Buying real estate is a real business and a serious transaction. The biggest mistake you can make is not supporting your negotiations, conclusions, and the concessions made in writing. Such mistakes are not only dangerous, but they can also lead to irredeemable losses and unclaimable interests.
Following the above, there is usually the question of what to include, where, how, and the best ways to couch those important paragraphs.
Important clauses for a contract of sale of property
The introductory part
This portion includes the title (that is, the nature or name of the agreement); it may be a sale agreement, a deed of transfer, a mortgage deed, etc., depending on the unique terminologies used by various states.
After the title comes the introduction and description of the parties, this section contains the parties’ details; their names, addresses, occupations, and positions in the agreement. You are advised to use the parties’ legal name, and if it is a company, its registered company name.
Thirdly, the property is clearly described so that it can be traced and identified by a third party. For this portion, clarity in description is the goal.
The operative part of the contract
This portion talks about the nature of the contract, what it seeks to do, how it seeks to do that, and the terms of the agreement.
The operative part may include any or all of the following:
- A recitation of the property’s history, what kind of building it is, how the previous owner acquired it, or under what state or federal law it was acquired, etc.
- The purchase price and the method/ mode of payment until the contract sum is fully paid. This portion may also indicate the account numbers, where payment may be made, to whom it shall be addressed, etc.
- The purpose of the contract and what will happen upon the final execution of its terms. This portion often indicates a transfer of title from one party to another.
- Terms of the contract may include the terms of usage, payment of rates and taxes, condition of the property at the stage of the sale, the various urban laws adherence, and the registration of the new owner’s interest at the appropriate quarters, etc.
- Any condition precedent for the agreement
- Options in unforeseen circumstances such as a force majeure or a disaster, etc.
- Acknowledge the purchase price where it has been paid in full, etc.
- Contingencies and disclosures of all crucial terms of agreement/ of the property.
The closing part
After all of the parties’ representation, negotiation and agreements have been entered into the operative part, the closing part will contain spaces for signature, name, and date for the parties to enter. It may also have a space for witnesses to attest to the agreement and a closing clause indicating if the agreement is on a deed or otherwise.
A quick info
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A generic hack
While generating your agreements, transparency and truthfulness are essential elements. You must abstain from misrepresentation or failure to disclose the existence or otherwise of some features or conditions that may affect the contract’s binding. The misled party can claim fraudulent misrepresentation and ask for damages (if they are nice) or they may repudiate the contract entirely and retrieve their purchase price regardless of how high it would have been. It is better to lay all your facts during the negotiation and allow the parties to contract transparently so any reservations can be thrashed out before the deal is sealed.
Consult a lawyer or a realtor
Kindly consider this article a subtle guide on your real estate agreement, not comprehensive advice. While you can take cues from the above on the essential parts of a contract, you are advised to seek official and expert guidance in the execution of your real estate agreements. A lawyer, if you can afford one, and a realtor are great people to consult before preparing your agreement. Unless you have all the requisite skills, do not attempt to draft an agreement yourself because you may fail to cover the important areas of your clauses and may be inadequate to protect your interest.
