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7 Terms to Watch for in a Purchase Contract |
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- The closing date. It is important to agree upon a closing date and time (also known as the settlement date) that is agreeable to both Buyer and Seller.
- Date of possession. Usually possession is transferred from Seller to Buyer at closing. In rare cases, a Seller may allow a Buyer access prior to settlement, or a Seller may rent back the property from the Buyer after closing if they have a hardship that prevents them from moving into their new home by the date of settlement.
- The earnest money. A significant earnest-money deposit is usually a good indication of a sincere buyer. In the case of default, the Buyer would forfeit this deposit.
- Fixtures and personal property. Generally anything not permanently attached is considered personal property and would not be considered part of the sale. For example, lighting fixtures would be included in the sale as they are permanently attached. The Seller could, however, sell personal items to the Buyer by way of a separate Bill of Sale between both parties.
- Repairs. Many times needed repairs are discovered in a Buyer's home inspection. It is customary for the Seller to make major repairs, and negotiations may take place concerning minor issues. Monetary concessions are sometimes agreed upon in lieu of the Seller making repairs. If both Buyer and Seller cannot agree on these repairs, the contract can be determined as null and void and all deposit monies returned to the buyer.
- Contingencies. Selling a home, obtaining a mortgage, review of the contract by an attorney, home and wood-boring insect inspections are some of the possible contingencies in a real estate transaction. Time limits should be clearly stated and agreed upon when the contract is signed for any and all contract contingencies.
- The contract expiration date. An Agreement of Sale expires on the date set for settlement. If settlement will be delayed, an addendum must be prepared to extend the settlement date in order not to void the contract.
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