Real Estate Contract

Include Consideration: Consideration is something of value bargained for in exchange of the real estate. Money is the most common form of consideration, but other consideration of value, such as other property in exchange, or a promise to perform (i.e. a promise to pay) is also satisfactory. The real estate contract is typically not recorded with the government, although statements or declarations of the price paid are commonly required to be submitted to the recorder’s office. Notarization by a notary public is normally not required for a real estate contract, but many recording offices require that a seller’s or conveyor’s signature on a deed be notarized to record the deed.

Other hard assets, like gold, silver and anything of value can also be used or in other cases, love (where it can be shown to have existed between the parties). By using this site, you agree to the Terms of Use and Privacy Policy. This page was last edited on 11 January 2023, at 21:16 (UTC). When there are competing offers or when a lower offer is presented, the seller may be more likely to accept an offer from a buyer demonstrating evidence of being well qualified than from a buyer without such evidence. Any documentation demonstrating financial qualifications of the buyer(s), such as mortgage loan pre-approval or pre-qualification, may accompany a real estate offer to buy along with an earnest money check. Wikipedia® is a registered trademark of the Wikimedia Foundation, Inc., a non-profit organization. The better the financial qualification of the buyer(s) is, the more likely the closing will be successfully completed, which is typically the goal of the seller. Text is available under the Creative Commons Attribution-ShareAlike License 3.0; additional terms may apply. However, the earnest money deposit represents a credit towards the final sales price, which is usually the main or only consideration.

In a real estate contract, the type of deed to be used to convey the real estate may be specified, such as a warranty deed or a quitclaim deed. If a deed type is not specifically mentioned, “marketable title” may be specified, implying a warranty deed should be provided. Lenders will insist on a warranty deed. Any liens or other encumbrances on the title to the real estate should be mentioned up front in the real estate contract, so the presence of these deficiencies would not be a reason for voiding the contract at or before the closing. If the liens are not cleared before by the time of the closing, then the deed should specifically have an exception(s) listed for the lien(s) not cleared.

The common practice is for an “exchange of contracts” to take place. This rule enables contracts to be “exchanged” by mail. When the parties are together, both would usually sign both copies, one copy of which would be retained by each party, sometimes with a formal handing over of a copy from one party to the other. However, it is usually sufficient that only the copy retained by each party be signed by the other party only. This involves two copies of the contract of sale being signed, one copy of which is retained by each party.

If there are any real estate agents brokering the sale, they are typically listed also as the real estate brokers/agents who would earn the commission from the sale. Identify the purchase price: The amount of the sales price or a reasonably ascertainable figure (an appraisal to be completed at a future date) must be on the contract. Identify the real estate (property): At least the address, but preferably the legal description must be on the contract.

Freehold (“More permanent”) conveyances of real estate are covered by real estate contracts, including conveying fee simple title, life estates, remainder estates, and freehold easements. Real estate contracts are typically bilateral contracts (i. It is a legal requirement in all jurisdictions that contracts for the sale of land be in writing to be enforceable. In South Africa, the Alienation of Land Act specifies that any agreement of sale of immovable property must be in writing. The various Statute of frauds require contracts for the sale of land to be in writing. In Italy, each transfer of real estate must be registered in front of a notary public in writing.