Understanding your real estate contract
The most common real estate contacts are ones of sale for a property. A contract of sale is a legally binding agreement made between you and the owner of the property that you intend on purchasing.
Unsurprisingly, contracts can be complex in nature and difficult to understand, thus it is important to seek advice from contract lawyers to ensure that you have a sound understanding of the contract.
Contract lawyers are equipped with legal expertise – they can help you grasp your legal requirements and obligations in order to complete the transaction successfully.
What is a contract?
A contract is a legally binding agreement entered into between two consenting parties, and in order for the contract to be enforceable, the agreement must contain sufficient evidence of the below elements:
- An offer made by one party which is consequently accepted by the other
- A common intention between the contracting parties to create legally binding relations outlined in their agreement
- The giving of consideration by the offeree (something of value in the eyes of the law) for the promise made by the offeror
- The parties have the legal capacity to act as stipulated in their agreement
- Each party has given genuiane consent, rather than consent obtained through duress
- The legality of the agreement.
If an agreement does not fulfil the above elements, it is not a valid contract and therefore has no legal standing.
What is in a real estate contract?
Similar to standardised contracts of sale, a real estate contract contains the below essential elements:
- Names and addresses – At the very top of the agreement, there will be an assigned area for the property’s address alongside the current owner’s names. It is important to double-check all the information included to avoid signing an agreement for the wrong home.
- The chattels list – Chattels include things such as fixtures and fittings. You will find a designated area for the chattels that are included in the sale of your home. If the current owner has stated that certain chattels will be included in the sale of the property, it is important to check the list before signing to ensure that they are explicitly stated
- Settlement conditions – Any and all conditions such as finance or inspections will need to be identified in the settlement conditions area. Each condition needs to be numbered and initialled by both contracting parties
- The deposit amount required for the property and its due date – There will be a designated section in the agreement detailing the deposit amount and when this is due in order to secure the home. The remaining balance will also be specified. Ensure that you thoroughly check this section to ensure that the figures are correct. Additionally, identify a settlement date for the contract
- The agreed sale price of the property
- Any other special terms and conditions
- The settlement date
- Whether the house will be vacant possession or tenanted.
There may be other aspects of the contract that you may be responsible for such as building insurance.
Once the exchange of the contracts has been completed, it is important to discuss this with your lawyer before signing.
Before proceeding in the signing of a sale contract, it is crucial for a lawyer to oversee the terms and conditions that are stipulated so you are aware of your legal obligations.
If you are unsatisfied with a specific term, your lawyer may even be able to negotiate the term to your satisfaction.