Legal Information About the Real Estate Contract

The conclusion of final agreement between a seller and a buyer is the Agreement of Purchase and Sale. We know it as the real estate contract.

There are five mandatory requirements for a contract under contract law:

1. The name, address and contact data for the seller(s) and buyer(s).

2. A clear description of the property. We prefer the tax map and parcel number but a street address, or other clear description will do. Such as "parcel known as Hudson Farm, being 456 acres more or less fronting on west side of US Route One and County Rd. 264, being about 9 miles north of Rehoboth in Sussex County Delaware. The final description on the deed at settlement will contain the Book and Page number where it was purchased, a survey description and tax map ID. For the contract any clear description that could ONLY be the property being sold is sufficient. This can be the Tax I.D. number.

3. The price and terms of payment. For instance: cash at settlement in thirty days from the date of this contract. Here should also be noted the deposit or consideration which may be as little as one dollar BUT is normally 10% of the purchase price.

4. The date of the contract.

5. Signatures of all sellers and buyers.

Although the contract need not be written on the form provided by the Realtor, it is customary to do so. On larger properties a simple note is often written which include the above 5 items and says that a full contract will follow. Then, the short contract is followed by another formalized contract drawn up by the attorney for the buyer or the seller. That is then reviewed and usually changed to some degree by the attorneys for the other side of the transaction.

On larger and more complicated properties the contract can go to dozens or even hundreds of pages. The five items here must be included but hundreds or thousands of other items may need to be included for some properties.

Most contracts today, for residential homes, are written on the standard contract form authorized by the County Board of Realtors and provided by the purchaser's Realtor. The deposit money, or earnest money as it is sometimes called, is usually deposited in the escrow account of the selling Realtor.

Until all of the items above are included and ratified by all parties there is not a contract but only a "contract in progress" or an "offer" as we call it. This can be an offer to sell or an offer to buy and there may be several counter offers going back and forth as negotiations continue.

When everything is finalized the fully written and agreed upon document is said to be ratified. Even then the contract is not fully enforceable until it is conveyed, and received, in writing to all parties. THEN and only then can it be said to be a full and complete and enforcable contract.

Copyright © 2001-2005 www.JodyHudson.com

Source of this article is: http://www.kate-jody.com/essays/ aboutrealestatecontract.html

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