Components of a Contract

For a contract to be valid and/or enforceable, it needs to be made of the following six features – without these characteristics in play, any contract into is not valid nor can it be enforced:

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  1. There needs to be a “meeting of the minds”. An unqualified acceptance of the offer so that the seller clearly understands the terms of the buyers offer and the buyer clearly understands the performance required and the timing of the obligations
  2. The contract must be in writing – except if it a lease for one year or less
  3. There needs to be consideration, such as money or a promise to pay money
  4. There needs to be at least two competent parties to the transaction, as to a buyer and seller
  5. Names and signatures of all parties need to be on the contract
  6. The exact address of the property needs to be on the contract

Home Buying: The Offer

Depending upon the type of market (Buyer or Seller’s Market), will instigate the game plan you are going to take when home shopping. In a Buyer’s Market you need to be clear about what you want and buy at the level you are comfortable with. In a Seller’s Market, you need to pick an area and type of home where you want to live, trust your agent to find you the best home (don’t use multiple agents), tell everyone you know that you are looking for a home.

When you do find the home you would like to write an offer for, be sure that the following items are included:

  • Legal description of the property – address
  • Sales/purchase price
  • Specific terms
  • Any contingencies
  • Length of time for those contingencies
  • Seller’s promise to provide a clear title
  • Seller’s warranties and provisions to keep property in same condition upon taking possession
  • Closing date or length of escrow
  • Amount of earnest money deposit (EMD)
  • How the EMD will be returned should the offer not be accepted or escrow cancels
  • Method of any proration’s (taxes, utilities, etc.)
  • Type of deed
  • Provisions for who will pay for title insurance, inspections, etc.
  • Provisions for who will pay for repairs and retrofits
  • State-required provisions
  • Provision for final walk-through
  • Offer expiration period
  • Methods for breach of contract