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Key components of a residential real estate contract

Buying or selling a home in Florida is nearly always accompanied with signing a contract. While these documents provide legal protection for both the buyer and seller, many people are unaware of the items to look for to guarantee that protection.

For example, Bankrate.com reports that confusing or unclear language can lead to losing a sale, as was the case when a couple in Florida offered $620,000 for a home contingent upon the language that the property could not appraise for less than that amount. The seller secured an appraisal above that number, and the buyers got an appraisal for much less. When the buyers canceled the sale, the seller took the couple to court, claiming breach of contract. A state court of appeals ruled that the buyers were within their rights, as the contract language inferred that no appraisal could come in below the sale price.

Experts advise that a real estate contract should include clarity in a number of sections, including the following: 

  •        The inspection: There should be a contingency to protect the buyer in the event that the inspection turns up unsatisfactory results.
  •        Financing: Sellers should be aware that sections related to financing could indicate that a buyer can keep his or her earnest money if a loan falls through.
  •        Closing costs: Who is responsible for paying the closing costs? This is usually negotiated during the sale.
  •        Selling an existing home: Many contracts are contingent upon a buyer selling an existing home.
  •        Warranty: Is there a home warranty in place to cover the cost of certain repairs?

Florida Realtors points out that buyers should especially pay attention to as-is home sale contracts. These include a section that dictates that if a buyer moves into a home before closing, then the buyer accepts the property in the condition it is in, no questions asked. Reading the fine print on any contract or having a professional explain the documents is advisable.

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