Contracts – Real Estate Nightmares or Heroes


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Whether you are the real estate buyer or seller, people always say, “Get it in writing. They have to stick with it if you get it in writing.” In many cases, this is true, from school decisions to memberships. With real state investment, contracts are a little shakier issue.  A lot depends upon the actual agreement that was signed and the personalities of the parties involved.

Definitions

Real estate contracts are legitimate legal documents between two parties involving the purchase of or lease/rental of a property. That part is the black and white. Where it starts to get tricky is in the case of enforcing the contract if one party or another intends to break the contract or back out of it.

Contingencies are the conditions that must be met before a contract is legally binding or enforceable. Many times, homeowners or buyers will include situations like passed inspection reports or financial commitment that keep the contract from being enforceable. If for some reason, the contingencies have not been met, the contract can be cancelled.

Backing Out

Morally, things happen all the time. For one reason or another, a party may have to get out of their contract. Instead of getting too worked up, it helps to see this from both points of view. If you are the seller that needs to back out of the contract, the buyer may have started making plans and arrangements to move in to your home. By canceling, the buyer may not have to find an apartment or other place to live. The buyer may also have problems getting a loan lock extension. By changing your mind, you create a lot of problems for the buyer.

As a buyer that backs out, you create an equal amount of problems for the seller. By entering into contractual agreements with you, the seller removed his home from the market and has lost other potential buyers. He may have already entered into contractual agreements of his own for a new place to live, and will now have two households to maintain or not be able to get his own loan for the new house. Although he may not have to find a new place to stay, it will be just as hard for him to finance new marketing and find new buyers for the property.

Depending on which side of the contract you are on, there are always problems that turn contracts into nightmare situations. Be understanding whether you are the one backing out or not. There may need to be some financial compensation or reconciliation done to smooth things over, but that is best discussed with an attorney.

For more information on any real estate investment concern, visit us at Homevestors.com. Remember, we not only handle real estate investment. We also handle real estate franchise opportunities.

 

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