About Us *

Contact Us

Tour the Fountain


Real Estate Home

 

The Typical Residential

Real Estate Sales Transaction:

An Overview for Buyers and Sellers  

NOTE:  This article is intended to be a brief summary of law only, parts of which may or MAY NOT be applicable to your situation and/or your local jurisdiction(s).  Any information you glean from this article DOES NOT constitute legal advice and should be supplemented with the advice of an attorney licensed to practice law in your locality.

Check out our

Real Estate Web Links!

 

<<< CONTINUED FROM PAGE 3 <<<

This is where both Buyers and Sellers often get themselves into trouble if they are not careful. If each party doesn’t get the terms he/she wants into the contract prior to signing, it may be too late. As explained below, many real estate contract forms now include an Attorney Review clause stating that most of the contract’s terms (although almost never the purchase price) can still be negotiated by the respective parties attorneys for a period of time after both parties have signed the document. However, signing a real estate contract without having complete knowledge of its terms or, even worse, remaining uncomfortable with some of those terms, can have serious negative consequences, even if the contract contains an Attorney Review clause. Laws in several states allow a party to cancel a real estate contract if the other party requests material modifications to the signed version. Conversely, since most Attorney Review clauses do not allow for the purchase price term to be re-negotiated and modified after signing (otherwise, the signed document wouldn’t really be a contract at all per the basic rules of contract formation and the Statute of Frauds), parties to a real estate contract must typically have a ‘good faith’ reason for seeking to make modifications via an Attorney Review Clause.

Given all of this, what are the key terms that a Buyer or Seller should make sure to include and agree upon prior to signing any agreement to buy/sell real estate? While not a comprehensive list by any means, here are some of the most important and/or most commonly forgotten/overlooked terms, in no particular order:

i.)                  Attorney Review Clause. As mentioned above, inserting a clause into the real estate contract that allows for a period of attorney review (usually 2 weeks) provides an important layer of protection for both Buyers and Sellers.

ii.)                Timing / Method of Payment. Simply stating the purchase price is not enough. If part of the purchase price is to be paid as earnest money installments, that agreement must be stated along with the specific dates on which each such payment is to be made and in what format (e.g., banker’s check, wire transfer, etc.)

iii.)              Mortgage Contingency Clause. This is essential for the Buyer. Without this clause, a Buyer could be liable on a real estate contract even if he/she cannot arrange financing! [See Mortgage Issues.”]

iv.)              Inspections Clause. This allows the Buyer to have licensed professionals inspect the property and (the Buyer) cancel the contract if those inspections uncover unpalatable conditions. By limiting both the period in which inspections can take place and the nature/degree of defective conditions that can give rise to contract cancellation, these clauses also protect the Seller. [See Inspections.”]

v.)                Pre-Closing Damage/Destruction Clause. Due to the Doctrine of Equitable Conversion, depending on the state in which the real estate sits, and especially in the absence of a well-worded Damage/Destruction clause, even the Buyer can take the hit if the property is destroyed prior to Closing!!!

>>> CONTINUED ON PAGE 5 >>>

See Also:

Common Law Vs.
Civil Law

The Statute of Frauds

Doctrine of Equitable
Conversion

Jump
Back/Ahead
in this document:

Preliminary Matters

v

The Role
of the Attorney

v

Hiring a Real Estate

Agent/Broker

Real Estate Seller’s Agent

Real Estate Buyer’s Agent

Real Estate Broker

v

Negotiating the
Real Estate Contract

‘For Sale By Owner’

Deciding Key Terms

v

Pre-Closing Matters

Inspections

Mortgage Issues

v

The Closing

The Deed

Affidavit of Title
ALTA Statement

Business Law Home

 

If you would like further information about this topic, or would like to request attorney services for the writing, negotiation or closing of a real estate contract, click here to contact us today.

Go to:

page 1 / 2 / 3 / 4 / 5 / 6 / 7 / 8

of this document

&

Family Law Home

* Licensed to practice law in New York and Illinois.

© Roger Galer, 2004

The information contained on this website is protected from infringement by the laws of the United States of America, the laws of other nations, and by various international treaties and agreements.