The Crucial Role of Legal Agreements in Property Sales

Are you planning to sell or buy an apartment, a house, or a piece of land? Being extremely worried about the financial aspect of the arrangement, people often forget about the judicial one, and it’s a huge mistake. A valid and correctly drafted agreement between the parties is the core of any deal because it protects them from unexpected claims to each other. In this article, Green.org explains the role and types of contracts in property sales and outline the problems you can face if you don’t bother to get them before the transfer of ownership is over.

Importance of Documents in Real Estate Transactions

Serious purchases are always associated with big money and numerous nuances that both the seller and the buyer should consider. If any disputes arise after the final signatures are put in place, their resolution may take weeks and even years, costing both parties a fortune. The most reliable way to avoid such situations is to sign corresponding legal documents that clearly outline all the peculiarities of the property and the responsibilities of those selling and buying it. 

Even if, over time, some problems arise, these agreements containing the originally agreed-upon terms will allow the parties to resolve everything quickly. For instance, if the buyer refuses to pay off the whole sum within the agreed deadline, the seller can present a sales agreement containing the information about the payment terms to the court and get their money. 

Finally, real estate trading regulations may vary in different states and even cities. Therefore, a person from Colorado who buys a house in California, for instance, may be unaware of many local peculiarities, which can result in serious problems in the future. In such cases, a professionally drafted contract ensures all involved parties are aware of all the nuances of the transaction. 

Types of Legal Agreements in Property Sales

Depending on the specifics of the objects sold and the parties involved in the deal, one may come across five main types of contracts:

1. A sales agreement outlines the terms and conditions of the arrangement, such as the price, payment terms, and any contingencies. Always check if you sign the correct form. For instance, if you sell a plot of land, you should use a land sale contract template that is available on reliable legal platforms like Lawrina.
2. A listing agreement is signed by the parties with their real estate agent and specifies the commission, duties, and responsibilities of the latter. 
3. A title transfer form ensures the seller gets all the ownership rights for the property.
4. A mortgage agreement is needed when the buyer does not have the sum required to finalize the deal and takes a loan. This document outlines the interest rates, repayment terms, and fees. 
5. An escrow contract is required if an escrow agent is involved. It defines the deposit’s size, the funds’ disbursement, and the deadlines within which the buyer should get their money after the deal is completed. 

Problems Caused by the Lack of Legal Agreements in Property Sales

Without proper documents in place, the sales process can become a minefield of problems for everyone involved in the deal.

• Disputes over ownership: When you sell a property, you need a clear title deed to guarantee you are the actual owner. Imagine you put your house on sale, and someone else claims to own it. If you do not have the documents proving the property belongs to you, you could end up in a messy legal dispute. 
• Financial misunderstandings: A correctly drafted sales agreement outlines the price and related terms of the deal. Without it, you may agree on a certain sum, but the buyer could recall a different figure, and you won’t be able to protect your interests and get your money.
• Hidden defects: If there are certain problems with your house and you don’t reveal them to the buyer through a special form, you could get hit with legal action.
• Boundary & land use conflicts: Imagine you buy a land plot, and your next-door neighbor immediately challenges the boundary line, claiming part of your territory actually belongs to them. If the size of your piece of land is clearly stated in the sales agreement, this situation would be impossible.
• Loan complications: If your property sale is tied to a mortgage agreement that’s not clearly defined, you may face problems. For example, the buyer can delay payments, and you’ll have no legal tool at hand to force them to return your money to you.
• Rental Issues: If a property is sold with sitting tenants who don’t have a lease agreement to show the new owner, it will most likely lead to conflicts, court disputes, and chaos.

Contracts in Property Sales

Well-drafted contracts in property sales provide a basis for a successful and stress-free business deal. No matter whether you sell or buy something, you need to have your rights and interests legally protected. Preparing and checking all the documents may take days, but resolving disputes in court may take years and cost your wallet and mental health too much.