PURCHASING OR SELLING A HOUSE IN CONNECTICUT – Part 2: Important Provisions in your Offer and Contract
As explained in Part 1, an offer to purchase real estate is often made on a contract form, with much of the standard ‘boilerplate’ contract language already completed. However, there are certain provisions that are unique to each transaction. In most of Connecticut outside of Fairfield County, a real estate agent assists the buyer in filling out a form contract and making the offer, which, if accepted, becomes the contract. What are the important provisions to be certain to include and what do they mean?
Certain terms are required to make the contract complete, such as the names of buyer and seller, property address, purchase price, deposit amount, personal property included or excluded, date to accept the offer and closing date. These are the basic terms needed to make a binding agreement. In addition, there are certain optional terms, mostly included for the protection of the buyer.
One of the most important is the mortgage contingency provision, which would state the amount and terms of the mortgage and the date by which the mortgage must be obtained. It is a contingency provision, which means that the buyer’s obligations to close on the purchase are contingent on obtaining the mortgage, according to the specific terms of the contingency provision. So if the buyer tries and cannot be approved for a mortgage for the amount and terms stated in the mortgage contingency, and the buyer notifies the seller before the expiration of contingency date, the buyer would be released from the contract and receive a refund of their deposit. Another important provision is the inspection contingency, which acts in a similar manner to allow the buyer to have a building inspection on the premises by a certain date. If the building inspection reveals deficiencies in the condition of the property, the buyer can provide that information to the seller and be allowed to cancel the contract (or to negotiate repairs or credits). Although those are the primary contingencies, other contingency provisions are available depending upon your particular circumstances which a buyer should discuss with their real estate agent and their attorney.
In addition, be sure to include any special provision that is unique to the transaction, such as an agreement that the seller pay part of the buyer's closing costs. Once fully signed, the purchase and sale agreement is a binding contract; however, any verbal communications between the parties that are not part of the agreement will likely not be legally binding.
What happens after a final contract is signed? Find out HERE.