For a contract to be legally binding it must be in writing and signed by all parties. Real estate sales contracts must contain at least the following terms and conditions: all buyers’ and sellers’ full legal names, property legal description, purchase price, earnest money deposit, down payment, any contemplated financing, settlement date, delivery date (if different than settlement date), seller concessions, transfer and recordation tax division, property condition, included and excluded items.
Buyers will often include contract contingencies that will allow them to terminate the contract if the contingencies are not satisfied. Buyers often insert contingencies in their purchase offer covering: financing, property inspection, radon inspection, appraisal, existing home sale and third-party approval (as is the case in short sales). Just because a buyer asks for these contingencies does not mean you must agree to them.
If you do agree to financing, inspection or appraisal contingencies, you should insist on a relatively short time frame for satisfying these contingencies. Twenty-one days should be sufficient. If you agree to allow your home to be off the market until the buyers sell their home, you should insist that their home be priced competitively and listed with a real estate agent who can aggressively market it.
You should also try to negotiate to continue to market your home and accept backup contracts. By protecting yourself in this manner, you will not be losing valuable marketing time. If you get a backup contract, you can then present it to your first buyer, who can then either waive the home sale contingency and proceed to settlement or can release you from the contract, so you can proceed to settlement with the backup buyer.
Next time: The settlement.
Harvey S. Jacobs is a real estate lawyer in the Rockville office of Joseph, Greenwald & Laake. He is an active real estate investor, developer, landlord and lender. This column is not legal advice and should not be acted upon without obtaining legal counsel. Jacobs can be reached at firstname.lastname@example.org.