Even if you have never purchased property, you probably already know that the process of buying a home or commercial building requires more than just the exchange of property and money. A real estate contract of sale serves as the legally binding contract or agreement between the two parties involved in the transfer or purchase of a property.
What is the Purpose of a Contract of Sale?
This legal document’s primary purpose is to outline obligations of both parties involved in the buying, selling, or trading of a property. The contract of sale establishes the terms and conditions of the sale and allows the two parties to agree upon them. A few different professionals involved in the real estate transaction can prepare this document: a solicitor, real estate agent, or conveyancer. Contracts of sale for private sales are most often produced and provided by a real estate agent.
What Information is Included in a Contract of Sale?
These contracts can be simple and brief or heavily detailed, and typically include the following:
- The property address
- The buyer and seller’s names
- The price the property is being sold / purchased for
- The date of settlement
- The amount of deposit required
- Conditions of the sale, like financing information or additional inspections
- Any other personal property that is sold as a part of the deal
What Else do I Need to Know about the Contract of Sale?
The real estate agent representing the seller of the property most often drafts the contract. Some details, such as the selling price and settlement date, are left blank so that the purchaser can make their initial monetary offer for the purchase of the property and propose a date of settlement. Once the purchaser signs the contract, it is handed off to the seller who will either produce a counter-offer or accept the purchaser’s offer and sign the contract.
It’s important to know that this document is legally binding to the purchaser from the moment of signing, even if the seller has not yet signed the agreement. However, the contract of sale isn’t activated until it contains signatures of both parties.
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