Posted November 2018
Beware of the Standard Real Estate Contract – The phrase “standard form real estate contract” is a misnomer because such a contract does not exist. The better approach is to think of a “commonly used” form of residential real estate contract for a particular geographic area. Even within a particular local or regional market area, there are often multiple commonly used forms of real estate contracts that may have vastly different provisions which significantly impact the process of selling and purchasing real estate.
The following are just a few of the important provisions that can vary widely among commonly used residential real estate contracts:
- The definition and calculation of time periods (business days vs. calendar days).
- Inspection provisions may provide for a straight as-is sale, an as-is sale with a right to inspect and cancel the contract, or provisions that impose an obligation on the seller to make repairs up to a stated dollar amount or percentage of the purchase price.
- The manner in which delays in the closing date are handled in the event of adverse weather events, damage to the property, the suspension of insurance underwriting, an inability to close timely based on Consumer Financial Protection Bureau considerations or other unanticipated circumstances as the closing date approaches.
- Title cure provisions and time frames for corrective action in the event of a title defect or deficiency.
- The seller’s and buyer’s rights and duties in the event the residence is damaged prior to closing.
- Identification of the party responsible for obtaining and paying for such items as the title search; the owner’s or lender’s title insurance premiums; municipal lien, open building permit and code violation searches; surveys; recording fees; and documentary stamps on the deed of conveyance.
- Remedies in the event of a seller or buyer default.
The details of the contract matter, so beware of the standard form real estate contract.
The above information is provided for general information purposes only and should not be considered legal advice or a legal opinion as to any specific facts or circumstances. Do not act based solely on this information without consulting legal or other professional advisors.