Sample Real Estate Contracts: Everything You Need to Know
Reviewing sample real estate contracts will let you see how complicated they are. While real estate purchases are common, the stakes for both the buyer and seller are high.3 min read
2. Why Do I Need a Purchase Contract?
3. The Basic Elements of a Real Estate Contract
Reviewing sample real estate contracts will let you see how complicated they are. While real estate purchases are common, the stakes for both the buyer and seller are high. That is why it is important to state expectation, duties, and provisions in a contract.
Anyone purchasing real property needs a real estate purchase agreement. Here are a few scenarios:
- A seller wants to sell privately.
- The property is owner-financed.
- You are selling a property to a family member.
- The parties involved want to express their legal rights.
- You need to outline buyer and seller obligations before you transfer the title.
What Is a Real Estate Purchase Agreement?
Purchasing or selling real property, such as a home, land, or a condo, requires a written agreement. This agreement, known as a real estate purchase agreement, is the binding document for a real estate deal. The buyer makes an offer, and in turn, the seller decides whether to accept or decline the offer. While this document does not transfer the title to the property, it does outline what the buyer and seller must do before title transfer occurs.
Because there is plenty of money invested in these deals, you must use the proper agreement in order to avoid confusion or losses. State law requires that a sales contract include a real estate agreement. This is because real estate sales contracts fall under the statute of frauds and require a written agreement.
Why Do I Need a Purchase Contract?
There are both benefits and mandates associated with a real estate agreement:
- A real estate contract is required anytime you purchase real property.
- The statute of frauds is the law requiring a real estate purchase in the U.S.
- Lease purchase agreement contracts also fall under this statute.
- You are less susceptible to fraud or mistakes when you put a land purchase or lease agreement contract in writing.
The Basic Elements of a Real Estate Contract
- Buyer and seller details — include the buyer's and seller's full names and contact information.
- Property details — the property's address and a legal description of the land (most likely done by a licensed surveyor). It is important that you be able to identify the property's location.
- Purchase price — the price of the property after adding or subtracting any fees, deposits, or adjustments.
- Representations and warranties — the seller's promises and assumptions regarding the property. These are legal assurances to the buyer.
- Financing — states how the buyer is purchasing the property (e.g. buyer financing, owner financing, assume the seller's mortgage, etc.).
- Contingencies — the conditions that must be met before the purchase can happen.
- Title insurance — must be bought by one of the parties in case title issues come up sometime in the future.
- Closing and possessions dates — determine when the property will be legally transferred to the buyer.
- Lead-based paint disclosure form — required if the seller's home was built before 1978.
- Dispute resolution clause — dictates the way the parties resolve any disputes.
- Option to terminate clause — states the time period the buyer has to back out of the contract. The seller can request a fee for allowing the buyer to back out of the purchase deal.
- Home inspection clause — outlines the period of time the buyer has to get a home inspection.
- Closing deliverables — the date that all documents will be transferred to the right party during closing.
- Closing costs — the sum of all fees associated with closing or finalizing the sale.
- Risk of loss clause — states who is liable if there is damage done to the property between contract initiation date and closing date.
- Real estate taxes amount — the total taxes due on the land, the structures on it, and anything else permanently attached to the land.
Real estate agreements are "messy" by nature. Besides the buyer and seller, there are plenty of people involved like lawyers, contractors, etc. Check out samples of real estate contract to determine what you may need in your contract deal.
If you need help with a real estate contract, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.