As a realtor, is there anything more exciting than seeing your clients lay eyes on the exact property they have been looking for? Maybe it is a newlywed couple who have found their dream home with granite counters, four bedrooms, and great neighborhood schools nearby. Or, maybe it is a pizza-shop owner relocating from some hole-in-the-wall to a corner shop on Elm Street. Whatever the case may be, after the initial thrill of bringing buyers and sellers together comes the technical work of negotiating a price, drawing up the paperwork, and closing the deal. While some deals are more complex than others (just ask the Trump’s real estate lawyers, who drafted the paperwork for their Post Office hotel), there are certain principles that apply generally when navigating these tasks. Keep reading for a couple of pointers.
The Statute of Frauds
This particular statute is pretty simple. It establishes that certain kinds of contracts, real-estate contracts included, need to be in writing to be considered valid and enforceable. Some elements that need to be in written real estate contracts are:
- The names of each party (the buyer and seller) along with their signatures
- A description of the property
- The price at which the property has been sold
However intuitive it might seem, remembering to get the contract in writing is an absolutely essential part of successfully navigating a real estate deal. It is important to note that while the above contractual elements are necessary, you may find others that are optional and somewhat common. For instance, “contingency clauses” are often found. These allow one party to legally back out of the contract if some benchmark, perhaps timely financing, has not been met by the other party. As a rule, remember that handshakes are great, but pens sell property.
This is a somewhat “inside baseball” term to describe a rather common occurrence in the world of lending. It refers to a penalty that a debtor may be subject to if they pay off their debts early in a real estate contract. I know, pretty harsh, right? Talk about incentivizing good behavior. The idea behind this type of provision, sometimes found in commercial real estate agreements, is that the lender expects to benefit from the interests accrued on a loan as it matures. If the borrower is willing and able to pay off that loan before it reaches maturity, then the lender may not receive the same level of revenue. The prepayment penalty, therefore, is a way to offset whatever losses a creditor may assume in these situations. If you see this language in a contract, being able to explain this concept to your clients in a simple way is important.
Partnering with the Right Legal Team
As with most things in life, real estate deals take more than one party’s involvement. As a realtor, you have done the lion’s share of legwork, selling, and bringing interested parties to the table. This is no small feat. When it comes time to bring in the lawyers, it is essential to choose an experienced, dedicated team as your partner. That is exactly what you can expect with the Adam Law Group. Our years of experience and reputation speak for themselves. Call today to learn more.