Real Estate Law
What is a Residential Real Estate Contract and Why Should I Use a Ridge Lawyer to Review it?
Introduction- What is a Residential Real Estate Contract?
A residential real estate contract is an agreement that binds two parties in a residential property transaction. The two parties, called the buyer and the seller, will negotiate the terms of the agreement, and they will usually get help from a real estate broker / agent. The provisions within the agreement will determine certain aspects of the deal, including but not limited to, pricing, financing, closing terms, inspections, surveys, and property conditions.
Things to look out for in the contract
Purchase price and earnest money. These are essentially the most important things to take into consideration and confirm. Earnest money is a certain percentage of the purchase price that is paid upfront by the buyer. This is done so that the buyer can show that he or she is serious about buying the property (also called a deposit). It is important to carefully review the contract and make sure that you understand the contingencies that will determine whether this deposit will be returned or not.
Fixtures and personal property. Most agreements contain provisions that list the common appliances and other fixtures that will be included in the purchase price. Fixtures include, but are not limited to, refrigerators, ovens, furniture, smoke detectors, artwork pieces, and other general household items.
Mortgage contingency. Many of these agreements are conditional upon the buyer obtaining a mortgage for the property. This makes sense, as the seller would want to assure that they will be paid in full when they sell their property. It is important to note that there are different types of mortgages, for example, a fixed one, an adjustable mortgage, a conventional mortgage etc. Usually, if the buyer is unable to obtain a mortgage on the terms of the contract, they will be permitted to back out of the deal and will have their earnest money returned to them. However, there are situations where the earnest money will not be returned. If this is the case, then legal action, in the form of real estate litigation, may be required to refund that money. Also, the provisions in the real estate agreement will contain certain deadlines for the buyer to provide documentation regarding the mortgage.
The standard Illinois Real Estate contract includes many provisions, including the purchase of the property in an AS-IS condition. This is often a great negotiating tool for the buyers who are confident in the condition of the property they are buying, but are trying to secure the best price possible. Purchasing the property in an AS-IS condition effectively tells the seller that the buyer will conduct the inspection, but will not ask for additional repairs or credits after the inspection. Sellers often prefer this clause in the contract as it somewhat assures them that the price they accepted will not change any further. As a buyer who is purchasing the property in an AS-IS condition you are still allowed to do an inspection. However, if the inspection reveals certain defects that you did you expect, you have the right to terminate the contract and receive your earnest money back.
Why should I use a Park Ridge Lawyer to review this agreement?
There are numerous reasons to use a Park Ridge Real Estate Lawyer to review your contract. An experienced lawyer will understand the local market in the best way possible, and therefore may be able to negotiate certain parts of the contract to your benefit.
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