Parts of a Real Estate Contract
STEVEN MILLSTEIN: The contract spells out how much you are paying to buy the house. It spells out exactly what you are going to get. Are you getting the house or are you getting any other contents in the house? When you move in is the seller supposed to leave you the chandeliers, the curtains, the washing machine?
You may have negotiated who is going to pay the closing costs. Those fees and costs associated with the transfer of the real estate. Are they going to be split between the buyer and the seller or have negotiated into the contract that all of those fees are going to be paid by the buyer or the seller?
This contract is the contract to the most important transaction of your life and you want it to contain every last bit of information that you have thought of with respect to the purchase of this house.
IRWIN KRAMER: You need to protect yourself with the right contingencies in that real estate contract.
STEVEN MILLSTEIN: Contingencies in that contract spell out under what circumstances you might be able to back out of this transaction.
IRWIN KRAMER: Do not assume that everyone knows that you need to sell your house or get financing in order to afford it.
STEVEN MILLSTEIN: Is there a right for you, the buyer, to avoid that contract during a certain amount of time if you fail to secure the financing to purchase that house.
STEVE LOVEJOY: There is a financing contingency which says that, if I cannot get appropriate financing at a reasonable cost to buy the house, then I do not have to buy it.
STEVEN MILLSTEIN: Because if I do not get that financing I may not be able to afford this house.
IRWIN KRAMER: You need to provide yourself with some safety valves and some out provisions, so that if everything falls through, if that mortgage you thought you could get is turned down, it is quite a surprise, but it is not a surprise that you cannot live with by backing out the deal.
STEVEN MILLSTEIN: Is there a time frame during which you can hire and an inspector to go and look at the house and inspect the roof and the plumbing, and the heating, and ventilation, air-conditioning before the entire the house and tell you all those things that may be of concern?
STEVEN MILLSTEIN: And the contract is going to say you have the right to terminate the contract based on the results of that inspection or does the seller have the right to say that they will cure. Some of the problems that they are dollar amount. The contract that spells out all of those things that are critical to you as the buyer.
IRWIN KRAMER: If those are things are not part of the contingencies, the addenda in that contract, you could be signing a deal that you cannot back out of.