Real estate transactions are one of the most important business deals that many are ever directly involved. It may be for a place to live, work or rent out, but it also likely involves a substantial amount of money, particularly here in New York and New Jersey. Considering all that is at stake, it makes sense that the buyer or seller makes the right decision, not one they later regret.
There are several steps involved in buying and selling property. An effective real estate contract drafted by a real estate attorney will outline the steps and the consequences when these steps or conditions are met or not met. During the process, the contract can provide reasons to void the deal if the conditions are not met or change the conditions in some way before the deal is final.
Conditions that may void a contract
Real estate deals fall apart for many reasons. Some of the more common ones are:
- Grace period: There likely is a grace period where either side can void the deal without fear of a lawsuit or potential penalties.
- Title: The owner cannot sell the property if they do not have a clear title. They may not have the actual title or a lien against the property that must be cleared before selling.
- Contingencies: Contracts often will have conditions that seller and buyer must meet before concluding the deal. Typically this will involve finding a problem or flaw with the property that influences the property value.
- Financing: Most do not pay cash upfront for a property, so the mortgage company or lender must sign off on the purchase price.
- Mistakes: These can often get fixed, but errors on a critical issue can kill the deal. One example would be not realizing there was a potential for eminent domain seizure by the federal, state or local authorities.
- Disclosure: Depending upon the property, there are rules about what the seller must disclose in a statement regarding the relative status of the property, or a potential flaw, such as the presence of asbestos or lead pipes.
Contracts protect both sides
One of the above issues can lead to frustration, but it can reduce the risks of making mistakes. It can mean not paying too much for the flawed property or avoiding a lawsuit from an unhappy buyer after concluding the deal.
