| A real estate contract is a contract for
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| | for providing the promised consideration
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| the purchase/sale, exchange, or other
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| | for the real estate, which is typically
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| conveyance of real estate between
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| | money in the amount of the purchase
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| parties. Real estate called leasehold
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| | price. However, the details about the
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| estate is actually a rental of real
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| | type of ownership may not be specified in
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| property such as an apartment, and leases
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| | the contract. Sometimes, signing buyer(s)
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| (rental contracts) cover such rentals
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| | may direct a lawyer preparing the deed
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| since they typically do not result in
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| | separately what type of ownership to list
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| recordable deeds. Freehold ("More
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| | on the deed and may decide to add a joint
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| permanent") conveyances of real estate
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| | owner(s), such as a spouse, to the deed.
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| are covered by real estate contracts,
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| | For example, types of joint ownership
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| including conveying fee simple title,
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| | (title) may include tenancy in common,
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| life estates, remainder estates, and
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| | joint tenancy with right of survivorship,
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| freehold easements. Real estate contracts
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| | or joint tenancy by the entireties.
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| are typically bilateral contracts (i. e.,
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| | Another possibility is ownership in trust
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| agreed to by two parties) and should have
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| | instead of direct ownership.
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| the legal requirements specified by
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| | Contingencies
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| contract law in general and should also
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| | Contingencies are conditions which must
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| be in writing to be enforceable.
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| | be met if a contract is to be performed.
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| Details explained on the contract
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| | Contingencies that suspend the contract
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| In writing
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| | until certain events occur are known as
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| In many countries, real estate contracts
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| | "suspensive conditions". Contingencies
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| must be in writing to be enforceable. In
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| | that cancel the contract if certain event
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| the United States the Statute of Frauds
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| | occur are known as "resolutive
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| require real estate contracts to be in
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| | conditions".
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| writing to be enforceable. In South
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| | Most contracts of sale contain
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| Africa, the Alienation of Land Act
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| | contingencies of some kind or another,
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| specifies that any agreement of sale of
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| | because few people can afford to enter
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| immovable property must be in writing.
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| | into a real estate purchase without them.
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| Additionally, a real estate contract
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| | But it is possible for a real estate
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| must:
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| | contract not to have any contingencies.
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| Identify the parties: The full name of
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| | Some types of contingencies which can
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| the parties must be on the contract. In a
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| | appear in a real estate contract include:
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| sales contract, the parties are the
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| | Mortgage contingency - Performance of the
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| seller(s) and buyer(s) of the real
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| | contract (purchase of the real estate) is
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| estate, who are often called the
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| | contingent upon or subject to the buyer
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| principals to distinguish them from real
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| | getting a mortgage loan for the purchase.
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| estate agents, who are effectively their
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| | Usually such a contingency calls for a
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| intermediaries and representatives in
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| | buyer to apply for a loan within a
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| negotiation of the price. If there are
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| | certain period of time after the contract
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| any real estate agents brokering the
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| | is signed. Since most people who buy a
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| sale, they are typically listed also as
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| | house get a mortgage loan to finance
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| the real estate brokers/agents who would
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| | their purchase, mortgage contingencies
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| earn the commission from the sale.
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| | are one of the most common type of
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| Identify the real estate (property): At
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| | contingencies in real property contracts.
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| least the address, but preferably the
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| legal description must be on the
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| | Inspection contingency - Purchase of the
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| contract.
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| | real estate is contingent upon a
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| Identify the purchase price: The amount
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| | satisfactory inspection of the real
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| of the sales price or a reasonably
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| | property revealing no significant
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| ascertainable figure (an appraisal to be
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| | defects. Contingencies could also be made
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| completed at a future date) must be on
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| | on the satisfactory repair of a certain
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| the contract.
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| | item associated with the real estate.
