Real Estate Purchase Agreement Precision in Metairie & Kenner Markets

When a blank is not filled in, the abbreviation for not applicable (N/A) should be inserted as this states that this blank does not apply in the transaction. It is a mistake to simply leave the blank with nothing filled in as this would prompt an assumption that the blank has been overlooked. When you are entering into a purchase agreement make certain that all the blanks are filled in correctly or N/A
is inserted. This will lead to a more accurate agreement, with little room for misinterpretation.

Most purchase agreements originate with the purchaser submitting an offer to purchase a property according to certain terms and conditions which are or should be carefully spelled out and the agreement being submitted to the seller for consideration. When received by the seller usually one of three things will result-an
acceptance, a rejection, or a counter offer. If the offer has been refused it should be signed and dated by the seller and the purchaser should be provided with a copy of same. If the offer is accepted the seller should have signed and dated same and provided the purchaser with a copy. Originals of all documents remain with the listing broker. If the offer is countered this may occur in several ways. The changes or conditions which the seller wants may be written in on the agreement, initialed by the seller and conveyed to the purchaser for his consideration. If the purchaser is in agreement he or she will initial the changes indicating agreement. Another way to achieve agreement when there are changes is the use of a separate counter offer form which lists the changes desired, references the subject agreement and is signed by the seller and submitted to the purchaser for consideration. If there are a substantial number of changes I personally prefer to prepare an agreement to sell wherein the seller offers to sell the subject property to the purchaser under certain terms and conditions, all of which are spelled out. The agreement to sell is then conveyed to the purchaser for consideration and acceptance if purchaser is in agreement. These are basically the three ways that counter proposals are made.

When changes to a purchase agreement are made, subsequent, to acceptance, an addendum or an amendment to the purchase agreement is prepared. This document will be dated, outlining the departures or changes from the original agreement and will be signed and dated by both the seller and the purchaser. This then has the full force and effect of modifying the original agreement. Bear in mind that in addition to the purchase agreement you may have property disclosure, lead based paint addendum, waiver of redhibition , applicable addendums or amendments, among other items. Each of these documents should be carefully executed as they may have a significant impact on the transaction and all parties to the transaction should have copies of same. Again, I remind you that all originals remain with the listing broker in a transaction as well as the deposit which must be deposited in the listing broker’s sales escrow account, unless all parties agree otherwise. Please also note that the listing broker will deposit checks into sales escrow account as opposed to simply holding the check in a file or a drawer, as some purchasers are inclined to believe.

Occasionally, there are conflicting items within a purchase agreement which must be eliminated. One such item would be allowing a loan approval date of 40 days from acceptance of the agreement and requiring an act of sale within 30 days of acceptance. Another area which is a source of confusion is the substitution of working or business days for calendar days. A calendar day is the same for everyone, whereas a business or working day may vary depending upon one’s culture , religion or country of origin. Additionally, the addition of words such as “done or approved” where loan application is to be made within a certain time frame do little to clarify the purchaser’s obligation with respect to loan application.
And words such as “minimum” substituted for the amount of the down payment or “maximum” substituted for the loan amount are inadvisable if not unacceptable to lenders even though some agents will use such language. Another word which is utterly inadvisable is “required” when substituted for down payment or loan amount. Do not enter into purchase agreements as a seller or purchaser when these terms are sprinkled throughout the agreement. They may sound hip, but they are nothing more than the inability of the person drafting the agreement to prepare a straight forward, easily understood agreement, which will stand up to scrutiny from
lenders, title companies, appraisers , lawyers and possibly courts. A good test of the accuracy and quality of a purchase agreement is to let several knowledgeable brokers or agents read the agreement and see if they all agree on the meaning of the agreement. If each has a different interpretation of the terms and condition ,then you almost certainly have a poorly drafted agreement, one that will cause problems and misunderstandings. Amend it to accurately reflect the precise terms and conditions and you will avoid potential multiple difficulties down the road. Shoddy, carelessly drafted agreements which are subject to many different interpretations have no place in professional real estate brokerage and must be avoided. For additional information on agreements to purchase or sell go to “Essentials of an agreement to purchase or sell in New Orleans market” listed on our web site under information.

The preceding article is subjective and represents the professional opinion of the author/ real estate broker, Larry Trunk.