Purchase Agreement Lawyer
We have experienced real estate purchase agreement lawyers on staff that can help you navigate the complex nature of your contract. Our San Diego real estate attorneys are well versed in aspects of contract law, and real estate law. We know what parts of the agreements to look out for, or can help you in any purchase agreement litigation situation.
We help with the following –
- Legal agreement questions
- Drafting of purchase agreements
- Breach of Contracts
- Disclosure Law
- Terms & Conditions
- Purchase a property
- Deposit rules
- Real estate closings
- Purchase agreement disputes
- Buying or selling your property
Why It’s Important To Have A Lawyer Look Over Your Agreement?
At times, important deals might require the use of a lawyer looking over your contracts. In fact, it can be argued that if a buyer or seller presents you with a lengthy contract, it would be wise to hire the counsel of an attorney to review the aspects of your agreement.
The lawyer will pour over every word of your legal contract, and look for any deviations from the standard contract language that is typically in place. If for any reason, there is a variance in a part of your agreement that is not typical, the firm will notify you of this and some common options for you to take to reduce your risk.
At Equity Legal LLP, we suggest that you look out for the following when in a real estate purchase situation –
- Make sure there is adequate time to properly review items during the due diligence process
- Watch out for a standard purchase agreement that isn’t standard at all
- Any counter offers and addendums should also include the standard language
- If in doubt with regards to your real estate broker or agent, hire an attorney
- Remember a real estate purchase agreement is just language until signed. Review upfront and be comfortable with the terms.
What Is A Purchase Agreement?
A real estate purchase agreement is the agreement that is formed when you, as a buyer, agree to the purchase of real estate from the current owner or seller of real estate. The contract is typically comprised of the following sections:
The Property Description
The description of the property that is being purchased from the seller by the buyer is described by including the street address, tax parcel detail, and legal description. Any personal property that is being sold is included as well.
The Purchase Price For The Real Estate
The purchase price is listed, which is paid in cash at the real estate closing.
The Closing Agent
The agreement lists the closing agent, who is responsible for disbursing the earnest money during the closing and performing specific duties, as defined by both parties to the agreement, in writing. The agent is not normally liable to any matters associated with his or her performance of duties, with the exception of misconduct or gross negligence.
Earnest Money Or Deposit
The earnest money is recorded in the purchase agreement. This is the down payment or deposit toward the real estate’s purchase price. Normally, if the buyer does not deliver funds to the closing agent within 48 hours (after receiving notice in writing from said agent), the seller can cancel the purchase agreement. However, before this takes place, it is always best to consult with a lawyer.
The Closing Date
The purchase agreement states the date and time when the real estate transaction will close. If an extension is required, the date and time must be agreed upon in writing by both parties. Any to-date taxes, dues, rents, costs, or fees related to the real estate are prorated as of the closing date. Taxes due for previous years are paid by the seller.
The agreement generally requires that the seller pay all current loans affecting the real estate, including the expenses of a title search and title insurance policy. The seller is also responsible for attorney fees and the cost of preparing the deed.
On the other hand, the buyer is responsible for the recording fees and transfer taxes on the deed or deed of trust. He or she must also remit attorney fees and loan closing costs.
The purchase agreement indicates whether title insurance is required. If a title insurance policy is required, it is taken out by the seller. The name of the title insurance company and agent are recorded in the contract.
Title insurance is a type of indemnity insurance that insures against monetary loss from title defects or from the unenforceability of a mortgage. While title insurance is not required legally, most lenders do require a policy when issuing a loan. A title insurance policy ensures a lender’s interest in a property. A purchaser should always insist on an owner’s title insurance policy to safeguard his or her equity as well.
Either the purchase agreement will feature a financial contingency, or the contingency will be excluded. For example, if a contingency is not included, the agreement may state that the contract is not conditioned upon a purchaser’s ability to obtain financing or another financial contingency. Otherwise, it will state the contingency.
The purchase agreement typically includes a provision about the warranty deed. Normally, at the closing, the seller conveys the real estate by warranty deed, subject to any of the following:
- Local zoning, regulations, and ordinances
- Utility, drainage, sewer, and other easements
- Subdivision covenants, declarations, conditions, or similar limitations
- Tenant claims or rights
- Finding a Material Defect
If a title examination survey, mortgage loan inspection, or other details reveal a material defect, the buyer typically can choose to either accept the real estate in its current state, or require that the seller fix the defect within a specified amount of time. If the defect is not remedied, the purchaser can cancel the contract and ask for a refund of the deposit or earnest money.
This is another instance where a purchase agreement can be cancelled. Reviewing the terms of a contract is essential if you want to ensure the successful completion of a real estate transaction.
Inspection Of The Real Estate
The purchase agreement generally shows that the buyer has inspected the real estate and accepts the property in its current state.
Purchase Agreement Contingencies
Other stipulations included in a purchase agreement included the following:
- Buyer or Seller Default. Normally, if a buyer defaults, the deposit or earnest money is forfeited, or given to the seller. The seller, at this point, may also sue for specific performance, or extra damages, or both. If the seller defaults, the deposit or earnest money is returned to the purchaser. The buyer, in turn, can also sue for specific performance, or damages, or both. The prevailing party may receive recovery of all expenses for enforcement, including attorney’s fees.
- A Binding Agreement. This part of the contract states that the contract is binding on all the parties of the agreement, including the parties’ heirs, legal representatives, or assigns. No modification to the purchase agreement is binding, unless it is agreed, in writing, by both the seller and buyer.
The agreement is finally set up so it can be dated and signed by each of the parties, or the buyer and seller.
What Are Some Things To Include In A Purchase Agreement To Reduce Risk?
An allocation of risks is normally understood when a purchase agreement is created. For instance, a seller normally assumes the risk of a casualty loss due to a storm before the closing date. This duty is included in a contract term that requires that insurance be maintained by the seller.
Usually, the best ways to make sure risk is reduced is by adding the following to the contract:
- Disclosures – To mitigate a seller’s risk of being sued, he or she should disclose everything that they know about the condition of a property, currently and historically.
- Inspections – To mitigate risk for the buyer, it is important to have a property professionally inspected. Usually, a general home inspection can rule out the need for other inspections. However, these inspections do have some limitations. For example, septic tank or sewer inspections are not included, nor are fences or decks. Lead based paint or air quality do not fall under a general inspection as well.
What A Is Lease To Purchase Agreement?
Using a lease option to purchase a property can be done as well. In this type of agreement, a home rental lease is established that includes an option to purchase the home during the duration of the lease. The contract includes the purchase price for the real estate. In exchange for the purchase option, the tenant pays a deposit upfront. The lease normally lasts one to three years. During this time, the tenant can exercise his or her option to buy. When the house is being leased, the renter possesses exclusive rights to buy the home. Therefore, the house, during the lease period, cannot be sold to another party