Boilerplate Real Estate Contracts are Not One-Property-Fits-All



Boilerplate Real Estate Contracts are Not One-Property-Fits-All

Whether you’re buying, selling or renting a home, all real estate transactions begin with the signing of a contract. This legal document is necessary for outlining the essential terms of the agreement as well as the rights and obligations of the parties involved. Unfortunately, generic forms in real estate deals are all too common these days—and not just when selling or purchasing For Sale by Owner properties. These boilerplate contracts can lead to massive headaches should your real estate arrangement go awry.

Most sources of generic real estate contracts do not tailor them to your state. Every state has its own real estate contract and disclosure laws. Use a boilerplate contract template that does not take your state’s particular rules into account and a judge could declare it null and void, or your buyer’s lawyer find it full of exploitable loopholes, should the deal eventually land you in court.

Most boilerplate real estate contracts only cover the most basic issues. Because a lawyer did not compose it to address your transaction, it’s likely a generic contract will fail to cover some of the details essential in your situation. For example, a purchase offer template may not include a mortgage contingency—a must have in a tight financing environment—that would allow you to back out of the deal and reclaim your earnest money deposit should you be unable to secure an affordable loan within a set period.

Generic real estate contracts rarely cover all the appropriate elements of a specific deal. When dealing with legal documents, even small differences in wording can have big consequences in the outcome of an agreement. For example, a contract for a lease with an option to buy is very different from that of a lease with the right of first refusal. In the first, the renter may purchase the property for an agreed upon price within a set period. In the second, the seller must offer the renter an opportunity to purchase the property under the same terms suggested by a third-party buyer.

Boilerplate real estate contracts are not one-property-fits-all. Different property types—like apartments, condominiums and townhouses—may require different contracts. For example, when buying or selling a condo, an agreement that includes the specific rules and policies of the building, as well as how its association operates and governs it, is necessary.

Anyone can easily find generic real estate contracts online. However, they were not written to protect your interests, were most likely not drafted by real estate specialists, and they won’t include the essentials necessary to prevent costly legal problems. It’s better to find a trusted advisor—such as a lawyer, real estate agent or both—who can help you review your options and craft a contract that properly protects you from potential pitfalls. Upfront legal costs are a small price to pay for the protection a solid contract offers.

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