By: Dania L. Sancho, Esq.
Real Estate contracts are often long documents with complicated language, however correctly written contracts can save you a lot of headaches and money down the line. A lot of individuals either do not retain real estate attorneys during the sale or purchase of their homes, retain one right before the closing, or after they have already signed the contract.
Most sellers and buyers naturally begin their transaction by showing/viewing the property. Often times at least one of the parties has a real estate agent who prepares the contract for the parties’ execution. However, most real estate attorneys review only a small percentage of contracts before its execution. It is industry standard for most real estate agents in Florida to use the FAR/BAR Contract, a standardized form approved by the committee of Florida Realtors and The Florida Bar. Even then, these simple and “cookie cutter” contracts can be prepared incorrectly. Here are some of the most common mistakes made in real estate contracts that every buyer and seller should be aware of prior to signing it:
It is obvious that the contract needs the names of parties that are entering into the contract. It is not sufficient to just put one of the parties, but ALL of the parties must be referenced in the contract. For example, if a husband and wife are purchasing or selling a property both legal names of the parties must be correctly written into the contract. Watch out for misspellings and incorrect marital status of the parties. This is what real estate attorneys use to draft the deed and title policy. If these are misspelled, omitted, or incorrect in the contract, there is a chance the deed may be recorded with the wrong information.
One of the most important parts of the real estate contract is clearly the address of the property that is being transferred. In addition to the physical address, such as 123 Main Street, Miami, FL 33111, one must provide the legal description and folio number of the property. I cannot stress how important the legal description is in all of the real estate documents, yet so many mistakes are made when it is being referenced to in contracts and deeds. If the legal description is off by even just one number or a word, you could potentially be transferring title to an unrelated property.
I have seen many contracts signed by both parties but either not dated at all, or just dated by one of the parties. This is a very common mistake but one that should be avoided at all cost. The significance of the date triggers every provision within the contract. The date of the last party who signs the contract is known as the “Effective Date” of the contract. This date triggers all of the provisions within the contract and the timeframe in which deadlines must be met. Meeting the contract deadlines is crucial in assuring you do not breach the contract.
Contingencies are extremely important to buyers. There are many different types of contingencies, but the most common are the loan contingency and appraisal contingency. If the appropriate contingencies are either not checked off or written into the contract, then the buyer may not be able to rescind the contract in the event that they are either unable to secure financing to purchase the property or, in the event of paying cash, if the home does not appraise at the purchase price. These are only two examples in which contingencies could protect homebuyers while in the process of purchasing.
Having a well drafted contract will protect you and your assets. Please have your local real estate attorney review it before you sign it.
For more information or if you need assistance in writing or reviewing your real estate contract, please contact us for a free consultation!