One of the tools used in the business of real estate is the use of contracts. However, not many people understand what the contract is all about or the purpose of having one.? There should be no excuse for a seasoned expert or a rank beginner from not knowing or understanding the contract.?
A person who wants to invest in a real estate property should be know the basics of a real estate contract because the basis behind this contract came from the “common law contract principles.”? In most states, real estate agents and lawyers make use of standardized contracts like Counteroffer and Acceptance and Offer. The term offer refers to the contract that is being drafted. Meanwhile, the buyer is the one who usually signs this offer. A “mutual assent” or “meeting of minds” should take place in order for the contract to become effective. Remember that unless the seller formally accepts its terms and conditions, the contract does not bind. Acceptance of the contract happens if the seller already agrees to the terms of the buyer. Counteroffer takes place when a seller negotiates with the buyer. But if the seller does not accept the offer during the given time frame and manner that the buyer set, no contract happened at all. For instance, the contract says that the acceptance must be made through facsimile, the acceptance made through telephone call or mail is still unacceptable.?
There are two kinds of real estate contracts- bi-lateral contract and unilateral contract. When you speak of bi-lateral agreement, it means that there is a consensus between the buyer and the seller since the seller agrees that he or she will sell his or her property while the buyer assures the seller that he or she will buy the property. The second type which is the unilateral contract means the seller has given the obligation to sell while the buyer has an option of buying the property or not.?
Any prospective buyer should know the basic and legal requirements that should be present in order to consider the contract as a valid one. ?
The first requirement is that there should be a mutual agreement that took place. Second, the purchase and sale of the real estate contract should be in a writing form for it to be considered as enforceable. Otherwise, if the agreement only happens in a verbally and one of the parties (buyer and seller) decides not to push through with the deal, either the buyer or the seller will be unlucky of the deal. Third, the contract should identify who are the parties involved in the deal. Even if the law does not require it, the full names and even the middle initials should be present in the contract; if one party is a corporation, the name of the company should also appear in the contract. Third requirement is that, the specific property should be identified, otherwise if the description of the property is vague, there is no binding contract. The contract should also include the property’s purchase price and a consideration which comes in the form of a benefit, value, or interest that includes promise. Lastly, for the contract to be enforceable, the parties should have their signatures present on it. The signature of a witness or notary is not required but if there is a facsimile signature, it will only be acceptable if the contract says that the facsimile signatures that appear are valid.
By: Gary Allalouf
About the Author:
Gary writes for http://www.myhawaiirealestateonline.com where you can find Hawaii real estate for sale in the all the major islands. Review real estate in Oahu along with great oahu real estate listings.
