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A contract is an essential part of any sale and purchase of residential real estate. Most every contract starts as a standard form with the details to be filled in. But just as every parcel of real estate is unique, so must every contract be tailored to the particular facts and circumstances. Especially for a buyer, attorney review of the contract is vital to making sure all possible contingencies are accounted for.
The attorney review process is where deficiencies in the contract can be spotted and remedied before the deal goes forward. Here are some red flags for such problems:
Unclear title — The contract should guarantee a clear title to the property, meaning there are no outstanding liens or ownership disputes. It’s not uncommon for a home to be put up for sale by an heir or relative of the owner after the owner dies or becomes incapacitated. The contract should warrant that that the named sellers are, in fact, authorized to convey title.
Incomplete financing details — The contract should clearly state how the property is being paid for. If there is a mortgage contingency, there should be details about the amount of loan and what the terms are, including the timeline. The contract should be specific about how the failure to obtain a mortgage works to release the buyer from the contract.
Incomplete or unclear disclosures — Sellers are legally obligated to disclose any material defects about the property, such as structural issues, past renovations without permits and environmental hazards. These disclosures are not always complete or specific. Ambiguous terms like "in good working order" or "minor repairs" can be interpreted subjectively.
Unfavorable inspection and repair terms —The contract should grant you a reasonable window of time to conduct the inspection and negotiate repairs based on its findings. Buyers should be beware of limitations on the scope of the inspection and of clauses restricting the ability to walk away if major repairs are necessary.
Unrealistic closing deadlines — Rushing into a tight closing timeframe can be problematic. Ensure the timeframe is realistic inconsideration of loan approvals, title searches and other necessary preliminaries. The contract also should outline who bears the financial burden for closing delays.
Unequal termination clauses — Termination clauses dictate when and how either party can back out of the deal. A one-sided contract might allow the seller to terminate for minor reasons while making it difficult for you to walk away if you discover significant issues. Ensure both parties have fair termination rights with clear consequences.
Don't be pressured into signing a contract before you fully understand its contents. An experienced real estate lawyer will give the contract a thorough review and prepare and negotiate corrections and riders to make sure your interests are protected.
Gesmonde, Pietrosimone & Sgrignari, L.L.C. represents buyers and sellers in residential real estate transactions across Connecticut. Call 203-745-0942 or contact us online to speak with a real estate lawyer in our Hamden or East Haven offices.
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Gesmonde, Pietrosimone & Sgrignari, L.L.C. is located in Hamden, CT and serves clients in and around North Haven, Hamden, Waterbury, Bethany, Milford, Wallingford, Prospect, Woodbridge, Northford, Madison, Beacon Falls, Branford, Cheshire, North Branford, East Haven, Naugatuck, Meriden, Ansonia and New Haven County.
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