Essential Parts of a Property Purchase Contract
Buying a piece of land or property can be the most exciting thing you can ever experience. However, it comes with risks along with it and you should have ways to mitigate the downside.
A property purchase contract is the same as the promises that people make. The only difference is that you will be exchanging money on an asset. In the real world, promises are made on words and it’s easy for people to break them without getting caught.
This means that you only look for what matters. The answer lies in looking at the right things in a purchase contract. For that, you will need a blueprint that we care to provide. Here’s a blueprint prepared for you by the experienced team at Chris Price Realty.
1. Good Money Deposit
Promises are only good if they are kept. If you are a seller, then you should seek to get an offer. And most of the time, that means getting a buyer who is ready to commit to the purchase and put in a deposit to show it. This money should be secured in an escrow account or party.
2. Identification of Parties and Property
As far as you know you have a lucrative property with a low price and good location, but you might need to go a little bit further and learn more about the property’s history. Find out who owns the property and who they have ever sold to before. Also, identify the exact address and property legal or company’s description in the official records of the local jurisdiction. The same scrutiny should apply to the seller.
3. Method of Payment
This should be agreed upon by both parties. Beyond the traditional mortgage way or physical cash method, there are other ways. One can use community land trusts, nonprofit developers, and cooperative housing to fund the purchase of the home.
In special cases like foreclosure, it should be stated in the contract so that the seller can be aware. This means that he or she will expect new ownership or money from the loan company.
In layman’s terms, this is all about conditions and methods that are associated with a property of interest. Some of these conditions are in the control of the buyer and seller, while some are not. Some of the common contingencies that you might bump into are:
- Inspection: This means that a professional home inspector gets a look at the property’s foundation, condition, and amenities, and makes a judgment on the amount of repair/ replacement needed. If not satisfied, the buyer can pull out of the deal
- Appraisal: In this case, the buyer has zero control over this contingency. This is because the purchase is financed by a mortgage. If the appraised value is lower than the purchase price, then the buyer has to make up for the difference
- Title: This confirms that the seller is the real owner of the land and that the buyer will receive the title once the deal is done
5. Closing Date and Costs
All deals ought to come to an end. The closing date should be in the contract and should be around when everything transfers to the buyer- property, land and keys. On the other hand, closing costs should be detailed with correct figures. They include property and transfer taxes, title insurance, recording fees and loan origination fees, and prepayment of fees.
6. Signature of Each Party
Certain contracts will require that you put a sign on it. This includes real estate agreements. This will make sure that the contract is valid and enforceable. This is to reduce the possibility of fraud.