A real estate sales contract can seem like a straightforward kind of thing, but most people do not realize the hundreds of things that can go wrong with this type of agreement. Before you enter into a real estate deal, it helps if you have an understanding of some of the significant problems that can pop up that will affect both the buyer and the seller.
It is actually common to start a real estate sales contract and then realize that the seller does not have the authority to sell the property. This most commonly happens when the seller is the child of the property owner and the property owner has either passed away or become unable to make their own legal decisions. The child assumes they have the right to sell the property, but they do not. Even a child that has secured a power of attorney might not have the authority to sell the property because of limitations put in the power of attorney.
One of the biggest problem with a real estate sales contract that comes up when one or both parties decide to not hire an attorney is incomplete paperwork. Most people do not realize or appreciate the amount of information that is mandatory in a real estate sales contract until they actually get involved in a transaction. A misspelling in the property description or leaving out one of the names of the party on page 25 of the contract can mean that the entire transaction is void.
It is critically important that the attorneys for the buyers and sellers remain in constant contact throughout the transaction. If the seller wants to change some of the parameters of the sale but the buyer is not told, then that could mean that the closing will be canceled. Communication between the two parties, especially in matters that affect the smooth closing of the transaction, is very important.
It seems difficult for many people to grasp, but there are instances where the buyer and seller make verbal agreements that are never entered into the actual contract. The primary reason for the use of a real estate sales contract is to protect the interests of both parties. But when both parties make side agreements that are not made part of the contract, that can lead to a lot of legal problems after closing.
We talked earlier about how important verbiage is in real estate contracts and this is a great example. If the phrase "possession due on sale" is left out of the sales agreement, then the seller could hold onto the property indefinitely after closing. Leaving out those four little words can make life miserable for any buyer.
Real estate transaction contracts are complicated documents that contain a lot of information about a single transaction. But if those contracts are not done exactly right, then there is a lot that can go wrong with a real estate transaction.