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What
is a Contract?
A contract is an agreement between two or more persons (individuals,
businesses, organizations, or government agencies) to do, or to refrain
from doing, a particular thing in exchange for something of value.
What are the Key Elements to a Binding
Real Estate Contract?
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| 1. |
Offer and Acceptance: Original signatures with no alterations
to the contract. If the original offer is marked up and initialed by the
party receiving it, then signed, this is not an offer and acceptance but
a counter-offer. Any final agreement should be reduced to a final
writing and signed by both parties. |
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| 2. |
Consideration: A bargained for exchange of something of value.
Money is the most common form of consideration, but a promise to perform
(i.e. a promise to pay) is also satisfactory. |
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| 3. |
In Writing: A real estate contract must be in writing. |
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| a. |
Identify the Parties: The full name of the parties must
be on the contract. |
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| b. |
Identify the Property: At least the address, but
preferably the legal description must be on the contract. |
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| c. |
Purchase Price: The amount of the sales price or a
reasonably ascertainable figure (an appraisal to be completed at
a future date) must be on the contract. |
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| d. |
Signatures: A real estate contract must be signed to be
enforceable. |
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| e. |
Legal Purpose: The contract is void if it calls for
illegal action. |
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| f. |
Competent Parties: Minors, mentally impaired, drugged
persons, etc. cannot enter into a contract |
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| g. |
Meeting of the Minds: Each side must be clear as to the
essential details, rights, and obligations of the contract. |
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What is a Lease Purchase Contract?
A lease purchase contract (or lease option contract as some call it) combines a basic lease contract with an
option-to-purchase contract. The tenant/buyer pays to the
landlord/seller a nonrefundable option deposit that is applied to the
purchase price of the home. The tenant/buyer then pays to the
landlord/seller a sum that is typical to the rental amount usually on a
monthly basis. A portion of that monthly payment is then applied to the
purchase price of the home. During, or at the end of the lease period,
the tenant/buyer has exclusive right to buy the home under the terms to
which both parties have previously agreed.
Lease +
Option-to-Purchase = Lease Purchase
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More From
Jeff Beaubien!... |
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Mr. Beaubien has an information packed course available
that is sure to take you to the next level!
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