When you finally come across a house you want to buy, you will likely make an offer to the seller to purchase the home. Once they accept your offer, both the parties will want to enter a real estate contract, known as the Real Estate Purchase Agreement, that will act as a preliminary form of the deal. If you live in a state where involvement of an attorney is necessary in a real estate transaction or even if it isn’t, you may want to hire one to review the contract and ensure there are no legal implications down the road whatsoever.
The Elements of a Real Estate Purchase Agreement
Depending on how much in detail you want a real estate purchase agreement to be, they can vary in length and complexity. However, there are some common elements that are found in every agreement:
- Dates such as when the offer was made, the day it expires, when the transaction will take place once the offer is accepted, and several others.
- Names of the all the parties involved, with the important ones being the selling and purchasing parties. Even if one of them is a limited liability company or any other corporate entity, it needs to be mentioned in the agreement.
- The price offered for the property.
- The property’s legal description. It is somewhat similar to a home address, but also contains a description of the property in terms of parcels of land. It is provided by a county recorder’s office.
- The amount of earnest money deposit
Aside from these basic elements, you can include other critical aspects to ensure there are no problems in the real estate transaction. They may include inspections, title requirements, escrow, contingencies, warranties, and others.
Who can use the Real Estate Purchase Agreement?
This legal document is for both buyers and sellers. Use the real estate purchase agreement, if:
- You have made the decision to purchase the property and would like to enter a formal agreement regarding the terms of the sale with the seller.
- You have an interested buyer and are ready to sell your property. You want to draft a formal agreement to outline the details of the selling process until the closing date.
One important point to note here is that this document doesn’t transfer a title to a house, lot, or building. Instead, it only sketches out the parameters for doing so. It allows the buying and selling parties to determine their roles and responsibilities before the actual transfer of the property comes in question.
The Option to Terminate
If the buyer wants to opt out of the deal prior to the closing date, they can use an option to terminate to end the Real Estate Purchase Agreement. Sellers can either rely on the law state laws of their state or include a clause in the agreement for the option to terminate. The seller may request a fee, which will be decided by both the parties. The buyer will have to provide a written notice the seller as well.
Real estate transactions do not always go smoothly. It is a good idea to have a real estate attorney with you to review purchasing contracts and negotiate terms to reach a common ground. Contact our experienced Naperville real estate attorney from the Fitzgerald Law Firm, P.C., to schedule a free consultation today.