Real Estate Contract Mistakes You Should Avoid
What does a standard real estate purchase document include?
A standard real estate document is the blueprint showing the roles of each party in the transaction before the transfer of the title to the real property (apartment, house, office space, commercial real estate, etc.). Simple real estate documents include detailed information on the property, buyer, seller, price, financing, contingencies, insurance, closing, inspections, terminations, taxes, termination options and more. There is available a lot of information, and it’s easy for an unsuspecting buyer or seller get confused due to minor mishaps.
Here Are Five Mistakes You Could Find In A Real Estate Contract:
Not disclosing encumbrances
An encumbrance is simply a claim against a property by someone other than the owner. This can ultimately impact the ability of the title to be transferred to a new party. Encumbrances must be lifted before any transaction can occur. Common encumbrances can include property tax, liens, easements, and mortgages. Encumbrances can only apply to person instead of real-property. You might want to check with the office of regulatory affairs to make sure you remain protected from any potential scams.
Not disclosing leases
Buyers should pay attention to any potential lease disclosures and should discuss with the seller’s realtor to find out if there is an active lease on the property. Sellers who have hired a third-party management company needs to review their contract. This makes them sure to end any possibility of new leases before the sale, so the owner is not blind sighted.
Inaccurate legal description
Wring parcels can be listed on deeds or the real size of the land might be misstated during the purchase. This type of error can negatively affect the taxes on the property. Mistakes in the footage can ultimately change the appraised value of the home, thus leading to a denial of the loan. When the error is completely missed, you can expect a dispute at any point during the new ownership, and this can be a real headache for the new purchaser.
Not checking the right contingencies
Contingencies are provisions that could cause your control to become null and void in a specific thing happens. It functions as an escape clause for either the buyer or seller during a real estate transaction. These provisions or conditions can be complex or simple. Some of them are pretty standard, and they appear in the majority of contracts you’ll be part of.
Some of the items that the conditions might be built around include mortgage approval, insurance approval, property appraisal, closing date, walkthrough inspection, pending sale of another home and more. Buyers and sellers should pay great attention to these contingencies, so there are no surprises when the contract falls through. As soon as you know that you want to purchase or sell your real estate, look into the regulatory affairs to make sure you are playing by the rules.
Expired terms and conditions
Service contracts typically have an expiration date from the moment they are drafted. In most cases, active contracts are looked over and renewed when they get closer to expiration. It is not uncommon that a contract set for a fixed period falls into expiration without anyone noticing. Unfortunately, in real estate, once the contract is expired, the broker/seller partnership has ended. Sellers should stay on top of the contract timelines with their realtors so that new contract negotiations or renewals can be agreed upon before the contract is over.
Why consulting a real estate lawyer would be a wise choice?
Some states require you to involve a real estate attorney in home purchases. Real estate attorneys are capable enough to handle regulatory affairs. They are there to prevent you from accidentally breaking a rule or doing something to delay the closing process. Real estate attorneys understand the language of the contracts, and they are very familiar with the rules and regulations. These attorneys are familiar with potential issues regarding mortgage fraud, zoning, and negotiations prior to purchase. Your real estate attorney could save you from being overwhelmed during the purchasing process. You’ll feel much safer with someone working on your behalf to make sure titles and deeds are legally processed and properly transferred.
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