A real estate contract is a legally binding agreement between a buyer and a seller that outlines the terms of a real estate transaction. The real estate contract is also a sales contract, purchase agreement, or real estate purchase agreement.
What are the Different Types of Real Estate Contracts?
There are many different real estate contracts, but the most common type is the standard real estate sales contract. This type of contract is used in most real estate transactions.
The standard real estate sales contract includes the following provisions:
- The names of the buyer and seller
- A description of the property being sold
- The purchase price of the property
- The down payment amount
- The loan terms, if any
- Any contingencies, such as a contingency for the buyer to obtain financing
- When the closing takes place
When is a Real Estate Contract Used?
A real estate contract is used whenever real property is sold. This includes houses, condos, land, and even some leases.
Why is a Real Estate Contract Used?
The real estate contract protects both the buyer and the seller in a real estate transaction. It ensures that both parties are ready, willing, and able to complete the transaction.
How are Real Estate Contracts Made in Florida?
In Florida, real estate contracts must be in writing to be enforceable. This means that oral agreements are not valid. The contract must also be signed by both the buyer and the seller. This means that the buyer and seller are both obligated to uphold their end of the deal. If either party decides to back out of the contract, they may be subject to legal repercussions.
How are Real Estate Contracts Different in Florida?
In Florida, real estate contracts are typically made using a standard form contract provided by the Florida Association of Realtors (FAR). The FAR form contracts are designed to be used by real estate agents and brokers when representing buyers and sellers in the sale of real property.
There are different FAR form contracts for different transactions, such as sales of single-family homes, townhouses, condos, and vacant land. There are also different FAR form contracts for different buyers, such as first-time home buyers and investors.
What are Common Issues with Real Estate Contracts?
Some common issues with Real estate contracts include:
- The contract was not properly executed
- One or more of the parties did not have the legal capacity to enter into the contract
- The contract is voidable due to fraud, duress, or misrepresentation
- The contract is unenforceable because it was oral and not in writing
- There has been a material breach of the contract by one of the parties.
Each real estate contract is different, so it is important to have an experienced real estate attorney review your specific contract before you sign it.
Closing Real Estate Contracts
Closing is the process of transferring property ownership from the seller to the buyer. In Florida, real estate closings are typically handled by title companies. The title company will search the public records to make sure that the seller is the rightful owner of the property and that there are no outstanding liens or judgments against the property.
The title company will also prepare all of the necessary documents for the closing and disburse the funds from the sale. If you are considering purchasing real estate in Florida, it is important to have a real estate attorney review your contract before you sign it. At Galaxy Title & Escrow, our experienced real estate attorneys can help you navigate the process of purchasing real estate and ensure that your rights are protected.
What are the Contingencies of a Real Estate Contract? What Affects the Contract?
The contingencies of a real estate contract are the conditions that must be met for the contract to be binding. The most common contingencies are financing, inspections, and appraisals. If any of these contingency conditions are not met, the buyer is typically allowed to cancel the contract and receive a full refund of their earnest money deposit.
Financing is usually the biggest contingency in a real estate contract. The buyer will need to obtain a loan from a lender in order to purchase the property. The lender must approve the loan, and the terms of the loan must be met in order for the financing contingency to be satisfied.
The buyer will also want to have the property inspected by a qualified inspector to check for any potential problems with the property. The inspection contingency gives the buyer the right to cancel the contract if they are not happy with the results of the inspection.
An appraisal is typically required by the lender in order to determine how much the property is worth. The appraisal contingency gives the buyer the right to cancel the contract if the appraised asset is not worth at least the purchase price.
If the property is part of a homeowners’ association, the HOA must approve the sale. The HOA approval contingency gives the buyer the right to cancel the contract if the HOA does not approve the sale.
The seller must sign and acknowledge that they are aware of all of the buyer’s contingencies in order for them to be binding.
It is important to have a real estate attorney review your contract before you sign it to ensure that all contingency conditions are clearly spelled out and that your rights are protected. At Galaxy Title & Escrow, our experienced attorneys can help you navigate the real estate purchase process and protect your interests.
The buyer can remove any or all of their contingencies by giving written notice to the seller. Once a contingency is removed, it cannot be reinstated.
After both parties have signed a real estate contract, the purchase agreement is then “ratified.” This means that the real estate contract becomes a binding legal document. At this point, both the buyer and seller are legally obligated to fulfill their duties as outlined in the contract.
It’s important to have a real estate attorney review your contract before you sign it to ensure that all contingency conditions are clearly spelled out and protect your rights. If you have any questions about real estate contracts or need assistance drafting or reviewing a contract, please contact our office. Our decade of experience is here to help!
Real Estate Agent Responsibilities for Real Estate Contracts
The responsibilities of a real estate agent in preparing real estate contracts vary by state, but some general duties are typically required.
First, the real estate agent must disclose any material information about the property that could affect the buyer’s decision to purchase, such as known defects or zoning changes that would limit future development. The real estate agent is also responsible for ensuring that all pertinent disclosures required by law are included in the contract.
Next, the real estate agent should help the buyer to negotiate a fair purchase price and favorable terms with the seller. Once an agreement is reached, the real estate agent will prepare a draft of the contract for review by both parties. The attorney will also advise you of your legal rights and obligations under the contract.
After both parties have signed the contract, it becomes a binding legal agreement. At this point, the buyer will typically provide a deposit to the real estate agent as earnest money, which is held in escrow until closing.
If the buyer decides to back out of the contract for any reason other than those specified in the contract, they may forfeit their earnest money deposit. It’s important to be aware of all the terms and conditions in your real estate contract before you sign it. Once you sign, you’re legally bound to follow through with the purchase according to the terms of the contract.
What Should Buyers and Sellers Know About Real Estate Contracts?
Both buyers and sellers should be aware of the different types of real estate contracts before entering into any agreement. The most common real estate contract is the sales contract, which is an agreement between a buyer and seller to exchange real property.
Other types of real estate contracts include:
- Leases
- Options
- Easements
Each type of contract has its own set of terms and conditions that must be met in order for the agreement to be valid. Buyers and sellers should consult with an experienced real estate attorney to ensure that they understand all the terms of their contract before signing it.
Can You Void Real Estate Contracts?
A real estate contract may be voided if there is a material breach of the contract by either party. A material breach is an act that goes against the main purpose of the contract. For example, if a buyer agrees to purchase a property but then backs out of the deal without a valid reason, the seller could sue the buyer for breaching the contract.
If the court finds that the buyer did indeed materially breach the contract, they may order the buyer to pay damages to the seller. It is important to note that not all breaches of real estate contracts will result in voiding the contract.
Minor breaches, or those that can be remedied, will usually not void the entire contract.
For example, if a buyer is supposed to provide a down payment but is late in doing so, the seller cannot just keep the down payment and cancel the deal.
Instead, the seller would have to give the buyer a reasonable time to make the payment. If the buyer still does not make the payment, then the seller can cancel the contract and keep the deposit.
Take a Peek into Our Quality Services at Galaxy Title & Escrow
If you’re considering purchasing property in South Florida, it’s important to be up to date with the relevant legal requirements and documents. Trusting your new home requires patience and diligence to ensure your ducks are in a row.
Real estate contracts are invaluable to the transaction process. Galaxy Title & Escrow offers the support you deserve. Contact our office today if you have any questions about real estate contracts.