Real Estate : Details explained on the contract

[Reyed Mia (Apprentice, DIU)]

Real Estate : Details explained on the contract

It is a legal requirement in all jurisdictions that contracts for the sale of land be in writing to be enforceable. The various Statute of frauds require contracts for the sale of land to be in writing. In South Africa, the Alienation of Land Act specifies that any agreement of sale of immovable property must be in writing. In Italy each transfer of real estate must be registered in front of a notary public in writing.

The common practice is for an "exchange of contracts" to take place. This involves two copies of the contract of sale being signed, one copy of which is retained by each party. When the parties are together, both would usually sign both copies, one copy of which would be retained by each party, sometimes with a formal handing over of a copy from one party to the other. However, it is usually sufficient that only the copy retained by each party be signed by the other party only. This rule enables contracts to be "exchanged" by mail. Both copies of the contract of sale become binding only after each party is in possession of a copy of the contract signed by the other party—ie., the exchange is said to be "complete". An exchange by electronic means is generally insufficient for an exchange, unless the laws of the jurisdiction expressly validate such signatures.

A contract for the sale of land must:

Identify the parties: The full name of the parties must be on the contract. In a sales contract, the parties are the seller(s) and buyer(s) of the real estate, who are often called the principals to distinguish them from real estate agents, who are effectively their intermediaries and representatives in negotiation of the price. If there are any real estate agents brokering the sale, they are typically listed also as the real estate brokers/agents who would earn the commission from the sale.

Identify the real estate (property): At least the address, but preferably the legal description must be on the contract.

Identify the purchase price: The amount of the sales price or a reasonably ascertainable figure (an appraisal to be completed at a future date) must be on the contract.

Include signatures: A real estate contract must be entered into voluntarily (not by force), and must be signed by the parties.

Have a legal purpose: The contract is void if it calls for illegal action.

Involve Competent parties: Mentally impaired, drugged persons, etc. cannot enter into a contract. Contracts in which at least one of the parties is a minor are voidable by the minor.

Reflect a meeting of the minds: Each side must be clear and agree as to the essential details, rights, and obligations of the contract.

Include Consideration: Consideration is something of value bargained for in exchange of the real estate. Money is the most common form of consideration, but other consideration of value, such as other property in exchange, or a promise to perform (i.e. a promise to pay) is also satisfactory.

Notarization by a notary public is normally not required for a real estate contract, but many recording offices require that a seller's or conveyor's signature on a deed be notarized to record the deed. The real estate contract is typically not recorded with the government, although statements or declarations of the price paid are commonly required to be submitted to the recorder's office.

Sometimes real estate contracts will provide for a lawyer review period of several days after the signing by the parties to check the provisions of the contract and counter propose any that are unsuitable.

If there are any real estate brokers/agents brokering the sale, the buyer's agent will often fill in the blanks on a standard contract form for the buyer(s) and seller(s) to sign. The broker commonly gets such contract forms from a real estate association he/she belongs to. When both buyer and seller have agreed to the contract by signing it, the broker provides copies of the signed contract to the buyer and seller.

https://en.wikipedia.org/wiki/Real_estate_contract