Writing Contracts

The contract outlines the "agreement" between the buyer and the seller of the property. Contracts can be very complicated but it is very important for you to understand some basic contract law to ensure you limit your liabilities and also capitalize on the opportunities available.

Sales Contracts

1. 1. Definition – A written agreement between the buyer and seller for the sale and purchase of real estate.
2. 2. General Rule – If the buyer wants to buy and the seller wants to sell, they will close the sale. If either party wants to cancel the sale, he or she will find a way out.
3. 3. Elements of a sales contract
   1. a. Date
   2. b. Buyer’s name
   3. c. Seller’s name
   4. d. Deposit
   5. e. Purchase note
   6. f. Mortgages and liens taken “subject to”
   7. g. Terms and conditions
   8. h. Legal descriptions
   9. i. Signatures
4. Buying Protection Clause Example:
   This contract is subject to buyer’s accountant’s approval.
5. Selling Protection Clause Example:
   This contract is subject to seller’s attorney’s final approval.

Risk-Free Contract Clauses

1. Subject to financial partner's approval (gives you an out).
2. And/or assigns (after your name on all contracts to allow you to transfer an agreement).
3. Subject to inspection prior to closing, (check all properties).
4. Deposit five days after acceptance of contract or alternatives.
5. Subject to mortgages.
6. Subject to liens being cleared.
7. Subject to seller Purchase Money Mortgage (PMM) or Owner Take Back (OTB) and fully assumable to the next buyer.
8. Non-recourse (in case sellers take back mortgage.)