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The
Purchase Agreement
All residential
real estate contracts are NOT the same. It is
very important to carefully read the contract before signing
it. The following list sets forth some important things to
know about the purchase agreement. However, the purchase agreement
should be reviewed by a real estate attorney.
Form
Contracts
Many form
contracts are used in the marketplace. Some are oriented towards
protecting one party such as the builder, the agent, the seller
or the buyer.
The
Written Contract
It is
important to make sure that any agreements are written in
the contract. Most contracts contain a provision that the
contract reflects the entire agreement of all the parties
involved. Any agreements which are not included will not be
a part of the agreement.
Surviving
Closing
It is
important to check whether the contract contains a provision
that certain obligations survive closing.
The
Property Description
Some contracts
reference the description in the deed records at the courthouse,
when describing the property being purchased. If the property
is described by reference, it is important to obtain the legal
description on record. Some contracts allow the parties to
agree to attach an existing survey of the property to the
contract and the buyer has the right to terminate if a new
survey obtained by the buyer is materially different that
the one attached.
Contingencies
Some contracts
do not have a clause requiring the builder or seller to correct
defects prior to closing. Other contracts require that all
defects or certain defects be corrected prior to closing.
The contract may provide the buyer with the right to request
an inspection and request that defects be corrected. It is
important to check the contract for a provision which gives
the buyer the right to terminate the contract if the defects
are not corrected. Buyers should confirm that the purchase
is contingent upon obtaining a loan. Such a provision is referred
to as a financing contingency. The financing contingency should
include the amount of the loan, the interest rate and the
term of the loan. Some contracts provide that the buyer is
obligated to purchase the property even if the interest rate
increases before closing. If the buyer must first sell other
property, the buyer should make sure that the contract contains
a provision making the purchase contingent upon selling the
other property
The
Earnest Money
The earnest
money will go towards the purchase price if the sale goes
through. If the buyer decides to back out of the deal for
any reason NOT set forth in the contract, the seller MAY be
entitled to keep the earnest money.
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