Now that we’re entering the Spring real estate market , we should anticipate that our real estate clientele will be entering into new real estate contracts for their real estate purchases. Certain clauses of such contracts should be negotiated in a particular manner, depending upon whether your attorney is representing a buyer or a seller.
A seller may have decided to forego the services of a professional real estate agent or the property may have been on the market for an extended period of time. In these situations, the seller may be more amenable to certain requests of the buyer, such as making certain repairs before closing. The seller may not know that some of the requests are not customary or may need to move the property, which may result in more flexibility on such matters.
Your attorneys should pay particular attention to personal property issues , whether representing a buyer or a seller. The seller will be disappointed to find that a treasured chandelier was not excluded from the personal property to be sold with the house. A buyer may not approve of the removal of wall scones, without repairs being made to the wall after removal.
Improvements may have been made to the property without proper permitting. The seller may be aware of this and would prefer that the contract not address this possibility. A buyer would want the seller to be required to have all improvements properly permitted prior to closing, so that she does not have to complete corrective work in the future and obtain or close out permits.
An important clause to both parties concerns the mortgage contingency. Sellers would prefer that the buyer waive this clause in its entirety, so that if the buyer cannot obtain a loan, the seller would be able to retain the downpayment if the buyer cannot otherwise proceed to closing. A buyer’s attorney should draft this clause very specifically with a realistic deadline, so that if the buyer cannot obtain a mortgage, the downpayment will be quickly refunded.
Certain thresholds may not be met, which could result in the failure of the contemplated transaction. The property may not appraise to the value identified in the contract. If the contract clause is drafted in a certain way, the buyer can be released from the contract if the appraisal condition is not met. On the other hand, the appraisal clause can be drafted to give the seller an opportunity to reduce the sales price to match the appraisal result, in order to have the closing proceed.
Most residential contracts contain an “on or about” closing date, which is a target under New York law. If either party is unable to proceed as expected, a time of the essence closing can be demanded. The transaction could also break up by mutual agreement.
Customarily, sellers will prefer that the contract contain no warranties about property condition and that the buyer is deemed to accept property conditions, good or bad, once the deed is delivered at the closing. That way, most post-closing claims concerning property conditions will be unsuccessful.
Our attorneys are fluent is in the clauses to be negotiated, whether representing a buyer or a seller. We welcome the opportunity to represent our readers during this Spring market.