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What is a Real Estate Contract?


A real estate contract is a mutual promise between a buyer and seller of property for the future transfer of ownership of the property. The contract does not transfer ownership, it is only an agreement to do so at a future date and time providing all conditions stated in the contract are met.

For a real estate contract to be considered valid a number of requirements exist.

It is obvious that a real estate contract will include the parties (Seller & purchaser) Other parties may join the contract as well- for example, a real estate broker, or an escrow agent. All parties included in a real estate contract should be clearly identified by name, and their capacity (seller, purchaser, agent, etc) It is important for a seller to be identified in the contract exactly the way the seller holds title to the property. Purchasers should sign and be identified exactly the way they wish to take title. The name of the person should be printed underneath the signature line.

A real estate contract usually includes the consideration from one party to the other. Consideration is usually money or something of value.

A contract should also describe the the property being sold. A description of the property from a survey is ideal, but not necessary. Most states will accept the description as long as the property is clearly and distinctively identified.

Any personal property included in the sale of the property should also be included in the contract. For example curtains, throw rugs, etc. If there is anything that might be questionable it is recommended that you indicate in the contract whether or not it is included in the sale.

According to some the most important element of a real estate contract is the price. In relation to price the method of payment should also be stated. This is the way the price will be paid and received. The contract should provide the exact method of payment (cash, notes, certified check, etc)

A contract should also contain the quality of title at the time of closing. The most common terms are "marketable title" and "insurable title."

The closing of a contract is a date when the parties to the contract agree to perform all of their promises stated in the contract. A purchaser usually pays the remainder of the purchase price, and the seller usually transfers ownership to the purchaser. The date, time, and place should be set in the contract. A definite date and time for the purchaser to take possession of the property should be included in the contract. Possession can take place anywhere from immediately after closing, to a set number of days following the closing. The closing date.

When entering into a contract it is important to consider the mental capacity of the parties. For example if a minor signs a contract it is not enforceable by law.
Lastly a meeting of the minds must be met for a contract to be legally enforceable. A meeting of the minds simply means that both parties agree on the same terms, same thing, at the same time.


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10 secrets every spanish property buyer should know
10 Secrets Every Spanish Property Buyer Should Know
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