacies of real such transactions and can help you investigate the property you wish to purchase and review your contract to avoid any potential issues. We can also help you negotiate better terms with the other party if necessary.

So, if you have any questions or have an impending real estate transaction, do not hesitate to contact us immediately. Let us help you ensure your interests are properly secured by the terms of your real estate purchase agreement.

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