Buying or selling real estate: what should you consider?
A purchase agreement records more than the purchase price
Buying or selling a home, business premises, or a parcel of land involves more than agreeing a price. In the purchase agreement, the buyer and seller record the conditions under which the transaction takes place and the obligations they assume towards each other.
A carefully drafted agreement provides clarity about the transaction and helps ensure that important arrangements are not left undiscussed.
What exactly is being sold?
The first question may seem simple: what is the subject of the sale? In practice, this often deserves more attention than only the address or cadastral parcel.
Record precisely what forms part of the property being sold and which items remain behind. With business premises, for example, questions may arise about installations, inventory, or parking spaces. For land, the permitted use, actual layout, and any third-party rights may be relevant.
For the seller, it is important to be clear about what is being transferred. The buyer, in turn, wants to know what they will actually acquire.
In what condition will it be transferred?
The condition of the real estate is an important part of the transaction. Which defects are known, and what information has been provided about them?
A seller can be expected to disclose relevant information about the property. At the same time, depending on the circumstances, a buyer may have their own duty to investigate.
For business premises or land, specific matters may also be relevant, such as zoning or permitted use, permits, soil conditions, or an existing lease.
Under which conditions will the purchase proceed?
Not every purchase is unconditional. The parties can make the transaction subject to conditions.
A financing condition is a familiar example. For the buyer, this may be important when the purchase depends on external financing. For the seller, the wording determines when the buyer can rely on that condition and when the purchase becomes final.
Do not therefore look only at which conditions are included, but especially at their precise wording, deadlines, and consequences.
How are the purchase and financing arranged?
If financing is required for the purchase, the purchase agreement and loan agreement are connected.
A loan agreement records matters including the amount borrowed, interest, term, and repayment. Depending on the circumstances, security may also be agreed.
A loan between private individuals or businesses can raise different issues from bank financing. It is therefore important that the financing arrangements align with the purchase and with the parties' agreements.
What happens if the transaction does not proceed as agreed?
A good purchase agreement does not only describe how the parties want the transaction to proceed. It also regulates what happens if one party does not fulfil its obligations.
Consider a buyer who fails to pay on time or a seller who cannot transfer the property on the agreed date. The parties can make advance arrangements about matters such as a contractual penalty, damages, or termination of the agreement.
This makes clear in advance what consequences may follow from a breach.
Have your agreement reviewed
The purchase of real estate often has long-term and financial consequences. For both buyer and seller, it is therefore sensible to understand the arrangements being made and the legal points requiring attention before signing.
At Legal Comfort, I draft purchase agreements and loan agreements and review existing agreements. I consider both the legal arrangements and the concrete circumstances of the parties involved.
Are you buying or selling a home, business premises, or land? Or would you like to record a loan carefully? Please get in touch for a no-obligation discussion about legal advice.