Tips For Reviewing Real Estate Contracts
Real estate deals, such as commercial leases or property purchases, involve contracts that all parties must sign. However, you should review the contracts before you sign them. Below are tips for reviewing such contracts.
Read and Understand the Terms or Clauses
You should never sign legal contracts without scrutinizing and understanding every word they contain. A real estate contract is legally binding and requires the same treatment. Otherwise, you might sign something that you wouldn't otherwise agree to.
Give yourself time to read contracts when making real estate deals. You might not have enough time to read the contract if you leave everything until the last minute. Unless the contract is a single page and you understand it well, take it home for further scrutiny.
Ask the other party or your legal representative for clarification if you do not understand any part of the contract. Some people feel shy when they don't understand contract jargon or clauses; cast such feelings aside to sign a contract you understand.
In addition, don't assume even the tiniest mistakes in the contract. Say you know the closing for a home purchase day is June 21, but the contract indicates June 12. Don't assume that the person who typed the contract made a mistake. Instead, confirm the date with the other party.
Negotiate if You Need Something
A contract is not binding before all parties sign it. You have the right to negotiate all terms before you sign the contract. Don't feel pressured to accept any contract as is.
Say you want to sign a commercial lease with a rent increase clause you are uncomfortable with. Negotiate with the proprietor for a favorable clause before signing the contract. You can even ask the other party to edit the contract and include a clause it doesn't have.
Look Out for Red Flags
Lastly, watch out for red flags when reading the contract. Here are some things that should consign you:
- The other party rushes you and wants you to sign the contract without scrutiny.
- The contract contains multiple typos.
- The contract favors the other party if complications arise that require third-party intervention (for example, one party picks the arbitrator).
Experienced real estate lawyers know how to pick out red flags. Get a lawyer to review your contract before you sign it, even if you have been handling the deal without a lawyer. The lawyer will help you sign a fair contract and get a deal you won't regret.
Contact a local real estate lawyer to learn more.