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| Include signatures: A real estate
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| | another sale contingency - Purchase or
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| contract must be entered into voluntarily
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| | sale of the real estate is contingent on
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| (not by force), and must be signed by the
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| | a successful sale or purchase of another
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| parties, to be enforceable.
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| | piece of real estate. The successful sale
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| Have a legal purpose: The contract is
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| | of another house may be needed to finance
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| void if it calls for illegal action.
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| | the purchase of a new one.
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| Involve Competent parties: Mentally
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| | appraisal contingency - Purchase of the
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| impaired, drugged persons, etc. cannot
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| | real estate is contingent upon the
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| enter into a contract. Contracts in which
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| | contract price being at or below a fair
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| at least one of the parties is a minor
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| | market value determined by an appraisal.
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| are voidable by the minor.
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| | Lenders will often not lend more than a
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| Reflect a meeting of the minds: Each side
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| | certain percentage (fraction) of the
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| must be clear and agree as to the
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| | appraised value, so such a contingency
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| essential details, rights, and
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| | may be useful for a buyer.
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| obligations of the contract.
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| | 72-hour kick out contingency - Seller
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| Include Consideration: Consideration is
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| | contingency, which allows the seller to
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| something of value bargained for in
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| | keep the property in the market while the
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| exchange of the real estate. Money is the
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| | buyer contingencies are not yet
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| most common form of consideration, but
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| | fulfilled.
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| other consideration of value, such as
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| | Date of closing and possession
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| other property in exchange, or a promise
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| | A typical real estate contract specifies
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| to perform (i.e. a promise to pay) is
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| | a date by which the closing must occur.
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| also satisfactory.
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| | The closing is the event in which the
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| Notarization by a notary public is
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| | money (or other consideration) for the
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| normally not required for a real estate
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| | real estate is paid for and title
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| contract, but many recording offices
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| | (ownership) of the real estate is
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| require that a seller's or conveyor's
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| | conveyed from the seller(s) to the
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| signature on a deed be notarized to
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| | buyer(s). The conveyance is done by the
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| record the deed. The real estate contract
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| | seller(s) signing a deed for buyer(s) or
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| is typically not recorded with the
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| | their attorneys or other agents to record
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| government, although statements or
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| | the transfer of ownership. Often other
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| declarations of the price paid are
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| | paperwork is necessary at the closing.
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| commonly required to be submitted to the
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| | The date of the closing is normally also
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| recorder's office.
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| | the date when possession of the real
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| Sometimes real estate contracts will
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| | estate is transferred from the seller(s)
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| provide for a lawyer review period of
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| | to the buyer(s). However, the real estate
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| several days after the signing by the
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| | contract can specify a different date
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| parties to check the provisions of the
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| | when possession changes hands. Transfer
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| contract and counterpropose any that are
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| | of possession of a house, condominium, or
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| unsuitable.
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| | building is usually accomplished by
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| If there are any real estate brokers
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| | handing over the key(s) to it. The
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| agents brokering the sale, the buyer's
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| | contract may have provisions in case the
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| agent will often fill in the blanks on a
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| | seller(s) hold over possession beyond the
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| standard contract form for the buyer(s)
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| | agreed date.
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| and seller(s) to sign. The broker
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| | The contract can also specify which party
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| commonly gets such contract forms from a
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| | pays for what closing costs. If the
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| real estate association he/she belongs
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| | contract does not specify, then there are
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| to. When both buyer and seller have
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| | certain customary defaults depending on
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| agreed to the contract by signing it, the
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| | law, common law (judicial precedents),
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| broker provides copies of the signed
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| | location, and other orders or agreements,
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| contract to the buyer and seller.
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| | regarding who pays for which closing
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| Offer and acceptance
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| | costs.
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| As may be the case with other contracts,
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| | Condition of property
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| real estate contracts may be formed by
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| | A real estate contract may specify in
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| one party making an offer and another
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| | what condition of the property should be
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| party accepting the offer. To be
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| | when conveying the title or transferring
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| enforceable, the offers and acceptances
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| | possession. For example, the contract may
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| are normally in writing and signed by the
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| | say that the property is sold as is,
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| parties agreeing to the contract. Often,
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| | especially if demolition is intended.
