For example, the contract could state “Jane Doe, Seller” and then refer to Jane Doe as “Seller” throughout the rest of the contract. Jane’s full name only needs to be mentioned twice - once in the opening paragraph of the contract so that it is clear that she is the seller, and once in the signature block at the end of the contract, below her actual signature. “Seller” and “Buyer” are the most commonly used designations for the parties to a FSBO contract.
For instance, the contract could be entitled “Real Estate Purchase Agreement. " The contract could then be referred to as “Purchase Agreement,” or simply “Agreement” throughout the body of the contract. Similarly, the contract could be entitled “Real Estate Sales Contract. " The body of the contract could then use the shortened version of the title, i. e. “Contract,” throughout the remainder of the contract.
For example, appliances, such as stoves, refrigerators, and dishwashers, are often included in the sale of a home, but are not always included. As a result, the contract should specifically describe and list all appliances that the parties intend to include in the sale. Fixtures are another item that are typically included as part of the property being sold in a real estate contract. These are items of personal property that are affixed to the real estate in some way. These might include plants in the yard or other landscaping, as well light fixtures throughout the home. Again, the contract should specifically list those fixtures that are being included in the real estate sale.
For instance, the contract could read, “Buyer shall pay the purchase price in cash at the time of closing the sale. " If the parties intend for the buyer to purchase the property over time, then the payment provision could read, “Buyer shall pay the sum of $10,000. 00 in cash to Seller at the time of closing the sale. The balance of the purchase price, or the remaining $75,000. 00, shall be paid by Buyer to Seller in 75 equal monthly installments of $1,000. 00 each. "
The amount of earnest money to be paid The date on which it should be paid What entity should hold the money A sample earnest money provision might read, “Buyer shall deliver to Seller earnest money in the amount of $500. 00, no later than two days from the date of this Agreement. Said earnest money shall be delivered to [insert name of trust company] at [insert address of trust company], to be held in trust until this Agreement is fully executed or terminated. "
For example, a typical property tax provision in a FSBO contract might read: “Seller is responsible for all property taxes due and owing through and including the date of closing. Buyer shall be responsible for all property taxes due and owing following the date of closing. " If the tax payment deadline falls at or near the time that the negotiations are taking place, then the parties may agree to prorate the taxes that are due. For instance, the Seller might be responsible for the portion of unpaid taxes that are due and owing up to and including the closing date, with the Buyer being responsible for the balance of the taxes that becomes due after the closing date. In a case of prorated taxes, the contract provision might read “All property taxes, as determined on the date of closing, shall be prorated between Buyer and Seller as of the date of delivery of this deed. "
FSBO contracts regularly contain a provision stating that the Buyer is taking title to the property “subject to any zoning restrictions. " A zoning law that affects a particular parcel of property typically restricts how the owner can use the property. In other words, if a property is zoned residential, the Buyer cannot expect to buy the property and turn it into a store. Another common easement provision includes utility easements. It is common for contracts to include a clause that, for example, “permits utility companies to continue using those portions of the property that are necessary for the existing utility services to remain operable. " A contract provision relating to another type of easement might state as follows: “The property has a ‘right of way’ running through the southeast section of its grounds, which is clearly marked and allows the adjoining landowner to enter and exit his property as needed. "
Some sellers have an inspection done to make sure there are no problems or disclosures to make before putting the house up for sale. Probably the most common disclosure comes from the Residential Lead-Based Paint Hazard Reduction Act of 1992. This federal law applies only to houses being sold that were built prior to 1978. The seller must disclose to a buyer about the possibility of lead-based paint being used in the home. Most state laws provide for a specific standardized disclosure form to be filled out by the seller and given to the buyer. Both parties typically must sign and date the disclosure form. It is usually presented by the seller at the closing of the sale.
HSBO contracts are often contingent on the outcome of an inspection of the property. This type of contingency should outline the timeframe in which the inspection should occur. It also should set out which party is responsible for the costs of the inspection. This type of provision can refer to a general home inspection, or a specialized inspection, such as one that tests radon levels. An example of a contingency provision clause in a FSBO contract is as follows: “Buyer shall pay for a house inspection, to be conducted before closing. Renegotiation of the agreement will occur only if a major defect, which will cost more than $500. 00 to remedy. If the defect would cost less than $500. 00 to remedy, then the Buyer shall be responsible for the costs of remedying that defect. " Another common contingency involves the ability of the buyer to get financing. Again, this type of contingency should describe the timeframe that the buyer has to find adequate financing. It may even give details such as the amount of financing that is needed and the name of the mortgage company or financial institution providing the financing. The contract also may contain a contingency based on the ability of the seller to obtain suitable housing. Sometimes, the seller wants to make sure that he or she has another place to live before the property is sold and possession given to the buyer. As a result, FSBO contracts may contain a contingency provision like this.
For instance, the contract might contain the following provision: “If Buyer breaches this Agreement or otherwise fails to purchase the property as agreed, Seller shall retain the earnest money paid by Buyer as liquidated damages or seek specific performance of the Agreement, at his discretion. " This provision allows the Seller to either keep the earnest money paid and terminate the contract, or proceed to file a lawsuit against Buyer claiming a larger amount of damages than the earnest money that was paid. Likewise, a FSBO contract might contain the following clause in favor of the Buyer: “If Seller fails to deliver title to the property to Buyer at closing as contemplated by the Agreement, the Agreement shall terminate and the Buyer shall be entitled to a refund of any earnest money paid. " This provision gives the Buyer a specific remedy if the Seller fails to perform the terms of the contract.
A typical FSBO contract provision that addresses closing costs is as follows: “Seller shall pay at closing all costs related to the release of any mortgage on the property, delinquent real estate taxes, and outstanding mechanic’s liens. " Another way to address different types of closing costs is as follows: “Buyer shall be responsible for the payment of any title insurance policy and survey performed of the property. Buyer also shall bear the costs of preparing and recording the deed and any mortgage secured by the property that is the subject of this agreement. "
