When closing a deal in real estate, you have to follow certain mandates for it to be binding. For example, you contract has to be in writing, which will also spell out all of the terms and condition, special agreements if there are any.
However, a real estate contract can be full of hidden wonders which might trick you if not noticed. If there is no real estate agent involved, your attorney should be able to assist you in preparing a contract offer. In this article, you will learn the most important clauses that should be included in a real estate contract.
Description of the Property. For every real estate contract, the subject property must be fully describe in the contract. To do this, you can look at the title and the approved survey plan for the property. On the contract, you should place the name of the person to whom the property belong, the name of the property, title of the property, lot number, exact location, and any special identification details. These details are important to clearly identify your property.
Price of Property. The price of the property should be placed in the contract to make it clear the payment that the buyer has received. If you are the buyer and you are obtaining financing, you should allow yourself some time. Most mortgage lender application usually takes around 30 to 40 days to get approved, so you may want to give yourself up 60 days in which to finalize the deal.
Home Inspection Clause. This part of the contract allows the buyer to have an inspection made to the property, within a certain period of time. The inspection may include investigation for the roof, plumbing system, heater, and air condition. The inspection may be done to make sure there are no hidden problems affecting the integrity of the home.
Home inspection clause is an important clause in the contract to prove good physical condition of the property. The result of the inspection should be attached or annexed with the contract. If there are some repairs in the house, and the buyer agrees to the contract, then it means that the buyer is also okay with such shortcomings.
Closing Clause . The closing clause states that the seller turns over or conveys the property to the buyer either in fee simple, loan, or any other means of conveyance. The purpose of the closing clause is to evidence the transition of the property from the previous owner to the new owner.
Closing clause, however, is different from the closing cost. Closing cost spells out the financial cost of closing the contract, which will also include the cost of recording the deed, title insurance, and escrow fees.
Assignment Clause. It is important that your contract do not have a prohibition for assignment of obligation. Normally, the buyer can assign the property to a third person while the contract is pending and the latter can assume the obligation. You could add a simple clause like “buyer may assign the contract” or “whomever is assigned to this contract will also agree to the purchase.”
A real estate contract can be tricky, hence it is important that you have all important elements spelled out in the contract. Now that you know these, you can be more careful and mindful in your real estate contract.