Types And Contents Of Real Estate Contracts

The lawyers who have expertise in matters that relate to property transactions along with the disputes related to real estate, are known as real estate lawyers. A real estate lawyer is mostly involved in drafting as well as reviewing documents with regards to the real estate such as purchase agreements, mortgage documents, title documents, transfer documents, etc.

Drafting of real estate documents is focused on drafting a precise, clear and unambiguous contract by ensuring that their clients are free from unnecessary litigation. Thus, the object behind drafting a proper real estate contract is to  reduce disputes that arise out of unclear and ambiguous terms of the contract. Drafting a contract is one of the important steps while dealing with real estate transactions. There are various agreements concerning real estate which are dealt with mostly by the real estate lawyers, have been discussed hereunder.

The process of drafting a real estate sales contract is essentially writing and detailing all necessary elements applicable to the transaction.

1. Sale deeds or Real Estate Purchase Contract

A real estate purchase contract is a twofold agreement between the parties where the sale of property takes place. Real estate agreements mostly involve transactions relating to property or house, where the buyer agrees to buy property from the seller. A real estate purchase agreement must include the following-

• Property identification of the address of the property which is purchased by the buyer along with the required legal descriptions
• Identification of both the seller as well as the buyer of the property.
• The cost of the property along with terms of purchasing the property.
• The date of beginning the transaction and closing the deal must be included.
• Any additional taxes or costs related to others must be outlined in the agreement. 
• Specification of the parties as to which cost is paid by whom.
• Any material defects, if present, must be disclosed.

2. Agreement for Sale

Agreement for sale is an agreement prior to the sale deed where the seller expresses their interest by agreeing to transfer the goods or property to the buyer for a specific consideration at a later date or when a condition has been fulfilled prior to the transfer. Like any other agreement, the agreement for sale must be in writing and signed by the parties to the agreement.

3. Builder Buyer Agreement

This agreement is one of the forms of sale deed which is an agreement between the builder and the buyer. It is important to read and understand the builder buyer agreement before taking any legal recourse. A real estate lawyer ensures that the agreement has been well-drafted without putting the rights of the buyer at stake due to arbitrary terms of the agreement.

4. Mortgaging Deeds

In the mortgage deed, an interest in the property or the goods to be mortgaged is transferred to the mortgagee for providing a mortgage loan. A mortgage is defined under the Transfer of Property Act where interest in a certain immovable property is transferred to secure payment of money or advancement of loan. Based on the types of mortgage, the real estate lawyer drafts a mortgage deed.

5. Joint- venture Agreements

The agreement in which roles and obligations along with the sharing of profits or losses and various other terms with respect to achieving the goal of the joint venture has been outlined is known as a joint venture agreement. Mostly the real estate investors who enter into one-time projects, investments, or business opportunities use the joint venture agreement.

6. Lease Agreement

In this agreement, the landlord and tenant are bound by the terms of the agreement between them. The agreement specifies the duration given to the tenant to reside at the landlord’s property for which the tenant has to pay rent monthly. A lease is the transfer of the possession by the lessor to the lessee for a certain amount of consideration. However, in this agreement, the ownership remains with the landlord or the lessor.

7. Power of Attorney

To confer the authority by the owner to another individual or party for legally acting on behalf of the owner, power of attorney is used. A real estate lawyer will help in drafting the Power of Attorney by covering all the aspects of the property including the management of assets or money matters. Based on the authority given to the attorney by the principal power of attorney can be classified as general or special. The power of attorney grants the other person to be one’s legal representative. Powers granted in case of special power of attorney are specific and limited. Hence it is advisable to use this mostly in real estate matters.
 

There is a basic format that comprises the following key points while drafting any contract or agreement including real estate contracts.

• The contract or agreement must contain the name of the document which is basically the nomenclature of the agreement. For instance, a deed of conveyance or leave and license agreement. The name of the agreement is based on the facts described in the entire agreement.
• The date and place of executing the agreement or contract must be mentioned as it plays an important role in the period of limitation, priority, or registration.
• The name and description of the parties to the agreement must be mentioned in the document. This clause must also include a definition as to the heirs, executors, and assigns of the individual.
• Recitals must be provided where a detailed background or brief history of the facts and circumstances which led to executing the agreement is stated.
• Other clauses include- covenants, mode of payment, jurisdiction, testimonial, and signature of execution clause.

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