Finance

How important are the details of your Real Estate Contract?

PREMIER Business & Finance: Whether you are listing your property for sale, purchasing a home, or reviewing offers on the potential sale of your property, there are many things to be aware of in the State of California.

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PREMIER Business & Finance

Whether you are listing your property for sale, purchasing a home, or reviewing offers on the potential sale of your property, there are many things to be aware of in the State of California.

First of all, California is referred to as a “Title State”.  In many states, particularly on the East Coast, attorneys actually facilitate the real estate sales contract, prepare and issue the title reports and policies, and close the real estate transaction. Not the case in California where title companies and escrow companies provide these services.

No real estate contract can be enforced unless it is in writing.  Despite its misleading name, the Statue of Frauds is the requirement that certain types of contracts have to be in writing to be enforceable.  The Statute of Frauds requires that contracts be written and signed by ALL parties in order to be considered binding and enforceable…..the real estate contract falls under this category.

Mandating that specific contracts be in writing was an attempt to reduce fraudulent conduct.  While many agreements are made verbally, it is difficult to prove the actual terms of the contracts if there is nothing in writing to document the intent of the parties. So make sure your Realtor® gets everything in writing for your protection.

 

Be sure you understand everything you are signing.  Yes, the California Real Estate Purchase Agreement is a long document but it contains very important information.  Take time to read it and ask your Realtor® for clarification if needed.  But please remember, your Realtor® is not able to give you legal or tax advice, so for clarification of those issues, you should consult with your appropriate professional in those areas.

 

Pay close attention to the time frames in the contract.  Make sure they are reasonable and that you are able to meet the required deadlines as many disputes arise due to missed time frames.  There are remedies for missed deadlines and your Realtor® can point those out to you in the contract.  Buyers, be particularly aware of the Liquidated Damages clause which states that if you, as a buyer, remove all of your contingencies and then fail to perform on the contract, the seller may retain your earnest money deposit as liquidated damages.  Again, be aware of timeframes; be aware of what contingency removal forms you are signing, and make sure you are prepared to move forward to close the transaction.

Prepare yourself for the fact that not everything may go as smoothly as we all hope for.  Inspections can bring surprises with possible financial repercussions.  Repairs may be requested that were not anticipated, appraisals may fail and lender documents may not arrive correctly or on time (although this is not a common problem, it can happen).

It is important that you work with a professional Realtor® who understands fully the complexities of your transaction and is readily available to you.

 

Written by: DIANA RUBOTTOM

Branch Manager, Rancho Santa Fe, Fairbanks Ranch, Del Rayo

drubottom@bhhscal.com

Berkshire Hathaway HomeServices California Properties

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