The posting below is a copy of an article published in Boca/Delray Life Magazine in February of 2006.

Before you get to the point of making or accepting a purchase offer/contract ask for and read a contract to get familiar with the various clauses and paragraphs. Buying or selling a home, the contract is vital to insuring a smooth transaction and in protecting your interests. Be sure you choose an agent to represent you that is a good negotiator, understands contracts with an eye to structuring the contract to reach your goals and minimize any risks. It’s true for the most part that agents use standardized contract forms but choosing the right forms, and adding in the necessary addendums and/or contingencies into a contract can make the difference between success and disaster. Every real estate transaction is somewhat unique as all parties have a different set of concerns and each home has its own set of issues, all of which must be addressed in the contract.

Contract Contingencies

A purchase contract and its addendum(s) contain many contingencies that protect a buyer. A contingency is an event that must transpire in order for the purchase contract to stay in full force. In other words, if A, B and C do not take place then the buyer may walk away from the contract and get a refund of all deposits made to that point. For example, most contracts have a loan contingency that says the buyer must get the loan approved within the terms agreed to in the contract. As an example other contingencies may include approval of the Home Inspection Report, sale of your present home, approval of the Condo Documents (condo purchase only), appraisal contingencies or anything else that both parties agree on. These contingencies help protect buyers and sellers. In the past, there were fewer contingencies and disclosures. It was a “buyer beware” atmosphere. This is no longer the case, but that doesn’t mean you should not be diligent in protecting your interests.

Disclosures

In addition to the purchase contract, there maybe numerous other disclosure forms that must be filled out by the agents, sellers, and buyers. Some of the more important forms are the Seller’s Disclosure, the Homeowner’s or Condo Association Disclosures, the Lead-Based Paint Disclosure and the Mold Disclosure. These are just some of the forms are used to disclose material facts about the property so that the buyer is aware of known defects, expenses or issues impacting the property. Some of these forms are legally required and some are just a good idea to have included in order to protect a home seller from liability down the road, and others could be a reason to terminate a contract if they’re not incorporated into the contract.

Conclusion

I hope you gather from this short article that a contract can be quite involved. This subject is much too involved to cover every aspect here, for instance recently there has been a trend to selling properties “As Is” but as a buyer or as a seller do you understand the pros and cons of this approach. Be wary of any agent who is unable to explain the terms and conditions of a contract or that just says “don’t worry it’s a standard contract everyone uses”. The location and type of property call for different disclosures and contingencies. This is one of the most important transactions of your life so be sure the agent you’ve chosen is experienced in putting together the right contract, one that minimizes your risks.

(Please note that all aspects of this subject cannot be addressed in such a short article. Do your homework and seek the advice of a professional.)

Popularity: 92% [?]

Share This

(1 votes, average: 5 out of 5)

 Loading ...