This is part of the Real Estate Contract Fundamentals Series. I’m not giving you legal advice - you’ve got to get that for yourself from a qualified attorney. To get a free copy of the Real Estate Purchase and Sale Agreement upon which this series is based, visit the Monster Purchase And Sale Agreement Download Page.
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The 3 primary purposes of a real estate purchase and sale agreement are to identify the buyer, identify the seller, and identify the property being purchased & sold.
Most contracts simply leave a space for you to write in the physical address of the property. But is that enough?
Most of the time, yes. Frankly, its difficult to imagine a dispute involving residential real estate in which the property being transacted could become a point of contention if the physical address is specified. But there are some special circumstances to consider:
- Is the property you’re buying zoned for multiple houses? If so, you’ll need a more specific description than just a physical address.
- Are there multiple properties that match (or are similar to) the address of the property you’re buying? Ask any pizza delivery driver and you’ll find out very quickly that similar or even identical road names are far more common than you might think.
The most foolproof way to identify a property is by including the exact legal description of the property you’re buying. Generally speaking, this information can be found on the deed to the property, which is available at the local county courthouse.
However, this is generally overkill. For 99.99% of residential real estate transactions, specifying the physical address will be sufficient. As always, ask your own attorney to be certain.
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3 Comments So Far»
You can specify in your purchase contract that the legal description shall be provided later by the title company or closing agent. Then FOLLOW-UP to make sure the correct address and legal description are attached to the contract. You’ll need an abstract of title or a preliminary title report (whichever is used in your state), which is normally provided by a title company and that is how you’ll get the legal description.
I’m with the other Jeff on this.
I don’t bather to look it up myself but I make sure that it is part of the agreement before close of title.
Bryan Ellis,
Thanks for the series on contracts, and making this training available for us.. I would like to know just what do I do with an option contract since I also need a purchase contract for my buyer, right? How does it work? Am I liable for the contract if I do not record my option, and the document gets either lost or destroyed in a fire? Also I have a bit of worry of what happens if the title company misplaced or lost my option contract and they have the purchase contract? Seems like I need to get options recorded to protect myself, but would like to avoid the expense. How much is the usual charge to record an option at a recorders office. Do I need it noterized? How much to expect for that charge? Do I staple the option contract onto the purchase contract? Or do I declare in an addendum to the purchase contract that there is a option to purchase on this contract? If so what is the usual wording of the clause?
If you could outline just how to do the assignment of an option contract, how to submit it, how to protect oneself from being obligated to the purchase contract etc., it would be very helpfull and put away some of my worrys about messing up. I need to do it right the first time, as do not have much money right now.
David
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