For real estate transactions to be legally binding, they must be documented in contractual agreements. At Merlino & Gonzalez, our attorneys are well-versed in all aspects of real estate. We assist clients throughout Staten Island, New York, and New Jersey in negotiating purchases and leases, drafting commercial and residential documents, providing representation at closings, and settling any contract disputes that arise.
Whether you are buying, selling, renting, or investing in real estate property, contact our legal team now for exceptional service.
What constitutes a real estate contract?
There are four basic components of a real estate contract: an offer, an acceptance, an intention to create a legal relationship, and a consideration (in other words, money changes hands). Because real estate contracts are legal documents, you must engage the services of a real estate attorney in the contractual process to make sure that the document you sign is in full compliance with state laws and that your interests are well-protected.
Types of Real Estate Contracts
Real estate contracts, especially commercial ones, can be complicated, so it is important to have a savvy real estate attorney to interpret legalese and negotiate skillfully.
Purchase Agreements
Purchase agreements are the most common type of real estate contract. They state the details of the property being sold, including its address, price, the names of the buyer and seller, and the closing date of the sale. Both parties must sign the document for it to be valid. There are three varieties of purchase agreements:
- State/Association Purchase Agreement — the standard agreement between buyer and seller when a real estate agent is involved in the transaction
- General Purchase Agreement — a shortened version of the standard contract, used when no real estate agent is involved
- Property-Specific Purchase Agreement — which can be used for vacant land or a mobile home
Real Estate Assignment Contracts
Real Estate Assignment Contracts are used in wholesale purchases made for investment purposes. The word “assignment” in this context means that the property, typically one in danger of foreclosure, is secured by the contract and then “assigned” to another buyer.
Contract for Deed (Land Contract)
In a contract for deed, the property is transferred from seller to buyer directly, without the involvement of a bank or other third-party lender. Both parties agree on the purchase price, the interest rate, the monthly payments, and the length of time until the purchase is completed.
This type of contract favors the seller because the seller retains title until the purchase price is made in full. If the buyer falls behind in payments, they can lose the property and the money they have already invested. Also, the since the seller is effectively financing the deal, the price or interest rate the seller is charging may be higher than a financial institution would normally charge.
Lease Agreement
This contract is a legal agreement between an owner and a renter. The property owner (landlord) agrees to allow the tenant (the lessee) to reside in the building, or a portion of the building, at a specific monthly rate. Additional items or services may be provided and included in the rental price, e.g. utilities. The renter will also pay a security deposit to cover any damages to the property during tenancy.
Power of Attorney
If one of the parties in a real estate agreement is unable to sign the contract due to incapacity or being out of the country, that person can assign Power of Attorney to another trusted individual who will legally represent them, signing the purchase document or lease agreement on their behalf.
What is an option agreement?
Also known as a purchase option, a real estate option agreement allows a potential buyer or investor to buy the exclusive right to purchase a specific piece of property. The buyer’s payment prevents the owner from selling the property to anyone else. The option agreement has a limited duration, usually six months to a year. The selling price is set at the time the agreement is signed.
Notably, the prospective buyer’s purchase is not guaranteed. However, if the buyer decides not to purchase the property, the owner keeps the payment the potential buyer has already made.
Who benefits from option agreements?
Interestingly, real property buyers, investors, and owners can all benefit from purchase options.
- Buyers benefit by gaining time to arrange financing while the selling price is locked in place.
- Investors who are smart take an option agreement on a piece of property they have cause to believe will increase in value. They may have the opportunity to watch their property become more valuable before they buy it at a lower price, then sell at a profit.
- Owners benefit by knowing they have a potential buyer at a fixed price. They also have the reassurance of knowing that if the buyer decides not to purchase the property they will still get to keep the money they’ve already received and put the property back on the market.
Of course, there are still risks for all involved parties. The buyer may be unable to get financing and lose the money already spent. The investor may see the real estate market turn in the wrong direction. And the property owner will still be locked into the agreed-upon purchase price if property values soar.
Why It Is Crucial to Have a Knowledgeable Real Estate Contracts Attorney
The real estate lawyers at Merlino & Gonzalez are well-versed in all aspects of real estate contracts. Working with them, you can be sure of getting advice and guidance that is not only astute but up-to-date. We have a comprehensive understanding of the real estate market generally and of specific locations throughout Staten Island, New York, and New Jersey.
We also keep fully informed regarding zoning and environmental concerns and can draft contracts that will comply with all state and federal regulations.
Contact Our Experienced Real Estate Contracts Attorney Today
Whether you are looking to sell your home or purchase a new one, situate your new business, relocate an established one, or sell your commercial real estate and retire, our real estate lawyers are here to help. Contact us now for the personalized attention you deserve.