Whether you are buying or selling real estate, it is vital that you have a well-drafted contract (also known as a purchase and sale agreement) that protects your rights during this transaction. There may also be a need to file or defend yourself in a lawsuit involving this agreement. Because real estate contracts are complicated, you should retain experienced legal representation who will look after your best interests. LaFountain & Wollman P.C. handles both transactional and litigation aspects of residential and commercial real estate contracts. Our attorneys are ready to serve you today.
Formation of Real Estate Contracts in Massachusetts
The process of forming a binding purchase and sale agreement usually begins when the buyer proposes an offer to the seller. The seller may then reject the offer outright or propose a counteroffer. Until the two sides have a meeting of the minds, however, no contract is formed.
Once the seller accepts the buyer’s final offer, then a purchase and sale agreement will need to be negotiated and signed to formalize the transaction. It is important to note that in Massachusetts a written offer signed by all of the parties may be considered a binding contract and a buyer may be able to force the sale of the property if the seller walks away even before the purchase and sale agreement is signed. As part of the offer and purchase and sale agreement, the buyer will pay a deposit on the property and may be given a chance to inspect the property. Typically, the purchase and sale agreement itself is a standard form with typical terms like those discussed below.
But the buyer and seller can negotiate additional terms. For example, there may be something unique about the property that requires a more customized agreement. Regardless of which party you are to the deal, have an attorney review the contracts and advise you accordingly.
Elements of Real Estate Contracts
The following are only a few of the standard terms used in Massachusetts real estate contracts. Remember, the terms of the final contracts can be negotiated, so retain an attorney early in the process of buying or selling the real estate.
Description of the property. This section of the contract will contain details of the real estate that is being sold to the buyer. It may include not only the land itself but a description of structures on the property such as a house or building. Specific items may be listed as included or excluded from the property sale.
Purchase price. The total price of the property, how it will be paid, and the initial deposit (or down payment) are covered here. Be sure you understand the payment obligations, whether you’re the buyer or seller.
Title and title insurance. The seller should provide good and marketable title to the property (free from encumbrances and liens) but with standard exceptions like utility easements or special ones that are listed in the contract. The agreement will also contain terms related to title insurance, which protects both buyer and seller in the event of unforeseen defects in the title. An attorney can assist you with obtaining a policy.
Financing. Buyers often have to obtain financing (e.g. a mortgage) to purchase real estate. The contract may state that the buyer’s obligation to buy the property is conditioned upon obtaining a written mortgage commitment from a lender. If the buyer is unable to line up financing in good faith, then he or she can cancel the contract and have the deposit refunded. If the contract does not include a financing contingency, a buyer may lose his or her deposit if they are unable to get a mortgage.
Inspection. The standard real estate offer or purchase and sale agreement may give the buyer a certain amount of time from the date of the contract to complete an inspection of the property. If the results of the inspection are unsatisfactory, he or she will have the right to terminate the agreement in accordance with conditions and deadlines listed in this section. If such termination occurs, then the buyer’s down payment will be returned.
Seller representations and warranties. The seller may make certain representations and warranties about the property, for example concerning the presence of a septic system or underground storage tank. Also, this clause will make it clear that all representations made by the seller to the buyer are contained in the contract.
Additional terms. The offer and the purchase and sale agreement will both have space for additional terms that the buyer and seller may agree to. Remember, you have the right to retain a real estate attorney early in the purchase and sale process. Your attorney will make suggestions regarding terms to include (or exclude) and their legal consequences.
Litigation of the Real Estate Contract
In the event the buyer defaults on the contract, he or she loses the down payment. These funds will have been placed in escrow, a provision that is also covered by the contract. But the agreement will also contain numerous binding obligations on both the buyer and seller. If either party fails to meet its obligations under the agreement, then the other party can file a lawsuit for breach of contract. The plaintiff may seek monetary damages or another remedy such as specific performance.
Our firm can represent you in litigation, regardless of whether you are the plaintiff or the defendant. It may be possible to reach an out-of-court settlement by way of mediation. This can save both parties considerable time, money, and stress by avoiding a trial. However, if mediation fails, then we will advocate for you in court and demand the relief you deserve under the law.
Contact Our Middlesex County Real Estate Contract Attorney
LaFountain & Wollman P.C. can address all matters related to the negotiation, drafting, execution, and (if necessary) litigation of your real estate contract. We work with both buyers and sellers of residential and commercial properties. Have questions about real estate contracts? Give us a call to learn more.