Contract Requirements
Agreements for the purchase of real property generally must be in writing and be signed to be enforceable. An offer signed by the buyer that includes all essential terms and which is accepted and signed by the seller can constitute a binding contract. A written counteroffer made by the seller that is accepted in writing by the buyer can also constitute a binding agreement. Many real estate agents have forms of such agreements for use by clients and customers. Often a more detailed agreement known as a "Purchase And Sale Agreement" ("P&S") will be signed by the buyer and seller after an offer has been accepted. The P&S will then replace the earlier agreement. If you are unsure of your risks and responsibilities under any proposed agreement you should contact a qualified attorney to assist you.
Agreements for the purchase of real property generally must be in writing and be signed to be enforceable. An offer signed by the buyer that includes all essential terms and which is accepted and signed by the seller can constitute a binding contract. A written counteroffer made by the seller that is accepted in writing by the buyer can also constitute a binding agreement. Many real estate agents have forms of such agreements for use by clients and customers. Often a more detailed agreement known as a "Purchase And Sale Agreement" ("P&S") will be signed by the buyer and seller after an offer has been accepted. The P&S will then replace the earlier agreement. If you are unsure of your risks and responsibilities under any proposed agreement you should contact a qualified attorney to assist you.
Deposit By The Buyer
It is customary for a buyer to give a deposit or binder as a show of good faith at the time an offer is presented. While the amount is negotiable, it is typically 5% to 10% of the purchase price. Normally this deposit is held in escrow, but not deposited until the seller has accepted the buyer's offer.
It is customary for a buyer to give a deposit or binder as a show of good faith at the time an offer is presented. While the amount is negotiable, it is typically 5% to 10% of the purchase price. Normally this deposit is held in escrow, but not deposited until the seller has accepted the buyer's offer.
Mortgages And Financing Contingency
If it will be necessary to obtain institutional financing for the purchase, the buyer must fall within lender's guidelines to qualify for a loan. Loan packages, mortgage interest rates, points (pre-paid interest or administrative fees) and terms vary from one financial institution to another and will be adjusted from time to time. If institutional financing for a purchase is required, the buyer may wish to make an offer contingent upon receipt of a mortgage commitment within a specified period of time. Careful compliance with the exact conditions in a mortgage contingency clause is crucial.
If it will be necessary to obtain institutional financing for the purchase, the buyer must fall within lender's guidelines to qualify for a loan. Loan packages, mortgage interest rates, points (pre-paid interest or administrative fees) and terms vary from one financial institution to another and will be adjusted from time to time. If institutional financing for a purchase is required, the buyer may wish to make an offer contingent upon receipt of a mortgage commitment within a specified period of time. Careful compliance with the exact conditions in a mortgage contingency clause is crucial.
Title Examination And Title Insurance
Most banks and mortgage lenders require that an examination of the seller's title to the property he conducted to determine if the property is marketable and will provide adequate security for the loan it is making. Lenders generally require title insurance up to the amount of the loan and for an additional fee, title insurance can be obtained to protect the portion of the purchase price that the buyer paid.
Most banks and mortgage lenders require that an examination of the seller's title to the property he conducted to determine if the property is marketable and will provide adequate security for the loan it is making. Lenders generally require title insurance up to the amount of the loan and for an additional fee, title insurance can be obtained to protect the portion of the purchase price that the buyer paid.
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