A real estate sales contract, or real estate purchase agreement, is a contract for the sale or purchase of a property. The contract outlines the rights, duties, and responsibilities of the seller and buyer of the property.
What Does the Sales Contract Contain?
Each jurisdiction has different laws regarding a real estate sales contract. However, a general contract usually includes:
- Legal and full description of property which may contain any zoning provisions
- Purchase price
- Terms of sale such as any payment options, mortgage, escrow
- Deposit amount
- Condition of property such as “as is”
- Closing date
- Inspection right or results of inspection
- Items included in the sale of property, such as appliances and fixtures
- Any legal issues regarding the property’s title
- Option to terminate
- Insurance requirements
Is a Real Estate Sales Contract Binding?
A contract for the sale of property is binding. A contract typically contains certain contingency clauses, or contingencies, which allows one or both parties to terminate the contract. These contingencies do not have any consequences if certain conditions are not met.
What Is an Option to Terminate in a Real Estate Sales Contract?
The option to terminate allows a buyer to end the sales agreement prior to the completion of the sale. It typically requires the buyer to give adequate notice to the seller and/or pay a termination fee.
Is a Breach of a Sales Contract the Same as an Option to Terminate?
No. A breach of a real estate purchase contract occurs when the buyer or seller does not follow the conditions and terms of the contract. Terms of the contract include things like the seller not providing a clear title and not including other items in the contract. A breach can occur in several different ways, such as:
- Failure to pay
- Failure to provide the correct deed to the property
- Sub-leasing property when it is not authorized in the contract
- Contesting one or more real estate contract penalty clauses
Should I Discuss a Real Estate Purchase Contract with an Attorney?
If you are entering into or planning to enter into a real estate sales contract, contact a real estate attorney for help. They can represent you in negotiations to buy or sell a piece of property, and they can advise you in any real estate transactions.