Whether you’re buying or selling your home or an office location for your business, every real estate purchase requires a contract. How do you make sure that contract is valid, beneficial to you or your business, and legally enforceable? Every real estate purchase agreement should include these key elements to make sure you’re getting the most out of the transaction.
Real estate contracts require a few basic components in order to work (and to be enforceable in court). For one, the seller must be the legal owner of the property. Both parties must be legally competent, meaning they are of legal age and have the mental capacity to enter into a contract. Finally, neither party can misrepresent their end of the deal and there cannot be any fraud or duress involved in the agreement.
You’ll want to include the price of your transaction for obvious reasons, but don’t forget to include terms about the closing costs. These can include escrow fees, title search fees, transfer tax, and notary fees, to name a few. Specify whether the buyer or the seller will cover closing costs, or whether they will split the costs (and how these costs will be divided). Your agreement should also outline how property taxes, special assessment fees, and other costs will be paid.
When you’re viewing a property, or showing one yourself, certain items may be put on display. The buyer will want to know (and the seller should specify) whether these items are included or excluded from the transaction. Don’t make assumptions; list these items in your purchase agreement. You might list fixtures and appliances like light fixtures, washing machines, refrigerators, stoves, window treatments, and so on. If you are a seller working with a real estate agent, be sure to make clear to the agent what is and what is not to be included.
Most states prohibit sellers from intentionally concealing defects that they know about. For that reason, they must make certain disclosures, especially as they concern the buyers’ health and safety. Buyers should pay attention to these disclosures in their purchase agreements. Depending on your state, sellers may be required to disclose information about lead paint, wells, termite damage, radon gas, and similar conditions on the property. In New York, a seller who actively conceals a defect may be liable to the buyer for any damages arising from that defect. Make sure you discuss with your attorney any defects you are aware of so that he/she can craft a contract to protect you from potential litigation down the road.
Before the purchase of a home, buyers typically pay for a third-party home inspection to make sure the property is in good condition. The purchase will also likely involve an appraisal, which gives the buyer an opportunity to negotiate a lower price if the appraisal flals under the home’s listed value. In your purchase agreement, you should include a contingency clause for both of these processes. If the inspection shows flaws or damage to the property, if the seller refuses to make necessary repairs before closing the deal, or if other specific conditions are not met, the contingency clauses will allow the buyer to walk away and cancel the agreement.
Above all of these elements, the most important part of every real estate purchase agreement is the attorney who drafts it for you. A competent lawyer with relevant experience will be able to ensure that your contracts are legally valid. At Bergstein Flynn and Knowlton PLLC, we take this a step further. With our attorneys’ extensive real estate experience and our attentive approach, we will partner with you to ensure the terms of your purchase agreements always work in your favor. Please contact us today for further information and to schedule a consultation.