A Contract is a Legal Document... Know what you are Signing

December 22, 2017

 

Read the contract. Know what you're signing. With the convenience of electronic signatures, it's more important today than ever for the Buyer and the Seller to read and understand what you're signing. A contract is a legal document. Make sure all the information is correct. Parties to the contract are the Seller and Buyer. In Texas, the names entered on the contract will be used by the Title Company to draw up the deed. Paragraph 2: Property is the legal description of the property. Make sure it's accurate. Read what is written in improvements, which describes the location of the actual land and includes all of the improvements in the described real property. What conveys with the property and what is excluded will be found under Accessories and Exclusions. 

 

The Sales Price is self-explanatory. If the Buyer is using a Lender, the buyer needs to know what their financial obligations are before agreeing to the purchase of a property. Also, the buyer needs to have a pre-qualified letter from the Mortgage Company. If a Buyer is paying Cash, the buyer needs to also know what they can expect for closing costs. 

 

Both parties to the contract must read to understand all parts of the contract. It is best to consult with your Agent representation, lender, or attorney before signing. Other parts of the contract will include duties of responsibility for Earnest Money, purpose of an Option Fee and period, Title Policy and Survey, Title Commitment, membership in Property Owners Association(s), (if applicable), objections for a limitation on the Buyer's time to object to anything they don't like in the Title Commitment or Survey, information about residential service contracts, possession, any special provisions, settlement and other expenses, information about prorations, insurance, casualty losses, default (consequences if Buyer fails to comply with the contract, and Seller's recourse), notices to the parties must be in writing to the correct contact information, etc. Essentially, every part of the contract needs to be understood before signing. There may be an addendum to the contract. Buyers and Sellers need to know which items are negotiable and what happens when there is an effective date for an executed contract. Time is of the essence and time lines and deadlines are extremely important. 

 

An experienced Agent who is licensed should be able to thoroughly explain the agreement; however, the Texas Real Estate Commission prohibits real estate license holders from giving legal advice. Knowing and negotiating the contract is the most important aspect of practicing real estate. 

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