What’s In Your Real Estate Purchase Contract?
How wordy do you need to be when purchasing a property? Some purchase offer contracts can run into the dozens of pages. I find the opposite works better for me. I currently use simple and concise contract language that fits on about one page when I wish to make an offer on a property. This contract language has evolved over the years and I use it for several reasons.
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- It keeps things simple.
- Keeping it simple sometimes makes the deal.
- I can carry a contract with me at nearly all times, because you never know when a deal will pop up.
So what is this contract language that I use?
Here are the main provisions of my offer contract:
- It states the address and legal description of the subject property.
- It states the offer price, deposit amount and where the deposit will be held.
- It states the property will be bought “as is.”
- It requires the seller to supply all rental agreements, leases and an estoppel agreement (I will save that one for another post.).
- It calls for the proper proration of all security deposits, rents, taxes, etc.
- It requires the conveyance of a clear title.
- It states who pays transfer taxes, recording fees and commissions.
- If I have not seen the inside of the property, it requires a visual inspection of all units and other areas such as basements, common areas, etc.
- It contains a clause on finding acceptable financing and acceptance by my business partner. Yep; these are the “outs” if I ever need them, because you never know. But so far I never have needed them.
- It states a date for closing but allows for the extension of that date to complete “any and all required paperwork.”
- Space is also available if I need to add any additional clauses or conditions.
And that is about it other than lines for signatures. You can download the full contract here. We usually do add a few documents later on about lead based paint and a disclosure since my wife is representing me as a real estate broker.
So that is my basic, clear and simple contract language. Of course it may evolve in the future as I experience new twists and turns, but so far it has worked for me and here is why I believe it has:
- I fully intend to buy any property I make an offer on (unless something drastic arises),
- I have my financing in place before I make an offer.
- I do my due diligence (what I can) before I make my offer.
- I buy properties “as is” and I know what I am getting into.
In closing you should always check with your own counsel and do what makes you feel comfortable (That is one thing that makes real estate great, there is no one, right way to do things!). Also be sure to include any clauses or forms that may be required in your state or jurisdiction or by your local association of Realtors if you are a Realtor. So what does your purchase contract say? Let me know with your comments.
Until next time, happy investing.
Photo: Natalie Maynor