RESIDENTIAL REAL ESTATE CONTRACTS: SECTION 12
This is a brief summary of real estate contracts. This summary does not cover all aspects of the contract. This video has been made specifically for Real Estate Agents to use as an unofficial educational resource. Nothing in this video is intended to convey legal advice or best practices in any field. This video is only intended to give general advice on broad topics relating to contracts and the closing process at large. For legal advice please contact an attorney and for lending advice please contact a lender.
12. CLOSING & POSSESSION
What we’re looking at here is the actual closing date. The contract says that the sale will be complete and the deed delivered on such date. By “deed delivered” they mean a signed deed delivered to the attorney handling your closing. The attorney will draft the deed and watch the buyer sign it, so that counts as it being delivered. Your client will not receive their deed at closing; the attorney will take their deed once it’s signed and file it in probate court. It will not get back to the client for another 4-6 weeks because the court has to process it and file it, then send it back to the attorney, who has to go through their own system to make sure it’s been properly processed on that side as well and that title insurance is ready to go. After all of this is complete, the deed is sent to the client.
This section of the contract states that you must close “on or before” the specified date. If you want to close early, that’s great, but we can’t talk about closing later without a contract addendum, which is fairly easy to do and the attorney can walk you through it if necessary. If you think there would be any reason the closing date may need to be pushed, add some cushion to your closing date in the contract to prevent you from having to add an addendum later on. For example, if you have a cash deal that you believe can close in two weeks, we would recommend stating four weeks in the contract and just pushing for a closing in two weeks so that you don’t have to worry about the contract becoming void if it doesn’t close exactly when expected. There are many other parties involved including lenders and insurance representatives, and none of these parts are guaranteed to move quickly.
Note this section: “The seller has time to perfect title or cure defects.” If we do the title search and find problems with the title, then the seller has the ability to delay closing by saying that we found an issue he was unaware of and now he needs more time than the 4-week allotted period in order to get the title issues fixed.
Possession is also mentioned here. Sometimes buyers can take possession early; sometimes the seller will stay in a home after closing to clean everything out. If anything like this happens, I recommend you speak to your broker about writing up an Occupancy Agreement. If you need additional help with an agreement after you speak with your broker then you can bring it to the attorney, but traditionally these can just be done with your broker. These agreements are not solely about money, but are also about protecting the new owner, ensuring that parties vacate when they are supposed to and that the buyer has some sort of recourse if this doesn’t happen.
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Sample Real Estate Contract (highlighted)
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Condition of the Property