Definition of a Sale Contract
A sale contract is a written agreement between a buyer and seller of real estate, setting forth the terms of the sale, and specifying the rights and duties of the parties in the real estate transaction. It will be signed by the buyer and seller and their witnesses and will become legally binding upon each party.
A sale contact is also known as a purchase contract.
Mr. McGillicuddy wishes to sell property to Mrs Danforth. After agreeing on a price, closing date, and other terms of the sale, Mr. McGillicuddy’s attorney prepares a sale contract. It is reviewed and signed by Mr. McGillicuddy and Mrs Danforth. The parties are now legally bound by the terms of the contract and it will govern the sale transaction.
A sale contract is the basis of the real estate transaction, it is in large part the “law” the parties agree to bind themselves to. In the event of a dispute in the future, the terms of the real estate will control and define the dispute.
Terms of a Sale Contract
Real estate transactions can be complex, with a number of things to consider. The sale contract will obviously set forth the purchase price but it will also contain many other provisions. Some of these provisions that are commonly found in a sale contract are:
- The names and addresses of the parties;
- The address and legal description of the property;
- The date the contract will “close” or be finalized;
- The date financing, inspection and other conditions of sale must be completed;
- Whether the buyer will be able to cancel the contract if financing is denied;
- The amount to be paid at the execution of the contract;
- The type of inspections to be performed, the time in which they will be performed, and who will pay for the inspection;
- Whether the property is being sold in its present condition or whether repairs will be made;
- The time and method in which the seller will demonstrate good title to the property;
The payment of commissions to real estate agents and other third parties;
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A sale contract for real estate may contain many terms and clauses that are often not understood by a person not experienced in real estate transactions. Because the parties have legally bound themselves to the document, and are subject to being sued if they do not perform their obligations, it is usually recommended that both parties seek the advice of an attorney experienced in real estate law, especially in the case of a private sale.
When arranging a mortgage for you, we will require a copy of the sale contract pertaining to your real estate transaction. In addition to the advice given to your Realtor and lawyer, we can offer our expertise in regards to the portion of the contract that addresses mortgage financing.
If you are interested in learning more about sale contract, please feel free to contact us today!