Essential Elements of a Real Estate Contract

A real estate contract is an essential step in the real estate process as it contains all the details regarding real estate transactions. The contract’s goal is to ensure all the expectations are communicated and both the buyer and seller are protected. A real estate contract can be created by the party making an offer who signs it and gives it to the other party to accept the offer. A valid contract should have certain elements so let’s look at some of those required elements.

The Parties Involved Should Be Legally Competent.

The parties to a contract should be of legal age and mentally competent when entering the contract. For example, if a sixteen-year-old has a piece of land that they inherited and want to sell, they would not be able to do so because any contract they sign is invalid in a court of law. One should be eighteen years old and above to be legible to sign a contract. If one is unsure if the person they want to enter into a contract with is mentally okay, they should first do some due diligence.

Considerations

Considerations mean anything of value that is exchanged as part of the transaction, which in most cases is usually money. There are other alternative forms of considerations like love, affection and material items. The consideration needs to be spelt out clearly in the contract because it is a key element of a real estate contract. If one is not sure about what is acceptable as a consideration, they can hire the legal services of a real estate lawyer who can explain the details to them clearly.

Closing Costs

Closing costs are any other additional costs that accrue beyond the purchase price of the home. They vary from one property to the next, and who pays them between the seller and the buyer should be included in the contract. A real estate attorney should ensure that any agreement between the buyer and the seller on who will pay the costs is clearly stated in the contract and have their legal assistant proofread the contract to ensure all the information is accurate.

Price and Financing Terms of The Real Estate Contract

A real estate contract should include a payment method by the buyer and the offered price accepted by the seller. Some buyers will opt to pay cash, but since most people are not able to pay cash, they take out a mortgage. All this information should be in the contract, and if necessary, an additional financial document may be included containing all the details regarding the mortgage. If one requires any clarification on the financial terms in a real estate contract, they are advised to talk to an attorney.

Conclusion

When purchasing a home, one should ensure they understand all the conditions specified in a real estate contract. If one does not understand something in the contract, they should get legal advice from a real estate lawyer and not a lawyer specializing in business law or civil law as they may not have the best advice.