Buying and selling real estate is typically accomplished through written contracts that must be executed by the parties. The executed contract can be viewed as a road map that outlines the parties’ obligations on their way to a closing (at which title will be transferred and money will be exchanged). The seller’s attorney generally creates the first draft of the executed contract, and any unique or different information can be added to it as a rider.
Once the executed contract is created, the buyer will deliver a down-payment check equal to 10% of the purchase price to the seller, who will then deposit it for safekeeping in a separate account called an “escrow account.” Most residential real estate executed contracts contain a provision that allows the sellers to keep this money if you back out of the executed contract without a valid reason allowed by the executed contract (for example, if you are unable to get your mortgage loan approved).
The rest of the money will be paid at closing. At this time, you will pay the balance of the purchase price plus any additional costs that have been incurred, such as legal fees for the buyers and sellers or transfer taxes. After all of the money is exchanged, you will receive the deed to your property and you will take possession of your new home or commercial property, as stipulated in the executed contract.
Real estate transactions often include several contingencies to allow the parties time to complete their due diligence on the property before finalizing the transaction. The most common contingencies are for financing, environmental issues, engineering issues, and termite infestations. The executed contract will usually describe the property, including its Permanent Index Number (“PIN”) and any additional property included in the purchase, such as equipment, inventory, or furniture. It will also usually describe the conditions of the property and any liens or contracts related to it.
In addition to listing the property’s purchase price and the intended closing date, most residential executed contracts will also list a timeline that gives the buyer a certain amount of time to get a mortgage loan commitment from their lender. The executed contract will also likely include escrow instructions, including the expected escrow timeline and whether or not the deposits made by either party can be refunded.
In addition, most residential executed contracts will contain a disclosure statement that must be provided to the buyer by the seller under New York law. The disclosure statement will provide the buyer with information regarding the condition of the property, and if it is not provided, the seller must give the buyer a $500 credit at closing.
Whether you’re a commercial or residential real estate stakeholder, your transaction may involve a complex contract. A properly drafted, executed contract ensures procurement and offers a legal shield in the event of disputes or issues. An executed contract will also define crucial elements such as a property description, purchase price, financing terms, and potential add-ons or customizations through riders. It will also include contingencies, stipulating events that must occur before the sale is finalized, like the completion of home inspections and clearing of title issues.
The term “executed” is sometimes used interchangeably with the term “effective.” However, there are key differences between the two. An executed contract refers to a completed contractual agreement that both parties have fulfilled their obligations. A real estate contract is considered an “executed contract” once all of the conditions of the sale are met and all documents have been signed by the relevant stakeholders.
In many cases, these contracts will contain a closing date and an effective date. The closing date is when the deal actually closes and the new ownership of the property officially transfers, as stipulated in the executed contract. The effective date usually occurs later, and it relates to the time frame for when the new owners can move in or take full possession of the property.
Most real estate transactions in New York are handled by attorneys, and their role in the process is essential for buyers and sellers alike. Attorneys will create the initial executed contract of sale, oversee the escrow process, and perform a host of other responsibilities, including coordinating payoffs and preparing tax transfer documents. They will help their clients navigate the complex legal requirements of a real estate transaction, ensuring that all terms and conditions of the executed contract are upheld to protect their client’s interests.
Contract signatories often make mistakes that have serious consequences for their respective parties. Some of these mistakes are not intentionally malicious but rather the result of miscommunications or a lack of understanding of the law. Regardless of the cause, these errors can be costly. They can lead to financial damages and even litigation, especially when they occur in the context of an executed contract in a real estate transaction.
Overview of Executed Real Estate Contracts in New York
In a real estate transaction, the terms of the executed contract are legally binding on all parties involved. The most important reason to have a fully executed contract is that it offers protections in the event of a dispute or issue. The executed contract will define who is liable for certain problems or issues, and if they are not addressed, the affected party has avenues of recourse. This is why it is important to work with a qualified real estate lawyer throughout the process. A skilled attorney will be able to clarify and explain the terms of the executed contract while ensuring that all relevant parties have the opportunity to review it. The process of creating a valid executed contract can be time-consuming and complicated, but it will help to reduce any possible future disputes or complications.
The process of buying or selling real estate is a complex endeavor. Contracts are at the center of every step and there are many legal pitfalls to avoid. For this reason, it is strongly recommended that either Buyers or Sellers have an experienced attorney represent them throughout the transaction to ensure a proper executed contract is in place.
In most residential real estate transactions in New York, the first step is for the Buyer to make a verbal offer and then for the Seller to either accept the offer or make a counter-offer. This does not constitute a binding obligation on either party, however, until both attorneys prepare and sign a written contract that includes a price, an adequate description of the property, and any events that must happen before the sale can close (also known as “contingencies”), making it an executed contract.
After both sides have signed the contract, it is considered to be an executed contract. This means that both parties have fulfilled all of their obligations under the contract and that the other party can no longer force them to do anything more. In the case of a breach of a real estate contract, the most common remedy is money damages. However, there are also cases where the contract calls for specific performance. These types of cases often involve unique items like land and houses or custom objects, where a court might order the other party to perform exactly what the executed contract requires.
For these reasons, it is important that the language in a real estate contract be clear and concise. It should clearly state the price, a complete and accurate description of the property, an anticipated closing date, any events that must take place before the sale can close (also known as contingencies), and a time period within which the contract can be canceled by either party. It is also highly recommended that the Buyer have a home inspection performed on the property by a licensed home inspector, and that the Seller have their deed and mortgage recorded after the closing in order to put the world on notice that the ownership of the property has changed hands, as specified in the executed contract.
Generally, the Seller’s attorney creates the initial draft of the executed contract. There are standard forms that are used for this purpose, and any special or different information can be added as a rider. The attorney also assumes a number of other critical responsibilities, including clearing title issues and preparing and recording the deed and associated tax transfer documents, all of which are part of the executed contract process. In addition, the attorney must coordinate and facilitate payment of any liens or judgments identified in the title report and/or affecting the title to the property. The attorney also helps to prepare the closing statements and manage adjustments, if any, at the time of the sale. This is all done to ensure that a smooth and trouble-free closing takes place. While a real estate attorney is not required in all real estate transactions, a skilled lawyer can provide valuable representation for both the Seller and the Buyer in negotiating and understanding the nuances of the executed contract, as well as ensuring that all necessary steps are taken to prepare for and attend the closing.
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