When you are buying the single largest purchase of your life, it is important that you get the terms of the sale in writing.

Like the famous movie magnate Sam Goldwyn once said, a verbal agreement (or hand-shake) isn't worth the paper it's printed on. And despite the advent of technologies such as the Internet, even e-mail isn't good enough, at least not until fool-proof (and affordable) personal identity software is available. You may be able to use the phone, e-mail, or fax machine to volley the negotiations back and forth, but when it comes to signing on the dotted line, make sure you Fed-ex the sales contract and that both parties sign in writing, and make subsequent changes in writing.

According to the Real Estate Buyer's Agent Council, the purchase contract is a "legally binding document that sets forth the terms of the sale, establishes the rights and obligations of the parties involved, specifies the actions to be taken in order to close the sale, and establishes the time frames for those steps to be completed."

The contract form is typically filled out by the real estate agent, buyer's attorney or the buyer and seller if no agent is involved. Standard pre-printed forms contain such agreements as price, closing date, financial terms, and contingencies. Changes can be made to the contract by crossing out the part in dispute, circling the change and having both parties initial the change.

REBAC advises buyers to be sure that they understand all of the terms of the contract before signing. Some of the items that you may be agreeing to when you sign the pre-printed form may include: *

• What personal property will be included or excluded from the sale
• Who will pay for required repairs or retrofits
• What the seller's disclosure obligations will be
• What the seller's obligation to maintain the property will be
• What the seller is warranting about the property
• What the buyers inspection rights will be
• What will happen in the event either party does not comply with the contract
• What the parties legal rights and attorney fee provisions will be in the event of a breach of contract

*Reprinted with permission from the Real Estate Buyer's Agent Council (REBAC.)

You should try to obtain forms that are most commonly used in your area of the country. For example, in parts of the northeast, an attorney handles the seller's side instead of the Realtor. In parts of the south and west, agents act as legal fiduciaries.

It is easy for buyers and sellers to focus most on issues such as price, terms, and dates for inspection, appraisal, and closing, but losses can occur on both sides through missing the small details. Most misunderstandings occur between buyers and sellers when some terms are not fully disclosed. For example, do not assume that any moveable object such as window treatments, refrigerators, ceiling fans, chandeliers or special ornamentation will remain with the house. If any of those features are significant to you as a buyer or seller, you must include or exclude them clearly in the contract.

By reviewing and understanding the purchase contract form ahead of time you can strengthen your negotiating position, protect yourself from incurring unnecessary costs or problems, and have a better understanding of what you will need to do to conclude the sale.

Where to get real estate forms

Since real estate is a state-regulated transaction, you can go to the search engines and key in "real estate forms - your state." A general inquiry will pull up the occasional state, but mostly you will find forms marketed to Realtors.

Another approach is to go to Realtor.com and click on Realtor Associations. Go to the association that represents your city or town, and call them or e-mail them to ask for forms. If your city is not represented, click on the state association. For example, the Washington Association of REALTORS® sell residential sales contracts in packages of 50 for about $53, but they do not sell individual forms to consumers.

Another on-line solution is to contact the Real Estate Library and the 'Lectric Law Library. These sites have a wealth of information about all aspects of the real estate transaction, including access to forms.

You can also contact a local attorney that specializes in real estate transactions. Even if you are buying or selling a home without the benefit of an agent, it is in your best interest to have someone look at your legal exposure in a sales contract of the magnitude of a home purchase.

You can also check the real estate section and classified section of your local newspaper to see if there is a local business that sells forms.

You may also find forms from your local property taxing authority.

Since the forms vary extensively from state to state, it is in your best interest to contact your local real estate board or state association to get a list of all the documents which should be included in any real estate transaction.

Published: January 26, 1999

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