Selling or buying a home is one of the biggest transactions you will ever enter into during your life. As with most transactions of this sort, a contract is required. Ah, but what if you are not a lawyer?
Let’s start off with the basics. A contract is simply an agreement between two parties in which each promises to do something. At its most basic, a real estate sales contract is an agreement wherein the seller promises to exchange title to the property in exchange for the buyer’s promise to hand over a boat load of money. If one party fails to live up to its promise, then it is in “breach” of the contract and a court action can be filed to enforce the promise.
If you have every purchased a home, you know a real estate agreement is much more complex than the simple example in the previous paragraph. You might not know why exactly, but the sheer thickness of the agreement tells you as much. So, what is all that extra stuff?
Boilerplate. This is the legal term for the five billion clauses in your average real estate agreement. “Boilerplate” is simply legal jargon referring to language included in the agreement to cover various potential events and issues. Let’s look at a simple one.
Every real estate agreement has a jurisdiction clause that is part of the boilerplate language. It is often found in the last few paragraphs. What does it do? It sets forth the county and court where any disputes that arise between you and the other party will be decided. As simple as this sounds, it can often be 10 lines long. And this is only one clause!
Obviously, it is impossible to go over every clause in a real estate contract. If you are entering into a real estate transaction and are nervous about the agreement, don’t sign it. Instead, spend a few hundred bucks to have a real estate attorney review it to make sure you aren’t getting taken to the woodshed. It will be money well spent, particularly given the large amount of money involved in the transaction.
Raynor James writes about issues faced by
FSBO sellers for FSBOAmerica.org where you can list your property for sale by owner for free for 1 month.
