October 26, 2023
Needham, MA--We want to trust people at their word, and nowhere is this more dangerous than in the process of finalizing a real estate contract.
Here a few examples:
Leases: A young couple sells their rental property in order to buy a single-family home. In accepting an offer, they ask the buyers if they will please honor the lease with the current renters. The buyers eagerly agree, but as soon as they take possession, they give the current renters notice to vacate.
Appliances: The prospective buyers have no appliances to bring to the new home and inquire if all appliances are included. The sellers assure them all appliances will remain, but when the buyers move in, the washer and dryer are gone.
In both cases, these oral agreements were never reflected in the written language of the real estate contract.
Oral agreements can be extremely difficult to enforce, especially when it comes to real estate and property. While one would hope oral agreements would be honored, more than a few contract lawyers will tell you, if it’s not in the contract, it’s not part of the deal.
During the process of purchasing a home, there are many factors that must be negotiated. It’s imperative that the homebuyers carefully read the language to ensure everything they discussed is reflected in the final contract.
Reviewing the contract
Here are some of the most critical elements to review:
The agreed upon price in the final offer must be clearly stated in the contract.
There must be a meeting of the minds as to when the homebuyers can take possession of their new home. When choosing a date, there is deference given to the time needed to procure inspections, financing, title insurance and so on, but also deference given to the amount of time a seller may need to purchase another property and move out.
What am I getting
The contract must clearly state what the homebuyer is getting for their price. This may include a movable shed, appliances, or curtains. Make sure anything that is discussed orally during negotiations is reflected in the final wording.
This may be the most important portion of the contract. A contingency is basically a requirement that must be met for the transaction to go through.
For instance, an appraisal contingency requires that the value of the home be commensurate with what the buyer is offering to ensure they can obtain financing. If the appraisal comes in low, the appraisal contingency allows the buyer to walk away from the deal. A seller may request a contingency that states that they will not finalize the deal until and unless they are able to consummate a deal on their next home. An inspection contingency allows the homebuyer to gather detailed structural information on the home in order to renegotiate the price, ask for pre-sale repairs, or walk away from the deal entirely if significant issues crop up.
The contract may also include details on who pays the closing costs, a financing clause allowing a buyer to back out if they fail to get approved, and a detailed explanation of what happens in case either party defaults on the contract.
The bottom line is that real estate contracts are serious legal documents and homebuyers should carefully review each section before signing.
At Kriss Law/Atlantic Closing & Escrow, we have a full range of experienced legal professionals who are highly experienced at reviewing your legal documents and identifying discrepancies. Contact us to learn more about our services and expertise.