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| the party making the offer prepares a
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| | Alterrnatively there may be a
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| written real estate contract, signs it,
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| | representation or a warranty (guarantee)
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| and transmits it to the other party who
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| | regarding the condition of the house,
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| would accept the offer by signing the
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| | building, or some part of it such as
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| contract. As with all other types of
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| | affixed appliances, HVAC system, etc.
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| legal offers, the other party may accept
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| | Sometimes a separate disclosure form
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| the offer, reject it - in which case the
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| | specified by a government entity is also
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| offer is terminated, make a counteroffer
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| | used. The contract could also specify any
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| - in which case the original offer is
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| | personal property (non-real property)
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| terminated, or not respond to the offer -
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| | items which are to be included with the
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| in which case the offer terminates by the
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| | deal, such as washer and dryer which are
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| expiration date in it. Before the offer
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| | normally detachable from the house.
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| (or counteroffer) is accepted, the
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| | Utility meters, electrical wiring
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| offering (or countering) party can
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| | systems, fuse or circuit breaker boxes,
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| withdraw it. A counteroffer may be
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| | plumbing, furnaces, water heaters, sinks,
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| countered with yet another offer, and a
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| | toilets, bathtubs, and most central air
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| counteroffering process may go on
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| | conditioning systems are normally
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| indefinitely between the parties.
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| | considered to be attached to a house or
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| To be enforceable, a real estate contract
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| | building and would normally be included
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| must possess original signatures by the
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| | with the real property by default.
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| parties and any alterations to the
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| | Riders
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| contract must be initialed by all the
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| | Riders are special attachments (separate
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| parties involved. If the original offer
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| | sheets) that become part of the contract
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| is marked up and initialed by the party
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| | in certain situations.
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| receiving it, then signed, this is not an
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| | Earnest money deposit
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| offer and acceptance but a counter-offer.
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| | Although, it is not absolutely required
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| Deed specified
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| | for a valid real estate offer or a
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| A real estate contract typically does not
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| | contract, an earnest money deposit from
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| convey or transfer ownership of real
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| | the buyer(s) customarily accompanies an
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| estate by itself. A different document
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| | offer to buy real estate. The amount, a
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| called a deed is used to convey real
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| | small fraction of the total price, is
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| estate. In a real estate contract, the
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| | listed in the contract, with the
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| type of deed to be used to convey the
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| | remainder of the cost to be paid at the
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| real estate may be specified, such as a
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| | closing.
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| warranty deed or a quitclaim deed. If a
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| | Financial qualifications of buyer(s)
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| deed type is not specifically mentioned,
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| | The better the financial qualification of
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| "marketable title" may be specified,
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| | the buyer(s) are, the more likely the
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| implying a warranty deed should be
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| | closing will be successfully completed,
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| provided. Lenders will insist on a
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| | which is typically the goal of the
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| warranty deed. Any liens or other
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| | seller. Any documentation demonstrating
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| encumbrances on the title to the real
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| | financial qualifications of the buyer(s),
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| estate should be mentioned up front in
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| | such as mortgage loan pre-approval or
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| the real estate contract, so the presence
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| | pre-qualification, may accompany a real
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| of these deficiencies would not be a
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| | estate offer to buy along with an earnest
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| reason for voiding the contract at or
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| | money check. When there are competing
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| before the closing. If the liens are not
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| | offers or when a lower offer is
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| cleared before by the time of the
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| | presented, the seller may be more likely
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| closing, then the deed should
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| | to accept an offer from a buyer
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| specifically have an exception(s) listed
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| | demonstrating evidence of being well
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| for the lien(s) not cleared.
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| | qualified than from a buyer without such
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| The buyer(s) signing the real estate
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| | evidence.
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| contract are liable (legally responsible)
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