Contracts are essential in big purchases, especially real estate. It will be one of, if not the most expensive purchase you’ll ever make, and the transaction must be legally binding in the form of contracts. When talking about real estate, there are several kinds of contracts including purchase agreements, lease agreements, contracts for deeds, and rent-to-own. Let’s review them to find out why they’re necessary when you decide to lease, purchase, or sell a home.
First, you should note that both the buyer and seller of the home must sign all contracts to complete the deal. Real estate contracts typically cover the financial terms of the deal, the obligations of both buyer and seller, including rights to home inspection, closing date details, and outline the sale of the home. They’re legally binding and necessary for all real estate transactions.
Let’s start with the most common contract, the purchase agreement. This contract is binding between the buyer and seller of the property and outlines all the details of a home sale transaction. These details can include:
Note that not every purchase agreement will outline the same items. In an average transaction, the buyer will present the purchase agreement to the seller, and there will likely be some back and forth until everything is settled and both parties are satisfied. Once the purchase agreement has been signed, you’re now “under contract.”
Lease agreements are used for those of us who opt to rent instead of buy and landlords who are renting out their property. The lease agreement should outline:
Lease agreements can be a bit confusing for those new to real estate, and we always recommend reviewing the agreement with an attorney to be sure you know what you are agreeing to.
A contract for deed is a bit different than a purchase agreement. It’s a legally binding agreement that allows the buyer of the property to take possession of the home and start making payments to the seller; however, the seller still technically owns the title of the property until all payments are made. This kind of contract is appropriate in situations where the buyer cannot qualify for a mortgage due to poor credit history, etc. You are highly advised to speak to a real estate attorney before signing a contract for deed as these kinds of agreements can be tricky and NC laws require specific language and recordation.
Lastly, let’s review rent-to-own contracts. These contracts allow a person to rent a property for a specified amount of time, with the option of purchasing the property before the lease is up. This is a great option for those unsure if they’ll like the area or the property specifically without making a huge commitment.
Have any more questions about real estate contracts? Contact the Kelly & West team today.
“Reggie Kelly is a fantastic attorney with fantastic paralegals. My wife and I have been using him and his firm since 1983 when we first purchased property in Harnett County 37 years ago. He offers excellent legal advice and guidance. He never gets in a hurry to get us out the door because of his next appointment. He always takes the time needed to check out all of the issues that might come up. Reggie Kelly is a proud American and he loves our country and he wants everyone to do well. Reggie Kelly is an even finer person than he is a fantastic attorney and we are very fortunate to also be able to call him and his wife Cheryl our friends. We give him a 10 STAR Review!”