Buying and Selling a home should be a fun and exciting time. Take out the stress with some friendly legal tips from real life situations.
1. Complete Agreements – For starters, get a copy of the complete purchase and sale agreement after both sides sign it. The complete purchase and sale agreement includes all counter offers. Be sure you get copies of everything showing everyone’s signatures.
2. Liquidated Damages – Be sure you understand what the contract says about Liquidated Damages. The money you place in the escrow, goes to the seller if you don’t perform (i.e., you default). If you can’t perform, or you are unwilling to perform due to something which is not a legal excuse (e.g., unexpected serious illness), paying liquidated damages to the seller is usually preferable to a lawsuit.
3. Deadlines – Pay close attention to contractual deadlines. There are things each side has to provide to the other within a certain number of days after the contract becomes effective. If you can’t provide them on time, get a written extension. The deadlines run from the effective date of the contract. The effective date is the date both parties sign the purchase and sale contract (including the last accepted counteroffer).
4. Notice To Perform – Be sure you understand the ‘notice to perform.’ Merely missing a deadline doesn’t mean the other side can immediately cancel. First they have to give you a notice to perform. Sellers in a rising market should give notices to perform to buyers who are taking too long to perform. Otherwise things can drag on and on, while other buyers are out there ready, willing, and able to pay as much or more.
5. Back Up Offers – Accepted backup offers are actually contracts contingent on a prior buyer’s contract being cancelled. The backup buyer’s contingent contract then becomes non-contingent and effective, which means his deadlines have begun to run. If you find yourself faced with that prospect as a backup buyer, be sure before the initial period for doing so expires, that you give the seller convincing proof you have the funds to close. Otherwise you may be faced with the choice of letting the house go or suing the seller to compel the sale.