Real Estate Contracts and Agreements
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Real Estate Contract
Real estate contracts, the available types, and how they benefit investors can be confusing for those just starting real estate investing.
Retaining the services of a top-rated business lawyer in Atlanta can ensure you have the information necessary for making informed investment decisions. Contact the professionals at Perigon Legal Services for additional information and advice.
Author: Stan Faulkner, Founder, Perigon Legal Services, LLC
Mr. Faulkner is an experienced counselor and litigator with 15 years of experience, having held bar licenses in four states (Mo, Il, Ct and Ga). Stan Faulkner uses this experience and focuses his skills in the pursuit of assisting individuals in probate (trust and estate) matters, guardianships and conservatorships, estate planning, business disputes and contract disputes. Published on May 09, 2023.
What Is a Property Contract?
Signing a real estate contract implies a legal agreement between two or more parties negotiating real estate transactions. This document outlines the agreed-upon terms and officially enforces them once the contract is signed.
Home buyers should be aware of the various details that come with a real estate purchase agreement. This can include the following:
- Real estate contingencies
- Agreed upon purchase price
- Earnest money deposit amount
- Included appliances and other property details
- Who pays for the closing costs and recording fees
- When the closing date will occur
As an investor, you’ll need to be comfortable negotiating and executing contracts whenever you take on a new venture. As a first-time buyer negotiating your own real estate contract, it’s essential to understand the various aspects of a real estate transaction to make informed decisions.
Requirements of Valid Real Estate Agreements
In order for a real estate contract to be legally binding, both the buyer and the seller must agree and complete the required paperwork. Both parties should then sign the documents to seal the deal. Otherwise, the contract would be considered invalid.
Any real estate contract must meet certain requirements to be enforceable. Although they may vary, contracts typically include the following:
- Legal capacity: All parties must be over 18 and without mental impairments to legally sign the real estate contract.
- Offer: The first party will present a written real estate contract to the second party, who can accept it, reject it, or make a counteroffer.
- Acceptance: The second party must sign the real estate contract to accept it. If either party changes the offer, the initial offer will no longer be binding. The contract will be nullified if the second party fails to sign the offer according to the deadline specified. If the offer is refused, then the agreement will be terminated.
- Consideration: In the legal context, consideration is essential to any binding contract. It refers to the exchange of something of value, such as money or assets, between two or more parties.
- The legality of purpose: All aspects of the real estate agreement should be for legal purposes in order to be legally binding and enforceable.
A party’s counteroffer invalidates the original contract since both sides have not accepted the terms. An experienced lawyer can streamline the home-buying process.
Contract law can be complicated, and real estate is expensive for prospective buyers. It may be beneficial to consult a skilled attorney from a reputable law firm to ensure you have considered everything.
Types of Contracts in Real Estate
Having a good understanding of the contracts and agreements used in real estate transactions is essential. Legally binding documents such as these safeguard investments, mitigate risks and reduce liabilities. Additionally, they can be extremely helpful in preventing disagreements and miscommunications.
Four of the most common types of real estate contracts are purchase agreements, assignment agreements, leases, and power of attorney agreements. Each type of real estate contract has a distinct purpose and set of regulations to adhere to.
Purchase Agreements
The most common real estate contract is the real estate purchase and sale agreement, also known as a sales contract. The contract sets out the terms and conditions of a property transfer between a buyer and seller. It ensures that all parties understand the terms and conditions before a deal is closed.
There may be a need for a property-specific purchase agreement, but a general purchase agreement might do.
A skilled Georgia attorney can assist you in determining what type of real estate purchase agreement is best for your situation by working with a real estate agent.
Real Estate Assignment Contract
Real estate assignment contracts are mainly used for wholesaling investments. It involves finding a distressed property, securing it under contract, and then “assigning” it to a second buyer. This strategy is useful and helps you make money quickly.
The structure of a real estate assignment contract is similar to that of a standard purchase agreement. In addition, it will likely include additional terms and clauses explaining the purchasing arrangement.
In an assignment agreement, investors can lock in a property through a purchase contract with an option to transfer it.
Lease Agreements
Lease agreements essentially provide an understanding between the landlord (the lessor) and the tenant (the lessee).
With this real estate contract, both parties agree that the tenant will be renting the property for a predetermined monthly rate. There are also clear details regarding the rent amount, security deposit, and utility payment process.
Crafting the right lease agreement is essential to avoid potential issues in the future and ensure each party has legal protection if something unexpected arises. A real estate litigation attorney can represent you in court, and the right legal advisor can help draft a binding lease and review one to protect your rights.
Power of Attorney
The power of attorney document is extremely valuable in the field of real estate. Even though they are not exclusively used for real estate, they have proven valuable in various situations.
This document would give another party the power to sign legal documents on your behalf if you travel abroad or are incapacitated for whatever reason.
How Can an Attorney Help With Real Estate Contracts?
Real estate contracts are complex documents that require a great deal of legal experience. An attorney experienced in real estate law in Georgia can help you navigate the complexities of real estate contracts and ensure that your interests are protected.
Their knowledge and experience can help you negotiate better terms, understand the implications of different clauses, and review the document for accuracy. They can also guide how to handle disputes or other issues that may arise with the contract.
By working with an attorney, you can be sure that your real estate contracts are legally sound and protect your best interests. Talk to an attorney at Perigon Legal Services for questions about real estate matters.
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