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Feb 05

Learn How to Write A Contract – Contract Considerations And Contingencies – Rich Investor Series

For a contract to be legally binding, it can be anything from a note handwritten on a dinner napkin to complex terms and conditions written on a fancy print form. Back in the day, a contingency could allow a buyer to easily weasel out of any contract. In other words, they could call off a contract without incurring any penalty which means if a buyer holds on a property and changes his mind at the 11th hour, you will be left stuck with your property and start looking for a new buyer.

 

These contingencies will often vary from one state to another but there are those that are almost universal in all states. This article will look at the basic contract considerations you will need to make, what needs to be included in a contract for it to be legally binding, and also look at what is expected of each party that appends its signature to a legally binding contract.

 

Contract essentials

The following items must feature in any legally binding contract

 

  1. Any contract must be dated for it to be a legally binding instrument.
  2. A contract should also list the full price of purchase for a property in question i.e. the price that has been agreed upon by both parties
  3. A contract should also contain the full official names of the buyer and seller plus any third party that is likely to challenge the contract in a court of law. A third party can be someone like a wife of the seller plus their official addresses.
  4. Of course a contract can never be complete without the address of property that is being sold. You can always put a street address if the houses on that street are not numbered – in which case you may need to get a lot and block number from your local tax map. In case you are buying a condominium, you should ensure the building and apartment number, along with the street address are clearly mentioned in the contract.
  5. The other thing that has to be mentioned is the date and place of contract closing. While this date is often subject to change, naming the time and place for property transfer is an integral part of any agreement.
  6. Last but not least, a contract can never be complete if there are no signatures. Each person adversely mentioned in the contract, and who plays an integral role in the transfer of property ownership should append their official signature. In case a signature is missing, the whole contract can be invalidated.

 

Some of the common purchase agreement contingencies include appraisal fee, loan contingency, home inspection, roof inspection, lead-based paint, wood destroying pest inspection, private well inspection, asbestos, mold, or radon inspections etc.

 

Be sure you understand everything that is contained in a contract before appending your signature. Most certainly it is a lawyer or closing agent who will help draft the contract. Sometimes they may use jargon that you may never live to clearly understand the meaning. You can always ask your agent or lawyer to give you a copy of a blank contract so you can look over it in detail at your convenience.

 

 

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