Elements in a Real Estate Contract

Contract Elements for most real estate contracts

Items to be filled in or appear on a typical purchase offer/sales contract:

ITEM GENERAL COMMENTS

Address of the property xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
Names/addresses of parties x
Date of signing by the parties x.
Scheduled date of the closing x		Closing–also known as “settlement.”
Date and time buyers take possession x		Often specified as "at closing."
Agreed upon purchase price		Usually it is spelled out and written: Four hundred thousand and $400,000.
Interest rate limit xx		The maximum interest rate acceptable to the buyers–although often inserted is the term “current rate.” xxx
Earnest money deposit		Amount and the party who will be holding this binder or “good faith deposit.” xx
Financing contingency x x		Used if the buyers are securing a loan. A time limit for approval is stated.
Down payment amount x x		This could be specified as a dollar amount or as a percentage. Or it could be the "loan" amount.
Closing costs		Various costs paid by the buyer or seller based on local custom, negotiation or are prorated. xxx
List of fixtures/personal property being conveyed		Many agreements detail items considered fixed/attached to the property, plus items agreed upon such as, appliances, window treatments, etc. xxxx
Contingencies		Various items the parties agree to which must be completed prior to the closing. xxxx
Inspections		The type, time frame for performing, who pays, method for resolving defective items. xxxx
Prorations		Allocations–specifying what items will be paid by the owner as of the date of closing. These include real estate taxes, prepaid utilities, etc.

Often the contract will include other items or has additional attachments or addendums such as:

Lot size xxxxxxxxxxxxxxxxxxxxxxxxxxxxx		And/or property legal description.
Acceptance period		A time limit for a seller’s (and sometimes the buyer's) response to the offer. xxxx
Delivery of the title		Your attorney or the title company will check the public records to ensure you are providing clear title to the buyers. xxxx
Seller disclosures		The state legal disclosure requirements. xxxx
Attorney review		Allows for legal review of the contract by the parties’ attorneys. xxxx
Title/escrow company		Selected by either party, depending on local custom. xxxx
Property survey		Custom dictates who pays. xxxx
Performance		Specifies legal remedies if contract is not honored by one party (from earnest money forfeiture to law suits). xxxx
Damage to real estate prior to closing		Typically specifies extent of damage before contract is voided (fire, flood, etc.) and buyer options for continuing with the sale. xxxx
Seller responsibilities		Maintaining property before closing, etc.

Complicated? Not really:

Individually, each item in a real estate contract is not that complicated, but taken together, they can appear intimidating to the average homeowner. In its simplest form, a contract contains information as to what is being sold, from whom to whom, together with the when and where in addition to what are the “subject to” or contingency provisions.

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Contract Elements for most real estate contracts