The decision to purchase real estate is a big one, and you have to proceed with care. If you don’t, then you could end up on the losing end of your bargain, leaving you saddled with unexpected costs and a property that doesn’t meet your needs. In some instances, you may even find yourself embroiled in contentious litigation. You certainly don’t want those outcomes, which is why you must be diligent, comprehensive and thoughtful in your deliberations before entering into a real estate purchase agreement.
Taking the time needed to thoroughly vet an agreement is critical, especially given that there are multiple mistakes that can be made when creating and entering into a real estate contract. Let’s take a closer look at some of those errors so that you know what you need to be on the lookout for to protect your interests.
Commonly made errors in real estate purchase agreements
There are several mistakes that can come into play when negotiating, drafting and finalizing a real estate purchase agreement. Here are some of them:
- Ambiguous terms and conditions: There are a lot of issues that’ll have to be addressed in a real estate purchase agreement. This can include payment terms, including the payment schedule and amount of deposit, as well as clarification on closing and actual possession dates. If there are terms in your purchase agreement that are unclear or ambiguous, then you could find yourself in a legal battle later over what should happen and when.
- Inadequate precedent conditions: Before purchasing a property, you may want to see certain conditions met. You can protect your interests by specifying what these precedent conditions are. However, if you fail to identify them or neglect to check up on them prior to finalizing the purchase agreement, then you may struggle with issues like the seller’s debt, regulatory clearances and transfer of employees.
- Lack of dispute resolution processes: Your purchase agreement should contain a clause that specifies how disputes will be resolved without the need for full blown litigation. This could include a requirement to mediate. If you bypass this aspect of a real estate purchase agreement, then you could wind up in court fighting over the intricacies of your agreement.
- Failure to address seller competition: If you’re buying commercial real estate, then you should protect your market interests as much as possible. One way to do that is to include certain terms in the purchase agreement that limit the seller’s ability to compete with you. If you overlook this aspect of your agreement, you could end up at a disadvantage in the marketplace despite having secured a new commercial space.
- Lack of due diligence: Before entering into a purchase agreement, you have to have a full understanding of the property’s limitations. Through the due diligence process, you should be able to identify zoning issues, needed maintenance and repairs as well as the benefits and disadvantages of the location itself. Only be being thorough in this process can you enter into a real estate purchase agreement that truly meets your needs and protects your interests.
Don’t be overwhelmed by the legal issues associated with your real estate deal
The complexities of a real estate transaction can quickly become overwhelming. But you don’t have to try to navigate the on your own. In fact, doing so could lead to serious mistakes that prove costly in more ways than one. So, if you want to protect your interests as fully as possible as you navigate the real estate landscape, then now is the time to read up on purchase agreements and what you can do to secure the deal that you want.